EX-10.9






Exhibit 10.9




 










CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT




Dated as of June 23, 2008




among




RHI ENTERTAINMENT, LLC

as Borrower,




THE GUARANTORS REFERRED TO HEREIN,




THE LENDERS REFERRED TO HEREIN




and




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




 






J.P. MORGAN SECURITIES INC.

as Sole Bookrunner and Sole Lead Arranger




 





 









 





     CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT dated as of June 23, 2008 (as amended,
supplemented or otherwise modified, renewed or replaced from time to time, the “Credit
Agreement”) among (i) RHI ENTERTAINMENT, LLC, a Delaware limited liability company, as
Borrower, (ii) the GUARANTORS referred to herein, (iii) the LENDERS referred to herein and
(iv) JPMORGAN CHASE BANK, N.A., a national banking association, as agent for the Lenders.



INTRODUCTORY STATEMENT




     Terms not otherwise defined above or in this Introductory Statement are as defined in
Article 1 hereof or as defined elsewhere herein.



     The Borrower, the Guarantors, the lenders party thereto and the Administrative Agent are
parties to a Credit, Security, Guaranty and Pledge Agreement dated as of January 12, 2006, as
amended and restated as of April 13, 2007 (the “Existing Second Lien Facility”).



     The Borrower has requested that the Lenders make available a $55,000,000 seven-year single
draw, secured term loan credit facility (the “Facility”), subject to increase via up to two
additional draws in accordance with Section 2.16 hereof. The Borrower intends to,
contemporaneously on the Closing Date (as defined herein), (a) consummate a Qualified IPO (as
defined herein) of Public Co. (as defined herein), and (b) increase the revolving credit
commitments under the First Lien Facilities (as defined herein) from $275,000,000 to $350,000,000.
A portion of the net proceeds from the Qualified IPO will be used to retire all Indebtedness
outstanding under the Parent Credit Agreement (as defined herein) and to pay all fees and expenses
incurred in connection therewith (including any applicable prepayment premiums). The proceeds of
the Facility extended on the Closing Date, together with the remaining net proceeds from the
Qualified IPO and/or borrowings under the First Lien Facilities, will be used to (a) refinance all
Indebtedness outstanding under the Existing Second Lien Facility and (b) pay all fees and expenses
incurred in connection with the refinancing of the Existing Second Lien Facility, including,
without limitation, any applicable prepayment premiums payable to the lenders under the Existing
Second Lien Agreement. The consummation of the Qualified IPO, the extension of the Facility, the
effectiveness of the Registration Statement (as defined herein) and other transactions described in
the preceding sentence are collectively referred to herein as the “2008 Transactions”.



     To provide assurance for the repayment of the Loans and the other Obligations of the Borrower
hereunder, the Borrower will, among other things, provide or cause to be provided to the
Administrative Agent, for the benefit of itself and the Lenders, the following (each as more fully
described herein):




	 	(i)	 	a security interest in the Collateral from each of the Credit
Parties pursuant to Article 8 hereof;
	 
	 	(ii)	 	a guaranty of the Obligations by each of the Guarantors
pursuant to Article 9 hereof; and




 









 












	 	(iii)	 	a pledge by each of the Pledgors of the Pledged Securities
owned by it pursuant to Article 10 hereof.





     In connection with the execution of this Credit Agreement, the Intercreditor Agreement (as
defined herein) shall be entered into in order to, among other things, set forth certain agreements
between the Administrative Agent and the First Lien Agent (as defined herein) with respect to their
respective rights relating to the Collateral securing this Credit Agreement and the collateral
securing the First Lien Facilities.



     Subject to the terms and conditions set forth herein, the Administrative Agent is willing to
act as agent for the Lenders and each Lender is willing to make a Loan to the Borrower on the
Closing Date in an amount not in excess of its Commitment hereunder.



     Accordingly, the parties hereto hereby agree as follows:



1. DEFINITIONS




     SECTION 1.1. Definitions. For the purposes hereof unless the context otherwise
requires, all Article and Section references herein shall be deemed to correspond with Articles and
Sections herein, the following terms shall have the meanings indicated, all accounting terms not
otherwise defined herein shall have the respective meanings accorded to them under GAAP and all
terms defined in the UCC and not otherwise defined herein shall have the respective meanings
accorded to them therein and if defined in more than one article of the UCC, shall have the meaning
set forth in Article 9 thereof. Unless the context otherwise requires, any of the following terms
may be used in the singular or the plural, depending on the reference:



     “2008 Transactions” shall have the meaning given to such term in the Introductory
Statement.



     “Acceptable Obligors” shall mean any Person listed or Affiliated Group on Schedule 2
to the First Lien Facilities (as modified from time to time in accordance with Section 2.17
thereof) and such other Persons that are acceptable to the lenders under the First Lien Facilities
(or, at any time after the First Priority Obligations Payment Date, the Lenders) in their
reasonable discretion.



     “Account Control Agreement” shall mean an account control agreement substantially in
the form of Exhibit K hereto or such other account control agreement in form and substance
reasonably satisfactory to the First Lien Agent or, after the First Priority Obligations Payment
Date, the Administrative Agent.



     “Adjusted Receivables Amount” shall be as defined in the First Lien Agreement as
currently in existence; provided, however, that subsequent to the First Priority Obligations
Payment Date, the actions which the First Priority Agreement as currently in existence contemplates
being taken by the First Priority Agent with regard to “Eligible Receivables” and “Acceptable
Obligors” (each as defined in the First Lien Agreement) will be taken by the Administrative Agent.



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     “Administrative Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as agent
for the Lenders hereunder, or such successor Administrative Agent as may be appointed pursuant to
Section 12.11 hereof.



     “Affiliate” shall mean any Person, which, directly or indirectly, is in control of, is
controlled by, or is under common control with, another Person. For purposes of this definition, a
Person shall be deemed to be “controlled by” another Person if such latter Person possesses,
directly or indirectly, power either to direct or cause the direction of the management and
policies of such controlled Person whether by contract or otherwise.



     “Affiliated Group” shall mean a group of Persons, each of which is an Affiliate (other
than by reason of having common directors or officers) of some other Person in the group.



     “Alternate Base Rate” shall mean, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Effective Rate in effect for such day plus 1/2 of 1%. For purposes hereof,
“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime rate in effect at its principal office in New York City.
“Federal Funds Effective Rate” shall mean, for any day, the weighted average (rounded
upwards, if necessary to the next 1/100 of 1%) of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average (rounded upwards, if necessary to the
next 1/100 of 1%) of the quotations for the day of such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.



     “Alternate Base Rate Loan” shall mean a Loan based on the Alternate Base Rate in
accordance with the provisions of Article 2 hereof.



     “Applicable Law” shall mean all provisions of statutes, rules, regulations and
orders of the United States of America, any state thereof or municipality therein or of any
foreign governmental body or of any regulatory agency applicable to the Person in question,
and all orders and decrees of all courts and arbitrators in proceedings or actions in which
the Person in question is a party.



     “Applicable Margin” shall mean (i) in the case of Alternate Base Rate Loans, 6.50% per
annum and (ii) in the case of LIBOR Loans, 7.50% per annum.



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     “Approved Fund” shall mean any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.



     “Arranger” shall mean J.P. Morgan Securities Inc., in its capacity as sole lead
arranger and sole bookrunner in connection with the Facility.



     “Assignment and Assumption” shall mean an agreement substantially in the form of
Exhibit I hereto, executed by the assignor, assignee and other parties as contemplated
thereby.



     “Authorized Officer” shall mean with respect to any Person, any one of its Chairman,
Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer, Executive
Vice President of Finance or Senior Vice President of Finance.



     “Bankruptcy Code” shall mean the Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, as codified at 11 U.S.C. § 101 et seq.



     “Board” shall mean the Board of Governors of the Federal Reserve System of the United
States of America.



     “Borrower” shall mean RHI Entertainment, LLC, a Delaware limited liability company.



     “Borrowing” shall mean a group of Loans of a single Type and as to which a single
Interest Period is in effect on a single day.



     “Borrowing Base” shall have the meaning given to such term in the First Lien
Agreement.



     “Borrowing Base Certificate” shall have the meaning given to such term in Section
5.1(c) hereof.



     “Borrowing Certificate” shall mean a borrowing certificate, substantially in the form
of Exhibit H hereto, to be delivered by the Borrower to the Administrative Agent in
connection with the Borrowing of the initial Loans on the Closing Date or of the incremental Loans
(if any) extended thereafter in accordance with Section 2.16.



     “Budgeted Negative Cost” shall mean for any Item of Product, the aggregate amount of
the pre-production expenses with regard to such Item of Product plus the cost of all production
elements usually and customarily included as part of the negative cost of an Item of Product of
like cost and quality plus the usual and customary post production costs of such Item of Product,
and shall specifically include charges for any completion guaranty fee which is to be paid.



     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
banks are required or permitted to close in the State of New York; provided,
however, that



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when used in connection with a LIBOR Loan, the term “Business Day” shall also exclude any day
on which banks are not open for dealings in Dollar deposits on the London Interbank Market.



     “Business Plan” shall mean the business plan for the Credit Parties dated December 1,
2005, delivered to the Administrative Agent prior to the date hereof.



     “Cap Amount” means as of any date of determination $525 million plus an
amount not in excess of $52.5 million in the aggregate advanced in the context of a workout and/or
a debtor-in-possession financing, less an amount equal to the sum, without duplication, of
(i) the aggregate amount of all principal payments and prepayments of the term loans under the
First Lien Agreement as in effect on the date hereof (other than any principal payments made on
account or as a result of a Permitted First Lien Refinancing), (ii) the amount of all Proceeds of
Common Collateral received after the date hereof by the First Lien Agent, which pursuant to the
provisions of Section 2.10(f) of the First Lien Agreement as in effect on the date hereof, are to
be applied to pay First Priority Obligations and which are not so applied and (iii) the aggregate
amount of all permanent reductions of the Revolving Credit Commitments (as such term (or any term
comparable to such term) is defined in the First Lien Agreement) other than a reduction on account
of or as a result of a Permitted First Lien Refinancing.



     “Capital Expenditures” shall mean, with respect to any Person for any period, the
aggregate of all expenditures (whether paid in cash or accrued as a liability) by such Person
during that period which, in accordance with GAAP, are required to be included in “additions to
property, plant or equipment” or similar items included in cash flows (including Capital Leases);
provided, however, that Capital Expenditures shall not include: (a) expenditures
(i) to the extent they are made with proceeds of the issuance of Equity Interests of the Borrower
(other than Specified Equity Contributions) contributed after the Closing Date or (ii) that
constitute Net Proceeds of a Disposition that are reinvested in Productive Assets pursuant to
Sections 2.10(f) or 6.6(d) hereof; (b) expenditures of proceeds of insurance
settlements, condemnation awards and other settlements in respect of lost, destroyed, damaged or
condemned assets, equipment or other property to the extent such expenditures are made to replace
or repair such lost, destroyed, damaged or condemned assets, equipment or other property or
otherwise to acquire, maintain, develop, construct, improve, upgrade or repair Productive Assets
within 12 months of receipt of such proceeds; (c) interest capitalized during such period; (d) the
book value of any asset owned by such Person prior to or during such period to the extent that such
book value is included as a capital expenditure during such period as a result of such Person
reusing or beginning to reuse such asset during such period without a corresponding expenditure
actually having been made in such period, provided that (i) any expenditure necessary in
order to permit such asset to be reused shall be included as a Capital Expenditure during the
period that such expenditure actually is made and (ii) such book value shall have been included in
Capital Expenditures when such asset was originally acquired; (e) the purchase price of equipment
purchased during such period to the extent the consideration therefor consists of any combination
of (i) used equipment traded in at the time of such purchase and (ii) the proceeds of a concurrent
sale of used equipment, in each case, in the ordinary course of business; (f) expenditures relating
to Investments in respect of a Permitted Business Acquisition to the extent permitted by
Section 6.4; (g) expenditures to the extent they are financed with the proceeds of a
disposition of



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used, obsolete or worn out equipment or property in the ordinary course of business; or (h)
customary expenditures related to the production of Items of Product.



     “Capital Lease”, as applied to any Person, shall mean any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is
required to be accounted for as a capital lease on the balance sheet of that Person.



     “Cash Collateral Account” shall have the meaning given to such term in Section
11.1 hereof.



     “Cash Equivalents” means: (a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within one year from the date of acquisition thereof
and having, at such date of acquisition, the highest credit rating obtainable from S&P or from
Moody’s; (c) investments in certificates of deposit, banker’s acceptances and time deposits
maturing within one year from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State thereof which has a
combined capital and surplus and undivided profits of not less than $250,000,000 or that it is a
Lender; (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above; (e) money market funds that (i) comply with the
criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act
of 1940, (ii) are rated AAA by S&P or Aaa by Moody’s, and (iii) have portfolio assets of at least
$500,000,000; and (f) direct obligations of any State of the United States of America (or by any
subdivision thereof to the extent such obligations are backed by the full faith and credit of such
State), in each case, (i) maturing within one year from the date of acquisition thereof, and (ii)
rated AAA by S&P or Aaa by Moody’s.



     “Change in Control” shall mean (i) the first day on which a majority of the
members of the Board of Directors of the Borrower are not Continuing Directors, (ii) any
“person” (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder as in effect from time to time)
other than KRH or the Kelso Group or any of their respective beneficial owners or any
Permitted Group shall own, directly or indirectly, beneficially or of record, Equity
Interests representing more than 50% of the voting Equity Interests of Public Co. or such
person shall own, directly or indirectly, beneficially or of record, Equity Interests
representing more than 50% of the voting Equity Interests of the Parent (measured by voting
power rather than number of shares or membership interests), (iii) the Parent shall cease to
have both beneficial ownership and control of 100% of the voting Equity Interests of the
Borrower or (iv) the Borrower shall cease to have both beneficial ownership and control of
100% of the voting Equity Interests of each of RHI Entertainment Distribution, LLC, RHI
Entertainment Productions, LLC and RHI International Distribution, Inc., except as a result
of a disposition permitted under Section 6.6 hereof.



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     “Change in Law” shall mean (a) the adoption of any law, rule or regulation after the
date of this Credit Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the date of this Credit
Agreement or (c) compliance by any Lender (or, for purposes of Section 2.10(b) by any
Lending Office of such Lender or by such Lender’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any Governmental Authority made
or issued after the date of this Credit Agreement.



     “Clearing Account” shall mean the account of the Administrative Agent (for the benefit
of itself and the Lenders) maintained at the office of JPMorgan Chase Bank, N.A., JPMorgan Loan
Services Group, 21 South Clark Street, 17th Floor, Chicago, Illinois 60603, Attention: Sharon
Bosch, designated as the “LS2 Incoming Account”, Account No. 9008109962 C2547, Reference: “RHI
Entertainment”.



     “Closing Date” shall mean the date on which the conditions precedent to the extension
of credit under this Credit Agreement set forth in Section 4.1 hereof have been satisfied
or waived.



     “Code” shall mean the Internal Revenue Code of 1986 and the rules and regulations
issued thereunder, as now and hereafter in effect, as codified at 26 U.S.C. § 1 et
seq. or any successor provision thereto.



     “Collateral” shall mean with respect to each Credit Party, all of such Credit Party’s
right, title and interest in and to all personal property, tangible and intangible, wherever
located or situated and whether now owned, presently existing or hereafter acquired or created,
including, but not limited to, all goods, accounts, instruments, intercompany obligations, contract
rights, partnership and joint venture interests, documents, chattel paper, general intangibles,
goodwill, equipment, machinery, inventory, investment property, copyrights, trademarks, trade
names, insurance proceeds, cash, deposit accounts, letter of credit rights and the Pledged
Securities, and any proceeds thereof, products thereof or income therefrom, further including but
not limited to, all of such Credit Party’s right, title and interest in and to each and every item
and type of Item of Product, including with respect to each and every Item of Product and without
limiting the foregoing language, each and all of the following particular rights and properties (in
each case to the extent any of the foregoing is now owned or hereafter created or acquired by such
Credit Party):




	 	(i)	 	all scenarios, screenplays and/or scripts at every stage
thereof;
	 
	 	(ii)	 	all common law and/or statutory copyright and other rights in
all literary and other properties (hereinafter called “said literary
properties”) which form the basis of such Item of Product and/or which are
or will be incorporated into such Item of Product, all component parts of such
Item of Product consisting of said literary properties, all motion picture
rights in and to the story, all treatments of said story and said literary
properties, together with all preliminary and final screenplays used and to be
used in connection with such Item of Product, and all other literary material
upon which such Item of Product is based or from which it is adapted;




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	 	(iii)	 	all rights for all media in and to all music and musical
compositions used and to be used in such Item of Product, if any, including,
each without limitation, all rights to record, re-record, produce, reproduce or
synchronize all of said music and musical compositions, including, without
limitation, reuse fees, royalties and all other amounts payable with respect to
said music and musical compositions;
	 
	 	(iv)	 	all tangible personal property relating to such Item of
Product, including, without limitation, all exposed film, developed film,
positives, negatives, prints, positive prints, answer prints, special effects,
preparing materials (including interpositives, duplicate negatives,
internegatives, color reversals, intermediates, lavenders, fine grain master
prints and matrices, and all other forms of pre-print elements), sound tracks,
cutouts, trims and any and all other physical properties of every kind and
nature relating to such Item of Product whether in completed form or in some
state of completion, and all masters, duplicates, drafts, versions, variations
and copies of each thereof, in all formats whether on film, videotape, disk or
otherwise and all music sheets and promotional materials relating to such Item
of Product (collectively, the “Physical Materials”);
	 
	 	(v)	 	all collateral, allied, subsidiary and merchandising rights
appurtenant or related to such Item of Product including, without limitation,
the following rights: all rights to produce remakes, sequels or prequels to
such Item of Product based upon such Item of Product, said literary properties
or the theme of such Item of Product and/or the text or any part of said
literary properties; all rights throughout the world to broadcast, transmit
and/or reproduce by means of television (including commercially sponsored,
sustaining and subscription or “pay” television) or by any process analogous
thereto, now known or hereafter devised, such Item of Product or any remake,
sequel or prequel to the Item of Product; all rights to produce primarily for
television or similar use, a motion picture or series of motion pictures, by
use of film or any other recording device or medium now known or hereafter
devised, based upon such Item of Product, said literary properties or any part
thereof, including, without limitation, based upon any script, scenario or the
like used in such Item of Product; all merchandising rights including, without
limitation, all rights to use, exploit and license others to use and exploit
any and all commercial tie-ups of any kind arising out of or connected with
said literary properties, such Item of Product, the title or titles of such
Item of Product, the characters of such Item of Product and/or said literary
properties and/or the names or characteristics of said characters and including
further, without limitation, any and all commercial exploitation in connection
with or related to such Item of Product, any remake, sequel or prequel thereof
and/or said literary properties;
	 
	 	(vi)	 	all statutory copyrights, domestic and foreign, obtained or to
be obtained on such Item of Product, together with any and all copyrights
obtained or




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	 	 	 	to be obtained in connection with such Item of Product or any underlying or
component elements of such Item of Product, including, in each case without
limitation, all copyrights on the property described in subparagraphs (i)
through (v) inclusive, of this definition, together with the right to
copyright (and all rights to renew or extend such copyrights) and the right
to sue in the name of any of the Credit Parties for past, present and future
infringements of copyright;






	 	(vii)	 	all insurance policies and completion bonds connected with
such Item of Product and all proceeds which may be derived therefrom;
	 
	 	(viii)	 	all rights to distribute, sell, rent, license the exhibition of and otherwise
exploit and turn to account such Item of Product, the Physical Materials, the
motion picture rights in and to the story and/or other literary material upon
which such Item of Product is based or from which it is adapted, and the music
and musical compositions used or to be used in such Item of Product;
	 
	 	(ix)	 	any and all sums, proceeds, money, products, profits or
increases, including money profits or increases (as those terms are used in the
UCC or otherwise) or other property obtained or to be obtained from the
distribution, exhibition, sale or other uses or dispositions of such Item of
Product or any part of such Item of Product, including, without limitation, all
sums, proceeds, profits, products and increases, whether in money or otherwise,
from the sale, rental or licensing of such Item of Product and/or any of the
elements of such Item of Product including, without limitation, from
collateral, allied, subsidiary and merchandising rights, and further including,
without limitation, all monies held in any Cash Collateral Account, Production
Account or Collection Account, or any “Cash Collateral Account,” “Production
Account” or “Collection Account” maintained in accordance with the First Lien
Agreement;
	 
	 	(x)	 	the dramatic, nondramatic, stage, television, radio and
publishing rights, title and interest in and to such Item of Product, and the
right to obtain copyrights and renewals of copyrights therein;
	 
	 	(xi)	 	the name or title of such Item of Product and all rights of
such Credit Party to the use thereof, including, without limitation, rights
protected pursuant to trademark, service mark, unfair competition and/or any
other applicable statutes, common law, or other rule or principle of law;
	 
	 	(xii)	 	any and all contract rights and/or chattel paper which may
arise in connection with such Item of Product;
	 
	 	(xiii)	 	all accounts and/or other rights to payment which such Credit Party presently
owns or which may arise in favor of such Credit Party in the future, including,
without limitation, any refund or rebate in connection




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	 	 	 	with a completion bond or otherwise, all accounts and/or rights to payment
due from Persons in connection with the distribution of such Item of
Product, or from the exploitation of any and all of the collateral, allied,
subsidiary, merchandising and other rights in connection with such Item of
Product;






	 	(xiv)	 	any and all “general intangibles” (as that term is defined in
the UCC) not elsewhere included in this definition, including, without
limitation, any and all general intangibles consisting of any right to payment
which may arise in connection with the distribution or exploitation of any of
the rights set out herein, and any and all general intangible rights in favor
of such Credit Party for services or other performances by any third parties,
including actors, writers, directors, individual producers and/or any and all
other performing or nonperforming artists in any way connected with such Item
of Product, any and all general intangible rights in favor of such Credit Party
relating to licenses of sound or other equipment, or licenses for any
photograph or photographic or other processes, and any and all general
intangibles related to the distribution or exploitation of such Item of Product
including general intangibles related to or which grow out of the exhibition of
such Item of Product and the exploitation of any and all other rights in such
Item of Product set out in this definition;
	 
	 	(xv)	 	any and all goods including, without limitation, inventory (as
that term is defined in the UCC) which may arise in connection with the
creation, production or delivery of such Item of Product and which goods
pursuant to any production or distribution agreement or otherwise are owned by
such Credit Party;
	 
	 	(xvi)	 	all and each of the rights, regardless of denomination, which
arise in connection with the acquisition, creation, production, completion of
production, delivery, distribution, or other exploitation of such Item of
Product, including, without limitation, any and all rights in favor of such
Credit Party, the ownership or control of which are or may become necessary or
desirable, in the opinion of the Administrative Agent, in order to complete
production of such Item of Product in the event that the Administrative Agent
exercises any rights it may have to take over and complete production of such
Item of Product;
	 
	 	(xvii)	 	any and all documents issued by any pledgeholder or bailee with respect to
such Item of Product or any Physical Materials (whether or not in completed
form) with respect thereto;
	 
	 	(xviii)	 	any and all Production Accounts or other bank accounts established by such
Credit Party with respect to such Item of Product;
	 
	 	(xix)	 	any and all rights of such Credit Party under any Distribution
Agreements relating to such Item of Product; and




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	 	(xx)	 	any and all rights of such Credit Party under contracts
relating to the production or acquisition of such Item of Product or otherwise,
including, but not limited to, all such contracts which have been delivered to
the Administrative Agent pursuant to this Credit Agreement;




provided, however, that, notwithstanding the foregoing, Collateral shall not
include (a) any motor vehicles and other equipment subject to a certificate of title statute, (b)
commercial tort claims valued at less than $1,000,000, (c) fee interests in or real property valued
at less than $1,000,000, (d) leasehold interests, (e) fixtures, except to the extent that the same
are equipment under the UCC or are related to real property covered by a mortgage in favor of the
Lenders, (f) crops, farm products or as extracted collateral, (g) any contract, license, letter of
credit, property right, permit or franchise to the extent that the grant of a Lien therein would
constitute or result in a breach, termination or default thereunder or would otherwise be
prohibited under Applicable Law (it being understood that the exclusion provided under this clause
(g) shall not apply to any Distribution Agreements or any contract, license, letter of credit,
property right, permit or franchise that was entered into after the Closing Date), so long as the
sum of all amounts to which any Credit Party has any rights to payment under all such contracts,
licenses, permits, property rights and franchises (other than letters of credit and those listed on
Schedule 1(b) hereto) does not at any time exceed an aggregate principal amount of
$17,000,000, but in each case only to the extent, and for so long as, any such contractual or other
prohibition is not terminated or rendered or otherwise deemed ineffective by the UCC or any other
Applicable Law, (h) any assets to which title is contributed as an Investment in a Person that is
not a Credit Party to the extent such Investment is permitted by Section 6.4 hereof, (i)
any outstanding capital stock of a Controlled Foreign Subsidiary in excess of 65% of the voting
power of all classes of capital stock of such controlled foreign corporation entitled to vote
(within the meaning of Treasury Regulations § 1.956-2(c)(2)) and (j) any “intent to use” trademark
or service mark applications for which a statement of use has not been filed (but only until such
statement is filed); provided, that, at all times, notwithstanding the foregoing,
any proceeds received by any Credit Party from any such contract, license, property right, permit,
franchise or asset invested referred to clauses (g) and (h) above shall be included in this
definition of Collateral.




     “Collection Account” shall have the meaning given to such term in
Section 8.3(a) hereof.



     “Commitment” shall mean the commitment of each Lender to make a Loan to Borrower on
the Closing Date in the amount set forth opposite its name under the column entitled “Second Lien
Loan Commitment” in the Schedule of Commitments appearing in Schedule 1.



     “Completed” and “Completion” shall mean with respect to any Item of Product,
that (A) a Laboratory has in its possession a complete final 35 mm or 70mm (or other size or medium
which has become standard in the industry) composite positive print, video master or other
equivalent master copy of the Item of Product as finally cut, main and end titled, edited, scored
and assembled with sound track printed thereon in perfect synchronization with the photographic
action and fit and ready for exhibition and distribution in the medium for which the Item of
Product is intended for initial exploitation, and (B) if such Item of Product was acquired from a
third party, the entire fixed acquisition price or minimum advance shall have been paid to



11









 







the extent then due and there shall be no condition or event (other than the payment of money
not yet due) the occurrence of which might result in such Credit Party losing any of its rights in
such Item of Product.



     “Consolidated Net Income” shall mean, for any period for which such amount is being
determined, the consolidated net income of such Person after taxes for such period in accordance
with GAAP; provided, however, that, without duplication, (i) any net after-tax
income or loss from discontinued operations and any net after-tax gain or loss on disposal of
discontinued operations shall be excluded, (ii) any net after-tax gain or loss (less all fees and
expenses or charges relating thereto) attributable to business dispositions or asset dispositions
other than in the ordinary course of business (as determined in good faith by the board of
directors of the Borrower) shall be excluded, (iii) any net after-tax income or loss (less all fees
and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness
shall be excluded, (iv) any non-cash compensation expense realized from or related to profit
interest awards, grants of stock appreciation or similar rights, stock options or other rights to
directors, officers and employees of the Borrower or any of its Subsidiaries shall be excluded,
(v) Consolidated Net Income for such period shall not include the cumulative effect of a change in
accounting principles during such period, and (vi) accruals and reserves that were established
within twelve months after the Original Closing Date and that were so required to be established as
a result of the Transactions and in accordance with GAAP shall be excluded; provided, that
for purposes of determinations of Consolidated Net Income, it shall be assumed that amounts
actually paid or payable by the Borrower to the Parent pursuant to Section 6.5(b)(i) were
taxes expensed by the Borrower.



     “Consolidated Subsidiaries” shall mean all Subsidiaries of a Person which are required
or permitted to be consolidated with such Person for financial reporting purposes in accordance
with GAAP.



     “Continuing Director” shall mean, as of any date of determination, each member
of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on
May 29, 2008 or (b) was nominated for election or elected to such Board of Directors either
(x) with the approval of a majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election or (y) by or with the consent
of KRH.



     “Contribution Agreement” shall mean the contribution agreement substantially in the
form of Exhibit G hereto, as the same may be amended, supplemented or otherwise modified,
renewed or replaced from time to time.



     “Controlled Foreign Subsidiary” shall mean a Subsidiary that is a “controlled foreign
corporation” as defined in Section 957(a) of the Code or any successor provision thereto.



     “Copyright Security Agreement” shall mean the Copyright Security Agreement,
substantially in the form of Exhibit C-1 hereto, as the same may be amended, supplemented
or otherwise modified, renewed or replaced from time to time by delivery of a Copyright Security
Agreement Supplement or otherwise.



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     “Copyright Security Agreement Supplement” shall mean a Copyright Security Agreement
Supplement substantially in the form of Exhibit C-2 hereto.



     “Coverage Ratio” shall be as defined in Section 6.21 hereof.



     “Credit Parties” shall mean the Borrower and each of the Guarantors.



     “Crown Media” shall mean Crown Media United States, LLC



     “Current Valuation” shall mean that certain library valuation of Salem Partners LLC,
dated as of December 31, 2007.



     “Default” shall mean any event, act or condition which with notice or lapse of time,
or both, would constitute an Event of Default.



     “Direct Film Cost” shall mean, with respect to any period, the sum (without
duplication) of (a) net cash outflows actually spent by Borrower and its Consolidated Subsidiaries
in connection with Items of Product in development during such period and (b) production costs
actually spent by Borrower and its Consolidated Subsidiaries in connection with Items of Product
during such period, in each case, determined in accordance with the methodology utilized in the
Initial Projections.



     “Disposition” means any transaction, or series of related transactions, pursuant to
which any Credit Party sells, assigns, transfers or otherwise disposes of any property or assets
(whether now owned or hereafter acquired) to any Person (other than a Credit Party or any
Subsidiary of any Credit Party), in each case, whether or not the consideration therefor consists
of cash, securities or other assets owned by the acquiring Person, excluding any (i) sales
or licenses in the ordinary course of business on ordinary business terms, (ii) sales of used,
obsolete or worn-out tangible assets, (iii) sale and leaseback transactions permitted by
Section 6.8, (iv) the sale of defaulted receivables in the ordinary course of business and
not as part of an accounts receivables financing transaction, (v) sales, assignments, transfers or
other dispositions that would otherwise constitute Investments permitted under Section 6.4,
Liens permitted under Section 6.2 or Restricted Payments permitted under Section
6.5, (vi) licensing and cross-licensing arrangements involving any technology or other
intellectual property of the Credit Parties in the ordinary course of business, (vii) sales, leases
or other dispositions of inventory of a Credit Party in the ordinary course of business and
reasonably determined in good faith by the management of such Credit Party to be no longer useful
or necessary in the operation of the business of such Credit Party and (viii) leases, occupancy
agreements and subleases of real property in the ordinary course of business.



     “Distribution Agreements” shall mean (i) any and all agreements entered into by a
Credit Party, pursuant to which such Credit Party has sold, leased, licensed or assigned
distribution rights or other exploitation rights to any Item of Product to an un-Affiliated Person,
and (ii) any and all agreements hereafter entered into by a Credit Party pursuant to which such
Credit Party sells, leases, licenses or assigns distribution rights or other exploitation rights to
an Item of Product to an un-Affiliated Person.



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     “Dollars” and “$” shall mean lawful money of the United States of America.



     “EBITDA” shall mean, for any period, all as determined in accordance with GAAP, the
Consolidated Net Income of the Borrower and its Consolidated Subsidiaries for such period,
plus (a) the sum of (in each case without duplication and to the extent the respective
amounts described in subclauses (i) through (vii) of this clause (a) reduced such Consolidated Net
Income for the respective period for which EBITDA is being determined): (i) gross interest expense
for such period less gross interest income for such period, (ii) provision for federal, state and
local taxes based on income, profits, dividends, or capital of the Borrower and its Consolidated
Subsidiaries for such period, including, without limitation, state, franchise and similar taxes,
(iii) depreciation expense, (iv) amortization expense, (v) any extraordinary, unusual or
non-recurring charges, expenses or losses, (vi) any non-cash charges, expenses or losses;
provided that, for purposes of this clause (vi), any non-cash charges, expenses or losses
shall be treated as cash charges, expenses or losses in any subsequent period during which cash
disbursements attributable thereto are made, and (vii) the amount of management, consulting,
monitoring, transaction and advisory fees and related expenses paid to the Kelso Group or any of
its affiliates (or any accruals related to such fees and related expenses) during such period
permitted pursuant to Section 6.10(ix) hereof, minus (b) the sum of (without
duplication and to the extent the amounts described in clause (b)(ii) increased such Consolidated
Net Income for the respective period for which EBITDA is being determined): (i) Direct Film Cost
for such period and (ii) the sum of non-cash, income, gains and other items increasing
Consolidated Net Income of the Borrower and its Consolidated Subsidiaries for such period (but
excluding any such items in respect of which cash was received in a prior period or will be
received in a future period).



     EBITDA shall be calculated on a Pro Forma Basis (including any synergies and cost savings
relating to Permitted Business Acquisitions as certified by the chief financial officer of the
Borrower as being factually supportable, reasonably achievable and as having been determined in
good faith to be reasonably anticipated to be realizable within 12 months following any such
acquisition or disposition, provided, that in no event shall the EBITDA attributable to
synergies and cost savings under such Pro Forma Basis calculations exceed five percent (5%) of the
aggregate Pro Forma Basis EBITDA that would have existed in the absence of having included such
synergies and cost savings) and shall not include any non-cash impact attributable to purchase
accounting adjustments as a result of the fair value exercise undertaken as required by purchase
accounting for the transactions contemplated by such acquisition, in accordance with GAAP.



     “Eligible Assignee” shall mean (i) a commercial bank organized under the laws of the
United States of America, or any State thereof, and having total assets in excess of
$1,000,000,000, (ii) a savings and loan association or savings bank organized under the laws of the
United States of America, or any State thereof, and having a net worth of at least $100,000,000,
calculated in accordance with GAAP, (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and Development
(“OECD”), or a political subdivision of any such country, and having total assets in excess
of $1,000,000,000; provided, that such bank is acting through a branch, subsidiary or
agency located in the country in which it is organized or another country which is also a member of
the OECD, (iv) the central bank of any country which is a member of the OECD, (v) a financial
institution, insurance company or fund which regularly engages in making, purchasing



14









 







or otherwise investing in commercial loans, (vi) a “Qualified Institutional Buyer”, as defined
in Rule 144A under the Securities Act of 1933, (vii) an Approved Fund or (viii) any other Person
consented to by the Borrower (which consent shall not be unreasonably withheld or delayed and which
consent shall not be required if an Event of Default shall have occurred and be continuing) and the
Administrative Agent.



     “Eligible Library Amount” (A) prior to the First Priority Obligations Payment Date
shall (subject to the provisions in the Intercreditor Agreement limiting amendments to the
definition of the term “Eligible Library Amount” under the First Lien Agreement) have the meaning
set forth for such term in the First Lien Agreement, including that it shall as of the Closing Date
be equal to $717,586,000, which amount is equal to the present value at 10% of the unexploited
rights to the Completed Items of Product of the Credit Parties as set forth in the Current
Valuation; provided, however, that the First Lien Agent may in its discretion
reduce the Eligible Library Amount to reflect interim decreases, if any, in the remaining value of
unsold library rights resulting from one or more agreements pertaining to the licensing,
distribution or sale of library product under which the aggregate amount received or due exceeds
$20,000,000 at any time and (B) from and after the First Priority Obligations Payment Date shall be
established as follows: (i) the Eligible Library Amount shall be redetermined with respect to the
Credit Parties on an annual basis (and, to the extent from time to time requested by the Borrower,
at more frequent intervals) by an independent consultant approved by the Administrative Agent,
acting reasonably and in good faith, using methodology consistent with that used in the Current
Valuation or otherwise approved by the Administrative Agent acting reasonably and in good faith and
shall be accompanied by a variance analysis of the value of such Eligible Library Amount against
the Eligible Library Amount for the preceding period, (ii) the Administrative Agent shall be
entitled to exclude from the computation of Eligible Library Amount any library credit which has
not been valued by an independent consultant and in a manner, in each case, meeting the
requirements set forth in clause (i) above, (iii) the Eligible Library Amount may be increased in
the case of a significant library acquisition upon the delivery of a supplemental valuation report
meeting the requirements of clause (i) above and (iv) the Eligible Library Amount will be decreased
to reflect (a) any write-down of the assets contained in the Borrower’s financial statements
provided pursuant to Section 5.1 hereof to the extent that such assets were theretofore
included in the Eligible Library Amount, (b) for purposes of the computations required by Sections
2.10(f) and 6.21, any asset sales sold or disposed of since the last valuation report and (c) for
purposes of computing the Eligible Library Amount for inclusion in the Borrowing Base, subsequent
to the sale or disposition of Items of Product representing more than the lesser of $15,000,000 and
2% of the Eligible Library Amount since the last valuation report, any assets sold or disposed of
since the last valuation report.


All new valuations shall be deemed approved unless the First Lien Agent or Required Lenders under
the First Lien Agreement, in either case acting reasonably, object thereto in writing with the
reasons for such objection(s). If the First Lien Agent or Required Lenders under the First Lien
Agreement so object in writing to any new valuation within 45 days after receipt thereof, the
Borrower shall have 60 days from its receipt of such written notice to deliver or cause to be
delivered a revised valuation to the First Lien Agent (which will be subject to the same objection
process set forth above, but subject to an outside resolution date not more than 30 days after
receipt by the Borrower of a second written notice from the First Lien Agent) and during such


15









 






period the “Eligible Library Amount” shall be deemed to be the lesser of (x) the amount (as
adjusted above for subsequent events) last accepted by the First Lien Agent and the First Lien
Lenders and (y) the amount (as adjusted for subsequent events) in the most recent valuation
presented to the First Lien Agent; notwithstanding the foregoing, the First Lien Agent may object
to the inclusion of any value in any new valuation on the Eligible Library Amount attributable to
an Item of Product for which the Borrower prior to the delivery of such new valuation to the First
Lien Agent has not provided a fully executed Copyright Security Agreement Supplement covering its
interest under copyright in that Item of Product (whether such rights are as copyright proprietor
or as licensee) containing the registration numbers assigned by the United States Copyright Office
to the underlying copyright interest (other than the registration and/or recordation numbers for
Items of Product for which filings have been made and the appropriate expedited filing fee has been
paid but for which registration and/or recordation numbers have not yet been received). For
purposes of the definition of Eligible Library Amount, to the extent any Credit Party is required
to act within a certain number of days the last day of which is not a Business Day, then the due
date for such action shall be extended to the next succeeding Business Day.



Subsequent to the First Priority Obligations Payment Date, all determinations and/or other action
to be taken by the First Lien Agent pursuant to the definition “Eligible Library Amount” shall
instead be taken by the Administrative Agent.




     “Environmental Laws” shall mean any and all applicable federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of
any Governmental Authority regulating, relating to, or imposing liability or standards of conduct
concerning, any Hazardous Material or environmental protection, occupational health and safety, as
now or at any time hereafter in effect, including without limitation, the Clean Water Act also
known as the Federal Water Pollution Control Act (“FWPCA”), 33 U.S.C. § 1251 et
seq., the Clean Air Act (“CAA”), 42 U.S.C. §§ 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”), 7 U.S.C. §§ 136 et
seq., the Surface Mining Control and Reclamation Act (“SMCRA”), 30 U.S.C. §§ 1201
et seq., the Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”), 42 U.S.C. § 9601 et seq., the Superfund Amendments and
Reauthorization Act of 1986 (“SARA”), Public Law 99-499, 100 Stat. 1613, the Emergency
Planning and Community Right to Know Act (“ECPCRKA”), 42 U.S.C. § 11001 et
seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901
et seq., the Occupational Safety and Health Act as amended (“OSHA”),
29 U.S.C. § 655 and § 657 (only to the extent related to workplace exposure to Hazardous
Materials), together, in each case, with any amendment thereto, and the regulations adopted and the
publications promulgated thereunder and all substitutions thereof.



     “Equity Interests” shall mean shares of the capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a trust or other
equity interests in any Person or any warrants, options or other rights to acquire such interests.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as heretofore
and hereafter amended, as codified at 29 U.S.C. § 1001 et seq. and the regulations promulgated
thereunder.



16









 





     “ERISA Affiliate” shall mean each Person (as defined in Section 3(9) of ERISA) which
is treated as a single employer with any Credit Party under Section 414(b), (c), (m) or (o) of the
Code.



     “Event of Default” shall have the meaning given to such term in Article 7
hereof.



     “Excluded Proceeds” shall mean (i) any proceeds realized in a single transaction or
series of related transactions not exceeding $2,500,000 and (ii) any proceeds realized from one or
more transactions not exceeding $17,000,000 in the aggregate; provided, that upon the
aggregate amount of Excluded Proceeds realized by the Credit Parties meeting or exceeding
$17,000,000, the entirety of such proceeds shall be deemed to be Net Proceeds that the Borrower
shall prepay or reinvest in accordance with Section 2.10(f) or 6.6(d) hereof (less
any amounts previously prepaid or reinvested in accordance with Section 2.10(f) or
6.6(d)), following which prepayment or reinvestment of all such Excluded Proceeds, the
amount of Excluded Proceeds shall be reset to zero.



     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net income (or minimum tax
or similar taxes imposed in lieu thereof) by the United States of America, or by the jurisdiction
under the laws of which such recipient is organized or in which its principal office is located or,
in the case of any Lender, in which its applicable Lending Office is located, or otherwise imposed
as a result of a connection between the Administrative Agent or any Lender, as applicable, and the
jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from such
Administrative Agent or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Credit Agreement), (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other jurisdiction in which the
Borrower is located, (c) any withholding tax (in the case of a Foreign Lender) or backup
withholding tax (in the case of any Lender) that is imposed on amounts payable to such Lender at
the time such Lender becomes a party to this Credit Agreement (or designates a new Lending Office),
except to the extent that such Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.14(a) and (d) any
withholding tax that is attributable to such Lender’s failure to comply with Section
2.14(e).



     “Existing Second Lien Facility” shall have the meaning given such term in the
Introductory Statement hereof.



     “Facility” shall have the meaning given such term in the Introductory Statement
hereof.



     “FASB” shall mean the Financial Accounting Standards Board.



     “Fee Letters” shall mean, collectively, any fee letters entered into between the
Borrower and any of its affiliates on the one hand and the Administrative Agent and any of its



17









 







affiliates on the other hand, as they may be amended, supplemented or otherwise modified,
renewed or replaced from time to time.



     “First Lien Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as
administrative agent under the First Lien Facilities.



     “First Lien Agreement” shall mean that certain Credit, Security, Guaranty and Pledge
Agreement, dated as of January 12, 2006, as amended and restated as of April 13, 2007 (as the same
has been amended via that certain Amendment No. 1 dated as of October 12, 2007 and that certain
Amendment No. 2 dated as of May 29, 2008 and as the same may be further amended, supplemented or
otherwise modified, renewed or replaced from time to time in accordance with the Intercreditor
Agreement), among the Borrower, the Guarantors, the First Lien Agent and the First Lien Lenders
pursuant to which the following first-lien loans are to be extended to Borrower: (a) a revolving
credit facility of $275,000,000 (which revolving credit facility has been increased to $350,000,000
in connection with the consummation of the 2008 Transactions), which matures on April 13, 2013 and
(b) a term loan of $175,000,000 which matures on April 13, 2013.



     “First Lien Amendment No. 2” shall mean that certain Amendment No. 2 dated as of May
29, 2008 to the First Lien Agreement.



     “First Lien Facilities” shall mean each of the loans contemplated by the First Lien
Agreement and all other obligations of the Borrower in connection therewith.



     “First Lien Lenders” shall mean the “Lenders” as such term is defined in the First
Lien Agreement.



     “First Lien Notes” shall mean the “Notes” as such term is defined in the First Lien
Agreement.



     “First Priority Obligations” shall have meaning given to such term in the
Intercreditor Agreement.



     “First Priority Obligations Payment Date” shall have meaning given to such term in the
Intercreditor Agreement.



     “Foreign Lender” shall mean any Lender that is not a United States person, within the
meaning of Section 7701(a)(30) of the Code.



     “Foreign Production Subsidiary” shall mean any Foreign Subsidiary established or
existing solely for the purpose of producing or acquiring an Item of Product, which Foreign
Subsidiary may control the bare copyright but the not economic benefits of such Item of Product and
may have the right to manage funds utilized to produce such Item of Product; it being understood
that such economic benefits (including, without limitation, the distribution rights and the
proceeds generated from the exploitation of such Item of Product) of such Item of Product and the
beneficial ownership of the funds utilized to produce such Item of Product shall be held by a
Credit Party.



18









 





     “Foreign Subsidiary” shall mean any Subsidiary that is incorporated or organized under
the laws of any jurisdiction other than the United States of America, any State thereof or the
District of Columbia.



     “Fundamental Documents” shall mean this Credit Agreement, the Notes, the Pledgeholder
Agreements, the Copyright Security Agreement, the Fee Letters, the Copyright Security Agreement
Supplements, any Trademark Security Agreement, the Hallmark Guaranty, the Contribution Agreement,
the Instruments of Assumption and Joinder, UCC financing statements, the Incremental Amendment (if
any) and any other ancillary documentation which is required to be or is otherwise executed by any
Credit Party and delivered to the Administrative Agent in connection with this Credit Agreement or
any of the documents listed above.



     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect (i) with respect to the determination of the Credit Parties’ compliance with the
financial covenant set forth in Section 6.21 hereof, on April 13, 2007 consistently
applied and (ii) for all other purposes hereunder, from time to time consistently applied (except
for accounting changes in response to FASB releases, or other authoritative pronouncements).



     “Governmental Authority” shall mean any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, or any court, in
each case whether of the United States of America or any foreign jurisdiction.



     “Greenshoe Proceeds” shall mean the gross proceeds of any “greenshoe” offering
relating to the Qualified IPO, minus the aggregate of all underwriting discounts and commissions
and fees and expenses incurred in connection such greenshoe offering, fees and expenses of outside
accountants and counsel, SEC and FINRA filing and registration fees, exchange listing fees and
expenses, transfer agent fees and expenses, printing and financial printer service expenses and
road show expenses, in each case to the extent incurred in connection with such greenshoe
offering).



     “Guarantors” shall mean all the entities listed on Schedule 3 hereto and (a)
all other direct and indirect Subsidiaries of the Borrower, whether now existing or hereafter
acquired or created, (i) with assets valued at $250,000 or greater and (ii) formed under the laws
of a jurisdiction located in the United States of America and (b) any entity which is not a
Guarantor hereunder but becomes a “Guarantor” under the First Lien Facilities.



     “Guaranty” shall mean, as to any Person, any direct or indirect obligation of such
Person guaranteeing or intended to guarantee any Indebtedness, Capital Lease, dividend or other
monetary obligation (“primary obligation”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to advance or supply funds
(i) for the purchase or payment of any such primary obligation, or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, or (c) to purchase property, securities or services, in each case, primarily for
the purpose of assuring the performance by the primary obligor of any such primary obligation;
provided, however, that the term Guaranty shall not include endorsements for
collection or collections for



19









 







deposit, in either case in the ordinary course of business or customary and reasonable
indemnity obligations in effect on the Closing Date listed on Schedule 3.171 or
entered into in connection with an acquisition or disposition of assets permitted under this Credit
Agreement. The amount of any Guaranty shall be deemed to be an amount equal to (x) the stated or
determinable amount of the primary obligation in respect of which such Guaranty is made (or, if the
amount of such primary obligation is not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform thereunder)), or (y) the
stated maximum liability under such Guaranty, whichever is less.



     “Hallmark Guaranty” shall mean that certain Guaranty of Hallmark Cards, Inc. for the
benefit of the Borrower, in the form attached hereto as Exhibit L.



     “Hazardous Materials” shall mean any flammable materials, explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic substances or similar
materials defined in any Environmental Law.



     “Indebtedness” shall mean (without double counting), at any time and with respect to
any Person, (i) indebtedness of such Person for borrowed money (whether by loan or the issuance and
sale of debt securities) or for the deferred purchase price of property or services purchased
(other than amounts constituting trade payables (payable within 365 days or such longer terms as
may be customary in the industry), accrued expenses, deferred compensation arrangements and advance
payments in the ordinary course of business); (ii) obligations of such Person in respect of letters
of credit, acceptance facilities, or drafts or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person; (iii) obligations of such Person under
Capital Leases and any financing lease involving substantially the same economic effect;
(iv) deferred payment obligations relating to a lump-sum judgment or settlement of such Person
resulting from the adjudication or settlement of any litigation to the extent not already reflected
as a current liability on the balance sheet of such Person; and (v) indebtedness of others of the
type described in clauses (i), (ii), (iii) and (iv) hereof which such Person has (a) directly or
indirectly assumed or guaranteed in connection with a Guaranty, or (b) secured by a Lien on the
assets of such Person, whether or not such Person has assumed such indebtedness (but only to the
extent of the lesser of the amount of such Indebtedness and the aggregate fair market value of all
assets of such Person securing such Indebtedness); provided, that Indebtedness shall not
include any non-refundable advance made to a Credit Party by a third party distributor in
connection with the production, distribution or sale of any Item of Product.



     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes and Other Taxes.



     “Initial Date” shall mean (i) in the case of the Administrative Agent, the date
hereof, (ii) in the case of each Lender which is an original party to this Credit Agreement, the
date hereof and (iii) in the case of any other Lender, the effective date of the Assignment and
Assumption pursuant to which it became a Lender.





 




			
	1	 	RHI to prepare updated disclosure schedules.




20









 










     “Initial Projections” shall mean the projections included in the Business Plan Detail
dated May 9, 2008 delivered by Borrower to the Administrative Agent.



     “Instrument of Assumption and Joinder” shall mean an Instrument of Assumption and
Joinder substantially in the form of Exhibit J hereto.



     “Intercreditor Agreement” shall mean that certain Intercreditor Agreement among the
Credit Parties, Parent, KRH Investments LLC (f/k/a RHI Entertainment Holdings, LLC), the
Administrative Agent and the First Lien Agent dated as of the date hereof, and substantially in the
form attached hereto as Exhibit D (as amended, supplemented or otherwise modified, renewed
or replaced from time to time in accordance herewith and therewith).



     “Incremental Amendment” shall have the meaning given to such term in Section 2.16
hereof.



     “Incremental Loans” shall have the meaning given to such term in Section 2.16
hereof.



     “Interest Deficit” shall have the meaning given to such term in Section
2.15(a) hereof.



     “Interest Payment Date” shall mean (i) as to any LIBOR Loan having an Interest Period
of one, two or three months, the last day of such Interest Period, (ii) as to any LIBOR Loan having
an Interest Period of more than three months, the last day of such Interest Period and, in
addition, each date during such Interest Period that would be the last day of an Interest Period
commencing on the same day as the first day of such Interest Period but having a duration of three
months or an integral multiple thereof, and (iii) with respect to Alternate Base Rate Loans, the
last Business Day of each March, June, September and December (commencing the last Business Day of
June 2008).



     “Interest Period” shall mean as to any LIBOR Loan, the period commencing on the date
of such Loan or the last day of the preceding Interest Period and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the calendar month that is
one, two, three or six months thereafter as the Borrower may elect; provided,
however, that (i) if any Interest Period would end on a day which shall not be a Business
Day, such Interest Period shall be extended to the next succeeding Business Day, unless such next
succeeding Business Day would fall in the next calendar month, in which case, such Interest Period
shall end on the next preceding Business Day and (ii) no Interest Period may be selected which
would end later than the Maturity Date .



     “Investment” shall mean any stock, evidence of indebtedness or other securities of any
Person, any loan, advance, contribution of capital, extension of credit or commitment therefor
(including, without limitation, the Guaranty of loans made to others, but excluding current trade
and customer accounts receivable arising in the ordinary course of business and payable in
accordance with customary trading terms in the ordinary course of business), or any purchase of any
security of another Person. The amount of each Investment will be determined at the time such
Investment is made and without giving effect to subsequent changes in value.



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     “IPO Net Proceeds” shall mean the gross proceeds of the Qualified IPO (but if
there is a contemporaneous secondary offering on behalf of shareholders of Public Co. shall
not include any proceeds applicable to the shares being sold by them) minus the aggregate of
all underwriting discounts and commissions and fees and expenses incurred in connection with
the Reorganization and a Qualified IPO, including without limitation $6.0 million to be paid
to the Kelso Group in exchange for the termination of the Management Agreement, fees and
expenses of outside accountants and counsel, SEC and FINRA filing and registration fees,
exchange listing fees and expenses, transfer agent fees and expenses, printing and financial
printer service expenses and road show expenses.



     “Item of Product” shall mean any made-for-television product including movies of the
week, mini-series and series or any episode thereof produced for release on any form of television
viewing or transmission or via internet or electronic mobile devices in any case whether recorded
on film, videotape, cassette, cartridge, disc, digital medium or on or by any other means, method,
process or device whether now known or hereafter developed, with respect to which a Credit Party
(i) is the copyright owner, or (ii) acquires an equity interest (whether directly, through a joint
venture or partnership or otherwise) or distribution rights; provided, that all of the
episodes of any television series for a broadcast season shall be collectively regarded as being
one Item of Product. The term “Item of Product” shall include, without limitation, the scenario,
screenplay or script upon which such Item of Product is based, all of the properties thereof,
tangible and intangible, and whether now in existence or hereafter to be made or produced, whether
or not in possession of such Credit Party, and all rights therein and thereto, of every kind and
character, in each case, solely to the extent that a Credit Party owns, creates or acquires a
copyrightable interest therein and/or distribution rights thereto.



     “Kelso Group” shall mean Kelso & Company L.P. (“Kelso”), members of the
Borrower’s management (“Management”), Five Arrows Capital AG (“Rothschild”),
Magnetite Asset Investors III L.L.C. (“Magnetite”) and OCM Hallmark Holdings, Inc., a
Delaware corporation (“Oak Tree” and, together with Management, Rothschild and Magnetite,
the “Co-Investors”) and their respective Affiliates.



     “KRH” shall mean KRH Investments LLC, a Delaware limited liability company
formerly known as RHI Entertainment Holdings, LLC (and which was, under the Existing Second
Lien Facility, defined as the “Parent”), which upon consummation of a Qualified IPO and the
Reorganization will own a portion of the Equity Interests of Parent.



     “Laboratory” shall mean, collectively (i) The Television Center in Los Angeles,
California, (ii) Bonded Services in Fort Lee, New Jersey and (iii) any other domestic laboratory or
film vault at which a Credit Party from time to time will store Physical Materials relating to a
Completed Item of Product (as opposed to processing laboratories for video, film, sound or effects
during production or post production of an Item of Product or duplication of Completed Items of
Product that are not first-generation Items of Product) and that delivers a Pledgeholder Agreement
in favor of the Administrative Agent.



     “Lender” and “Lenders” shall mean the financial institutions whose names
appear on Schedule of Commitments and each Additional Lender signatory to an Incremental



22









 







Amendment in accordance with Section 2.16, and any assignee of a Lender pursuant to
Section 13.3 hereof, and their respective successors.



     “Lending Office” shall mean, with respect to any of the Lenders, the branch or
branches (or affiliate or affiliates) from which such Lender’s LIBOR Loans or Alternate Base Rate
Loans, as the case may be, are made or maintained and for the account of which all payments of
principal of, and interest on, such Lender’s LIBOR Loans or Alternate Base Rate Loans are made, as
notified to the Administrative Agent from time to time.



     “Leverage Ratio” shall mean, at any date of determination, the ratio of (i) the
aggregate principal amount of Indebtedness of the Borrower and its Consolidated Subsidiaries on
such date (net of unrestricted cash and Cash Equivalents) to (ii) the EBITDA for the Borrower and
its Consolidated Subsidiaries for the four-fiscal-quarter-period ending as of the Borrower’s most
recently completed fiscal quarter for which internal financial statements are available.



     “LIBOR” shall mean, with respect to the Interest Period for a LIBOR Loan, an interest
rate per annum equal to the quotient (rounded upwards, if necessary, to the next 1/100 of 1%) of
(A) the rate for Dollar deposits for a period equal to the applicable Interest Period commencing on
the first day of such Interest Period appearing on Reuters Screen LIBOR 01 Page or any successor
service as of 11:00 A.M., London Time, two Business Days prior to the beginning of such Interest
Period (or, in the event that such rate does not appear on such page, by reference to such other
comparable publicly available service for displaying Eurodollar rates as may be reasonably selected
by the Administrative Agent or, in the absence of such availability, by reference to the rate at
which Dollar deposits are offered to the Lending Office of the Administrative Agent in immediately
available funds in the London Interbank Market for LIBOR at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period) divided by (B) one minus the
applicable statutory reserve requirements of the Administrative Agent, expressed as a decimal
(including without duplication or limitation, basic, supplemental, marginal and emergency
reserves), from time to time in effect under Regulation D or similar regulations of the Board. It
is agreed that for purposes of this definition, LIBOR Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities as defined in Regulation D and to be subject to the reserve
requirements of Regulation D.



     “LIBOR Loan” shall mean a Loan based on LIBOR in accordance with the provisions of
Article 2 hereof.



     “Lien” shall mean any mortgage, copyright mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any agreement to grant a security interest at a future
date, any lease in the nature of security, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction); provided,
however, that this term shall not include contractual encumbrances which do not afford
security of the type described in this definition or the rights of a licensee as a licensee.



     “Liquidity Ratio” shall mean the ratio, calculations of which shall be determined in
accordance with Exhibit M, of (i) all projected known cash sources of the Borrower and its



23









 







Consolidated Subsidiaries (including cash on hand, borrowings under the First Lien Facilities
and cash receipts from operations) to (ii) all projected known cash uses of the Borrower and its
Consolidated Subsidiaries (including debt service, tax disbursements, amounts to be spent to
acquire film inventory, print and advertising expenses, overhead, development expenses, capital
expenditures and all other cash expenditures), all as projected by the Borrower in good faith.



     “Loans” shall mean the loans made hereunder in accordance with Section 2.2 hereof and
each series of Incremental Loans made hereunder in accordance with Section 2.16.



     “Management Agreement” shall mean that certain letter agreement between Borrower and
Kelso & Company L.P., dated January 12, 2006.



     “Margin Stock” shall be as defined in Regulation U of the Board.



     “Material Adverse Effect” shall mean any change or effect that individually or in the
aggregate (a) has had or would reasonably be expected to have a materially adverse effect on the
business, assets, operations, properties, financial condition, liabilities (including contingent
liabilities) or Material Agreements of the Borrower and its Subsidiaries, taken as a whole, (b)
materially impairs the legal right, power or authority of the Borrower or the Credit Parties, taken
as a whole, to perform their obligations under the Fundamental Documents to which they are a party
or (c) materially impairs the validity or enforceability of, or materially impairs the rights,
remedies or benefits available to the Administrative Agent for the benefit of itself and the
Lenders under, the Fundamental Documents.



     “Material Agreement” shall mean any Distribution Agreement, credit agreement,
indenture, joint venture agreement, or other agreement, contract, license or lease under which a
Credit Party reasonably expects that it would, pursuant to the terms thereof, (a) recognize future
revenues in excess of $17,000,000, (b) incur liabilities or obligations in excess of $17,000,000 or
(c) likely suffer damages or losses in excess of $17,000,000 by reason of the breach or termination
thereof; provided, that no production services agreement or other relevant agreement
principally relating to the production of an Item of Product shall constitute a “Material
Agreement” hereunder.



     “Maturity Date” shall mean the earlier of (i) June 23, 2015, and (ii) such
other date as the Loans shall become due and payable in accordance with Article 7 hereof.



     “Moody’s” means Moody’s Investors Service, Inc.



     “Multiemployer Plan” shall mean a plan described in Section 4001(a)(3) of ERISA.



     “Negative Pick-up Obligation” means, with respect to any Item of Product produced by a
third party, a commitment to pay a certain sum of money or other Investment made by the Credit
Party in order to obtain ownership or distribution rights in such Item of Product, but which does
not require any payment unless or until the requirements of clause (A) of the definition of
Completion have been satisfied. Negative Pick-up Obligation includes both “traditional” negative
pick-up arrangements and indirect structures.



24









 





     “Net Proceeds” shall mean 100% of the cash proceeds actually received by any of the
Credit Parties (including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment or otherwise, but only as
and when received) from any Disposition to any Person or the issuance of Indebtedness by such
Credit Party or Subsidiary, net of (i) reasonable attorneys’ fees, accountants’ fees, investment
banking fees, survey costs, title insurance premiums, and related search and recording charges,
transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of
other obligations relating to the applicable asset (other than with respect to any subordinated
debt), other customary and reasonable expenses and brokerage, consultant and other customary and
reasonable fees actually incurred in connection therewith and (ii) Taxes paid or payable as a
result thereof, provided, that, Net Proceeds shall not include Excluded Proceeds
except as expressly provided in the proviso in the definition of Excluded Proceeds.



     “Note” or “Notes” shall have the meaning given to such term in Section
2.4 hereof.



     “Obligations” shall mean the obligation of the Borrower to make due and punctual
payment of (i) principal of and interest on the Loans, costs and attorneys’ fees and all other
monetary obligations of the Borrower to the Administrative Agent or any Lender under this Credit
Agreement, the Notes, any other Fundamental Document or any fee letter in respect of the Facility,
(ii) from and after the First Priority Obligations Payment Date, all amounts payable by the
Borrower to any Lender under any Swap Agreement; provided, that the Administrative Agent
shall have received written notice thereof within ten (10) Business Days after execution of such
Swap Agreement and (iii) amounts payable to JPMorgan Chase Bank, N.A. or its affiliates in
connection with any bank account maintained by the Borrower or any other Credit Party at JPMorgan
Chase Bank, N.A., or its affiliates or any other banking services provided to the Borrower or any
other Credit Party by JPMorgan Chase Bank, N.A. or its affiliates.



     “Original Closing Date” shall mean January 12, 2006.



     “Other Taxes” shall mean any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this
Credit Agreement.



     “Parent” shall mean RHI Entertainment Holdings II, LLC, a Delaware limited
liability company.



     “Parent Credit Agreement” shall mean that certain Credit Agreement dated as of
May 8, 2008 among RHI Entertainment Holdings, LLC (which in connection with the
Reorganization will change its name to KRH Investments LLC), the lenders referred to therein
and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the lenders party
thereto made available a $30,000,000 unsecured term loan, the net proceeds of which were
contributed to the Borrower as an additional investment in Equity Interests of the Borrower.



25









 





     “Parent LLC Agreement” shall mean the limited liability operating agreement of
Parent, as the same may be amended, supplemented, replaced, restated or otherwise modified
from time to time, provided that the Administrative Agent may not (without the
consent of the Required Lenders) approve changes which would materially increase the Tax
Distributions or, materially change the management structure of the Parent or the Borrower.



     “Parent Note Obligations” shall mean, as of any date of determination, the
aggregate amount of all “Obligations” (as defined in the Parent Credit Agreement).



     “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.



     “Percentage” shall mean with respect to any Lender, the percentage of the Total
Commitment represented by such Lender’s Commitment.



     “Permitted Business Acquisition” shall mean any acquisition of all or substantially
all the assets of, or all the Equity Interests (other than directors’ qualifying shares) in, a
Person or division or line of business of a Person if (a) such acquisition was not preceded by, or
effected pursuant to, an unsolicited or hostile offer by the acquirer or an Affiliate of the
acquirer, (b) in the case of acquisitions of all Equity Interests of a Person, such Person shall
become a Guarantor hereunder if required by Section 5.21 and (c) immediately after giving
effect thereto: (i) no Event of Default shall have occurred and be continuing or would result
therefrom; (ii) all transactions related thereto shall be consummated in accordance with Applicable
Laws; and (iii) either (x) such acquisition is entirely funded by the issuance of additional Equity
Interests (other than Specified Equity Contributions) or (y) on a Pro Forma Basis after giving
effect to such acquisition the Liquidity Ratio, as evidenced by a certificate executed by an
Authorized Officer of the Borrower, for the ensuing four fiscal quarters is projected by the
Borrower to be at least 1.125:1.0.



     “Permitted Encumbrances” shall mean Liens permitted under Section 6.2 hereof.



     “Permitted First Lien Refinancing” shall be as defined in the Intercreditor Agreement.



     “Permitted Group” shall mean any group of investors that is deemed to be a “person”
(as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the
rules of the SEC thereunder as in effect from time to time) by virtue of the Parent LLC Agreement
and/or the limited liability company agreement of KRH, as the same may be amended, modified or
supplemented from time to time.



     “Permitted Refinancing” shall be as defined in the Intercreditor Agreement.



     “Permitted Slate Financing” shall mean a Slate Financing with respect to one or more
Items of Product: (a) that is designated as a Slate Financing for such Items of Product by an
Authorized Officer of the Borrower in a certificate delivered to the Administrative Agent prior to
the Borrower engaging in such Slate Financing and which certifies that such Slate Financing




26











 




qualifies as such pursuant to the terms and conditions of this Credit Agreement, (b) in which
the third party providing such Slate Financing is a Slate Financing Permitted Counterparty, (c) the
amount of which Slate Financing does not exceed the exposure limitation set forth for such Slate
Financing Permitted Counterparty on Schedule 2A hereto to the extent such Slate Financing
Permitted Counterparty is listed therein, and (d) for which a Slate Financing Intercreditor
Agreement has been executed and delivered to the Administrative Agent by the applicable parties
thereto.




          “Person” shall mean any natural person, corporation, division of a corporation,
limited liability company, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision thereof.




          “Physical Materials” shall have the meaning given to such term in paragraph (iv) of
the definition of “Collateral” herein.




          “Plan” shall mean an employee benefit plan within the meaning of Section 3(3) of
ERISA, other than a Multiemployer Plan, maintained or contributed to by any Credit Party, or any
ERISA Affiliate, or any other plan covered by Title IV of ERISA that covers employees of the Credit
Parties.




          “Pledged Collateral” shall mean the Pledged Securities and any proceeds (as defined in
Section 9-102(64) of the UCC) including cash proceeds (as defined in Section 9-102(9) of the UCC)
of the Pledged Securities.




          “Pledged Securities” shall mean (i) all of the issued and outstanding capital stock or
other Equity Interests in each of the Credit Parties, (ii) all other equity securities or interests
now owned or hereafter acquired by any of the Credit Parties (other than Equity Interests of any
Controlled Foreign Subsidiary) and (iii) 65% of the Equity Interests of any Controlled Foreign
Subsidiary held by any Credit Party, in each case, including without limitation the securities
listed on Schedules 3.7(a) and 3.7(b) hereto.




          “Pledgeholder Agreement” shall mean a laboratory pledgeholder agreement among a Credit
Party (or Credit Parties), the First Lien Agent, the Administrative Agent and one or more
Laboratories, substantially in the form of Exhibit E hereto, or in such other form and with
such additional parties as shall be reasonably acceptable to the First Lien Agent.




          “Pledgors” shall mean the Parent and those Credit Parties that own any of the Pledged
Securities.




          “Proceeds of Common Collateral” shall be as defined in the Intercreditor Agreement.




          “Production Account(s)” shall mean individually or collectively, as the context so
requires, each demand deposit account(s) established by a Credit Party at a commercial bank located
in the United States of America or otherwise acceptable to the Administrative Agent, for the sole
purpose of paying the production or acquisition costs of a particular Item of Product.




27









 








          “Production Exposure” for an Item of Product that is not Completed shall mean (i) with
respect to any Item of Product for which and to the extent a Credit Party has financial
responsibility for production costs, the Budgeted Negative Cost allocable to such Credit Party for
such Item of Product and (ii) with respect to all other Items of Product, the acquisition price
paid or to be paid by a Credit Party for such Item of Product or any rights therein Negative
Pick-up Obligations or co-financing obligation, in each case net of (x) amounts being cash-flowed
as and when needed by an Acceptable Obligor and pursuant to contractual arrangements with such
Acceptable Obligor and a Credit Party reasonably acceptable to the Administrative Agent and (y)
amounts being cash-flowed as and when needed by obligors that are not Acceptable Obligors not in
excess of $1,000,000 per obligor and $20,000,000 in the aggregate for all obligors that are not
Acceptable Obligors. For the avoidance of doubt, the calculation of Production Exposure shall not
be applicable to any Slate Financing Items of Product unless the Credit Parties have any equity
exposure relating thereto.




          “Productive Assets” shall mean, (a) when used in connection with the sale or other
disposition of assets constituting Collateral, any Items of Product or other assets used or useful
in the business of the Borrower and its Subsidiaries, at least 80% of the value of which shall be
pledged as Collateral hereunder and (b) when used in connection with the sale or other disposition
of assets not constituting Collateral, any Items of Product or other assets used or useful in the
business of the Borrower and its Subsidiaries.




          “Pro Forma Basis” shall mean, as to any Person, for any events as described below that
occur subsequent to the commencement of a period for which the financial effect of such events is
being calculated, and giving effect to the events for which such calculation is being made, such
calculation as will give pro forma effect to such events as if such events occurred on the first
day of the four consecutive fiscal quarter period ended on or before the occurrence of such event
(the “Reference Period”): in making any determination on a Pro Forma Basis, (x) all
Indebtedness (including Indebtedness incurred or assumed and for which the financial effect is
being calculated, whether incurred under this Credit Agreement or otherwise, but excluding normal
fluctuations in revolving Indebtedness incurred for working capital purposes and, in each case not
to finance any acquisition) incurred or permanently repaid during the Reference Period or
thereafter and through and including the date upon which the Permitted Business Acquisition is
consummated shall be deemed to have been incurred or repaid at the beginning of such period, (y)
interest expense of such Person attributable to interest on any Indebtedness, for which pro forma
effect is being given as provided in preceding clause (x), bearing floating interest rates shall be
computed on a pro forma basis as if the rates that would have been in effect during the period for
which pro forma effect is being given had been actually in effect during such periods and (z) in
the case of a sale or other disposition of an asset during the Reference Period, or if the
computation is being made specifically with regard to a sale or other disposition of an asset, the
contribution to EBITDA of such asset during the Reference Period shall be excluded.




          Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be
determined in good faith by an Authorized Officer of the Borrower. In the context of determining
the permissibility of any Permitted Business Acquisitions pro forma calculations may, for any
fiscal period ending on or prior to the first anniversary of such Permitted Business Acquisition,
include adjustments to reflect operating expense reductions and




28









 




other operating improvements or synergies reasonably expected to result from such Permitted
Business Acquisition, as follows: such adjustments may reflect additional operating expense
reductions and other additional operating improvements and synergies that would not be includable
in pro forma financial statements prepared in accordance with Regulation S-X but for which
substantially all of the steps necessary for the realization thereof have been taken or are
reasonably anticipated by the Borrower to be taken in the next 12 month period following the
consummation thereof and, are estimated on a good faith basis by the Borrower. The Borrower shall
deliver to the Administrative Agent a certificate of a financial Authorized Officer of the Borrower
setting forth such demonstrable or additional operating expense reductions and other operating
improvements or synergies and information and calculations supporting them in reasonable detail.




          “Pro Rata Share” shall mean with respect to any Obligation or other amount, each
Lender’s pro rata share of such Obligation or other amount determined in accordance with such
Lender’s Percentage.




          “Public Co.” shall mean RHI Entertainment, Inc., a Delaware corporation that is
initially wholly-owned by Robert Halmi, Jr. and will become owned by Robert Halmi, Jr. and
public investors upon consummation of the Qualified IPO and the Reorganization and will
thereafter own a portion of the Equity Interests of Parent.




          “Qualified IPO” shall mean an initial public offering of the common stock of
Public Co. by Public Co.




          “Quiet Enjoyment” shall be as defined in Section 8.13 hereof.




          “Refinancing Indebtedness” shall mean any Indebtedness issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or refund
(collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancings
thereof constituting Refinancing Indebtedness); provided that (a) the principal amount (or
accreted value, if applicable) of such Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid, accrued
interest and premiums thereon and underwriting discounts, fees, commissions and expenses), (b) the
maturity date of such Refinancing Indebtedness shall not occur prior to the Maturity Date, (c) if
the Indebtedness being refinanced is subordinated in right of payment to the Obligations under this
Credit Agreement, such Refinancing Indebtedness shall be subordinated in right of payment to the
Obligations on terms at least as favorable to the Lenders as those contained in the documentation
governing the Indebtedness being Refinanced, (d) no Refinancing Indebtedness shall have different
obligors, or greater guarantees or security, than the Indebtedness being Refinanced and (e) if the
Indebtedness being Refinanced is secured by any collateral (whether equally and ratably with, or
junior to, the Lenders or otherwise), such Refinancing Indebtedness may be secured by such
collateral on terms no less favorable to the Administrative Agent and the Lenders than those
contained in the documentation governing the Indebtedness being Refinanced.




29









 








          “Refinancing IPO Proceeds” means that portion of the IPO Net Proceeds that are
used by Borrower, KRH or Parent to repay Obligations (under and as defined in the Existing
Second Lien Facility) and all Parent Note Obligations.




          “Registration Statement” shall mean Public Co.’s registration statement on Form
S-1 (Registration No. 333-146098) initially filed with the SEC on September 14, 2007, in
connection with a Qualified IPO.




          “Regulation D” shall mean Regulation D of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.




          “Reorganization” shall mean the transactions and arrangements concerning the
corporate structure and ownership of the Borrower as described in the Registration Statement
(at the time it is declared effective) under the heading “corporate history and
reorganization”, provided that the terms thereof do not differ from those set forth in
Amendment No. 3 to the Registration Statement (filed with the SEC on May 2, 2008) in a manner
that is materially adverse to the Lenders.




          “Reportable Event” shall mean any reportable event as defined in Section 4043(c) of
ERISA, other than a reportable event as to which provision for 30-day notice to the PBGC has been
waived under applicable regulations.




          “Required Lenders” shall mean Lenders holding (i) prior to the Closing Date at least a
majority of the Total Commitments and (ii) on or after the Closing Date, at least a majority of the
then-outstanding Loans.




          “Restricted Payment” shall mean (i) any distribution, cash dividend or other direct or
indirect payment on account of shares of any Equity Interest in any Credit Party, (ii) any
redemption or other acquisition, re-acquisition or retirement by a Credit Party of any Equity
Interests in any Credit Party or any Subsidiary thereof, now or hereafter outstanding, other than
redemptions or repurchases funded from the proceeds of the issuance of additional Equity Interests,
other than Specified Equity Contributions, (iii) any payment made by any Credit Party to retire, or
obtain the surrender of, any outstanding warrants, puts or options or other rights to purchase or
otherwise acquire any Equity Interest in any Credit Party or any Subsidiary thereof, now or
hereafter outstanding, (iv) any voluntary prepayment of unsecured Indebtedness and (v) any payment
under any Synthetic Purchase Agreement.




          “S&P” shall mean Standard & Poor’s Ratings Group.




          “Schedule of Commitments” shall mean, with respect to all Loans, the schedule of
Commitments of the Lenders set forth on Schedule 1 hereto, as the same may be amended from
time to time by operation of Assignments and Assumptions in accordance with Section 13.3
hereof (as determined by the Administrative Agent) in connection with or amendment to this Credit
Agreement that is executed in accordance with Section 13.10 hereof.




          “SEC” shall mean the U.S. Securities and Exchange Commission and any successor
agency.




30









 








          “Slate Financing” shall mean the financing, in whole or in part, by a third party of
the development and production of a slate (i.e. more than one) of Items of Product with respect to
which the Borrower and its Subsidiaries otherwise would not produce or acquire any rights or
interest therein, and which requires (i) that the Borrower or any of its Subsidiaries grant a
security interest to such third party in and to any of such Items of Product, or (ii) that such
third party receive a participation in revenue derived from the Borrower’s or any of its
Subsidiaries’ exploitation of its rights in such Items of Product. For the avoidance of doubt, (1)
the financing by third parties of Items of Product in the ordinary course of business which does
not include the requirements set forth in (i) or (ii) above shall not constitute a Slate Financing;
(2) any co-financing of Items of Product in the ordinary course of business which involves a splits
rights relationship between the Borrower and its Subsidiaries and one or more third parties
pursuant to which a Credit Party is not obligated to account to a third party with regard to the
economic performance of the Item of Product distributed by it in its territories and/or media shall
not constitute a Slate Financing and (3) and a Slate Financing shall not per se be a sale and
leaseback subject to the restrictions of Section 6.8; provided, that: (x) with regard to
any Slate Financing Item of Product which is not wholly financed by third parties, that the
Borrower is entitled to no less than its pro rata share of the cash flow from that Slate Financing
Item of Product based upon the contribution by the Borrower or one of its subsidiaries (other than
as a result of non-recourse financing) to the cost of developing, producing and exploiting such
Slate Financing Item of Product, and (y) such Slate Financing results in a Credit Party acquiring
specified rights relating to the distribution and exploitation of such Item of Product (which
rights may include, without limitation, distribution fees, copyright for specified territories or
media, or other rights).




          “Slate Financing Intercreditor Agreement” shall mean, in respect of a Slate Financing
Item of Product, an intercreditor agreement among the Administrative Agent, the Second Lien Agent,
the applicable Credit Party, the applicable Slate Financing Permitted Counterparty and other
interested parties, if any, in form and substance reasonably satisfactory to the Administrative
Agent (as the same may be amended, supplemented or otherwise modified, renewed or replaced from
time to time in accordance with the terms hereof and thereof) and governing, among other things,
the terms of the applicable Slate Financing arrangements and the remittance to the Slate Financing
Permitted Counterparty of the proceeds of such Slate Financing Item of Product. Such intercreditor
agreement shall, among other things:





	 	(i)	 	acknowledge that a Credit Party will be the exclusive
distributor or sales agent of the Slate Financing Item of Product for specified
territories and media and for a specified period of time, but in no event less
than ten years;
	 
	 	(ii)	 	provide for the Administrative Agent to have a first priority
security interest (subject to the Permitted Slate Financing Counterparty’s
negotiated recoupment position), including control by the Administrative Agent
in the event of a liquidation of any common collateral, and (other than with
respect to any territory or media over which, in the context of a tax benefit
transaction, the tax counter-party has a priority claim in a specified foreign
territory in which the tax benefit counterparty or an Affiliate thereof is
located) provide the Administrative Agent with (x) control of remedies against
the Credit Party’s licensees of the Slate




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	 	 	 	Financing Item of Product, and (y) the right to deduct from the cash
proceeds realized from the exercise of such remedies, its costs in pursuing
remedies against the Credit Party’s licensee of such Slate Financing Item of
Product;






	 	(iii)	 	prohibit such Slate Financing Permitted Counterparty from
interfering with the rights of the licensees of the Slate Financing Item of
Product (other than with respect to any territories or media over which such
Slate Financing Permitted Counterparty has a priority claim); and
	 
	 	(iv)	 	permit the Slate Financing Permitted Counterparty to pursue
remedies only against the applicable Credit Parties (and only for money
damages), and not the Slate Financing Item of Product or the licensees thereof.





          “Slate Financing Item of Product” shall mean any Item of Product that is the subject
of a Slate Financing.




          “Slate Financing Permitted Counterparty” shall mean (i) each Person listed on
Schedule 2A hereto (or a majority-owned Subsidiary of any such Person, provided
that such Subsidiary’s obligations with respect to any relevant Slate Financing Item of Product is
guaranteed by such Person in a manner satisfactory to the Administrative Agent or such Subsidiary’s
capitalization and credit-worthiness are otherwise acceptable to the Administrative Agent in the
exercise of its reasonable commercial judgment), provided that the contemplated Slate
Financing to be provided by such Person for such Slate Financing Item of Product, together with the
aggregate of all Slate Financings to be provided by such Person but not yet funded for other Slate
Financing Items of Product, does not exceed the exposure limitation set forth for such Person on
Schedule 2A; provided further, that the Administrative Agent may from time to time
by written notice to the Borrower (which notice shall be prospective only, i.e., such reduction
shall not be given effect in the context of any Item of Product for which a Slate Financing
Intercreditor Agreement has already been executed, but such reduction shall nevertheless be
effective for all other purposes immediately upon the Borrower’s receipt of such notice) reduce the
exposure limitation set forth on Schedule 2A for such Person or its Subsidiaries, as the
Administrative Agent, acting in good faith and, to the extent reasonably practicable, giving its
reasons to the Borrower, may in its discretion deem appropriate, and (ii) any other Person
acceptable (with respect to such Person’s identity and creditworthiness) to the Administrative
Agent with regard to a specific transaction.




          “Specified Equity Contribution” shall have the meaning given such term in Section
1.2 hereof.




          “Specified Permitted Encumbrances” shall mean those Liens permitted under
Sections 6.2(b), (c), (d), (e), (f), (h),
(i), (j), (k), (l), (o), (r), (s),
(t) and, to the extent that the applicable party to a sale-leaseback will require the
Administrative Agent to release its Lien on an Item of Product and subsequently reattach its Lien
to the distribution rights related thereto, (p).




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     “Subsidiary” shall mean with respect to any Person, any corporation, association,
joint venture, partnership or other business entity (whether now existing or hereafter organized)
of which at least a majority of the voting stock or other ownership interests having ordinary
voting power for the election of directors (or the equivalent) is, at the time as of which any
determination is being made, owned or controlled by such Person or one or more subsidiaries of such
Person or by such Person and one or more subsidiaries of such Person.



     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided, that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of any Credit Party shall be a Swap Agreement.



     “Synthetic Purchase Agreement” means any Swap Agreement or similar agreement or
combination of agreements pursuant to which any Credit Party is or may become obligated to make (i)
any payment in connection with a purchase by any third party from a Person other than a Credit
Party of any Equity Interest in any Credit Party or any subordinated Indebtedness, or (ii) any
payment (other than on account of a permitted purchase by it of any Equity Interest in any Credit
Party or any subordinated Indebtedness) the amount of which is determined by reference to the price
or value at any time of any Equity Interest in any Credit Party or any subordinated Indebtedness;
provided, that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or consultants of a Credit
Party or its Subsidiaries shall be a Synthetic Purchase Agreement.



     “Tax Distributions” shall mean, with respect to any taxable period, an amount
not to exceed the product of (i) the estimated (in the case of a payment on account of
quarterly estimated tax payments or extension payments) or actual (in the case of a payment
on account of the filing of a tax return) taxable income of the Parent (determined without
regard to net positive adjustments to the basis of the Parent’s or its Subsidiaries’ assets
resulting from an Internal Revenue Code Section 754 election), as determined for federal
income tax purposes and (ii) the highest combined federal, state and local marginal tax rate
applicable to corporations residing in New York City, New York, or, if greater and KRH’s
percentage ownership of the outstanding membership interests of Parent is at least 20%, the
highest combined federal, state and local marginal tax rate applicable to individuals
residing in New York City, New York, in each case taking into account the deductibility of
state and local income taxes for federal income tax purposes, reduced by any tax credits of
Parent and its Subsidiaries allocated to its members and in the reasonable judgment of the
Borrower would be utilizable by the members or their direct or indirect owners if their
allocated income of the Parent (determined without regard to net positive adjustments to the
basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code
Section 754 election) was their only taxable income; provided, it is understood and agreed
that (a) Tax Distributions with regard to estimated and extension tax payments may be made
not earlier than 15 days prior to the date that the quarterly estimated




33









 





or extension tax payment is due (using the earlier of the corporate or individual due
date for such payment), (b) not earlier than 15 days prior to the date that the federal
income tax return for Parent is filed, a final Tax Distribution may be made equal to the
excess of (1) the product of clause (i) and clause (ii) above with respect to a taxable year
over (2) the prior Tax Distributions with respect to estimated and extension tax payments
made for such taxable year, (c) if the amount in clause (b) above is negative, such amount
shall reduce otherwise permitted future Tax Distributions, (d) in the event that the taxable
income of the Parent or its Subsidiaries (determined without regard to net positive
adjustments to the basis of the Parent’s or its Subsidiaries’ assets resulting from an
Internal Revenue Code Section 754 election) is increased for a taxable period pursuant to a
federal income tax audit or challenge by the Internal Revenue Service or the filing of an
amended federal income tax return, the calculation of the taxable income of the Parent shall
be appropriately increased and the Borrower shall be permitted to distribute a corresponding
additional amount pursuant to Section 6.5(b) (reduced by any distribution made pursuant to
clause (e) below for such taxable period) in the year during which a settlement occurs, a
decision of a court having jurisdiction with respect to such matters becomes final or it
files an amended federal income tax return, (e) in the event that the taxable income of the
Parent or its Subsidiaries (determined without regard to net positive adjustments to the
basis of the Parent’s or its Subsidiaries’ assets resulting from an Internal Revenue Code
Section 754 election, but taking into account any increases described in clause (d) above for
such taxable period) is increased for a taxable period pursuant to an state or local income
tax audit or challenge by the state or local taxing authority, the calculation of the taxable
income of the Parent shall be appropriately increased and the Borrower shall be permitted to
distribute a corresponding additional amount pursuant to Section 6.5(b) in the year during
which a settlement occurs or a decision of a court having jurisdiction with respect to such
matters becomes final provided that the tax rate used shall be the applicable state or local
income tax rate (reduced by the federal tax benefit using the higher of the maximum federal
corporate or individual rate) and (f) except as permitted in clauses (d) and (e) above, no
Tax Distribution with respect to a taxable year may be made more than 30 days after the date
on which the federal income tax return for such year is filed.




          “Taxes” shall mean any and all present or future taxes, levies, imposts, deductions,
charges or withholdings imposed by any Governmental Authority.




          “Total Commitment” shall mean, at any time, the aggregate amount of the Commitments
then in effect of all of the Lenders.




          “Trademark Security Agreement” shall mean a Trademark Security Agreement substantially
in the form of Exhibit F hereto to be executed by the Borrower and the Guarantors, as such
agreement may be amended, supplemented or otherwise modified, renewed or replaced from time to
time.




          “Transactions” shall mean, collectively, (x) the acquisition of all of the Equity
Interests of Hallmark Entertainment, LLC in connection with the Existing Second Lien Facility and
any transactions in connection therewith and (y) the merger of HEI Acquisition, LLC with and into
Hallmark Entertainment, LLC (currently RHI Entertainment, LLC) and any transactions




34









 




in connection therewith, including the making of the initial loans under the Existing Second
Lien Facility.




          “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Alternate Base Rate or to LIBOR.




          “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York on
the date of execution of this Credit Agreement (as such Uniform Commercial Code is amended from
time to time).




          “USA Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)).




          “Valuation Items of Product” shall mean all Items of Product which were analyzed in
connection with, and included as a component of, the Current Valuation.




          SECTION 1.2. Determination of Financial Covenants. For the purposes of determining
compliance with Section 6.21, the Borrower may include investments made by the
Kelso Group in the Borrower (the “Specified Equity Contribution”); provided
that (i) such investment is in the form of common equity or other equity which is not
entitled to receive any cash payments prior to the repayment in full of the Facilities and the
Second Lien Facility and is not entitled to any mandatory redemptions, (ii) is made within ten (10)
days of the date on which compliance is determined in Section 6.21, (iii) in each four
fiscal quarter period, there shall be a period of at least two consecutive fiscal quarters in which
no Specified Equity Contribution is made and (iv) in each eight fiscal quarter period there shall
be a period of at least four consecutive fiscal quarters during which no Specified Equity
Contribution is made.





	2.	 	THE LOANS





          SECTION 2.1. Term Loan Commitments 




          (a) Each Lender, severally and not jointly, agrees, upon the terms and subject to the
conditions hereof, to make a loan (the “Loans”) to the Borrower on the Closing Date in the
amount of such Lender’s Commitment as part of a single-draw term loan to the Borrower.




          (b) The Commitments are not revolving in nature, and the principal amount of any Loan, once
repaid, may not be reborrowed.




          SECTION 2.2. Term Loans and Borrowings.




          (a) The Loan of each Lender shall be made as part of a Borrowing consisting of Loans made by
the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.




35









 








          (b) Subject to Section 2.11, each Borrowing shall be comprised entirely of Alternate
Base Rate Loans or LIBOR Loans as the Borrower may request in accordance herewith; provided
that all Borrowings made on the Closing Date must be made as Alternate Base Rate Loans unless the
Borrower shall have provided three Business Days’ prior notice thereof and shall have agreed on or
prior to the date of the request to protect the Lenders against the failure to borrow a LIBOR Loan
on the date requested on terms substantially similar to those contained in Section 2.10(b).
Subject to Section 2.11(e), each Lender may at its option fulfill its obligation to make
any LIBOR Loan by causing a foreign branch or affiliate to fund such Loan, provided that any
exercise of such option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms hereof and of the relevant Note or increase the costs to the Borrower
payable hereunder in respect of LIBOR Loans. Subject to the other provisions of this Section
2.2, Section 2.8(b), Section 2.9 and Section 2.11, Loans of more than
one Type may be outstanding at the same time.




          (c) The Borrower shall give the Administrative Agent prior written, facsimile or telephonic
(promptly confirmed in writing) notice of each Borrowing hereunder; such notice shall be
irrevocable and to be effective, must be received by the Administrative Agent not later than 2:00
p.m., New York City time, (i) in the case of Alternate Base Rate Loans, on the Business Day
preceding the date on which such Loan is to be made and (ii) in the case of LIBOR Loans, on the
third Business Day preceding the date on which such Loan is to be made. Such notice shall specify
(A) the amount of the requested Loan, (B) the date on which such Loan is to be made (which shall be
a Business Day), and (C) whether the Loan then being requested is to be (or what portion or
portions thereof are to be) an Alternate Base Rate Loan or a LIBOR Loan and the Interest Period or
Interest Periods with respect thereto in the case of LIBOR Loans. In the case of a LIBOR Loan, if
no election of an Interest Period is specified in such notice, such notice shall be deemed a
request for an Interest Period of one month. If no election is made as to the Type of any Loan,
such notice shall be deemed a request for an Alternate Base Rate Loan. Notwithstanding anything to
the contrary contained in this Section 2.2, the Borrower shall not have the right to
request more than one Borrowing.




          (d) Notwithstanding any provision to the contrary in this Credit Agreement, the Borrower shall
not, in any notice of borrowing under this Section 2.2 request any LIBOR Loan which, if
made, would result in an aggregate of more than six (6) separate LIBOR Loans of any Lender being
outstanding hereunder at any one time. For purposes of the foregoing, LIBOR Loans having Interest
Periods commencing or ending on different days shall be considered separate LIBOR Loans.




          (e) The aggregate amount of any Borrowing consisting of LIBOR Loans shall be in a minimum
aggregate principal amount of $500,000 or such greater amount which is an integral multiple of
$100,000 and the aggregate amount of any Borrowing consisting of Alternate Base Rate Loans shall be
in a minimum aggregate principal amount of $500,000 or such greater amount which is an integral
multiple of $100,000.




          (f) Notwithstanding any other provision of this Credit Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing, if the Interest Period with
respect thereto would end after the Maturity Date.




36









 








          (g) The Administrative Agent shall disburse the proceeds of Loans by depositing them directly
to the account specified to the Administrative Agent by the Borrower in writing.




          SECTION 2.3. [Intentionally Omitted].




          SECTION 2.4. Notes; Repayment.




          (a) Any Lender may request that the Loan made by such Lender hereunder be evidenced by a
promissory note substantially in the form of Exhibit A attached hereto (each a
“Note”) in the face amount of such Lender’s Commitment, payable to such Lender, duly
executed on behalf of the Borrower and dated as of the date hereof. The principal amount of the
Loans shall be payable in full on the Maturity Date.




          (b) Each of the Loans shall bear interest on the outstanding principal balance thereof as set
forth in Section 2.5 hereof. Each Lender and the Administrative Agent on its behalf is
hereby authorized by the Borrower, but not obligated, to enter the amount of each Loan and the
amount of each payment or prepayment of principal or interest thereon in the appropriate spaces on
the reverse of or on an attachment to its Note, if any; provided, however, that the
failure of any Lender or the Administrative Agent to set forth such Loans, principal payments or
other information shall not in any manner affect the obligations of the Borrower to repay such
Loans.




          SECTION 2.5. Interest on Loans.




          (a) In the case of a LIBOR Loan, interest shall be payable at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal to LIBOR plus the
Applicable Margin. Interest shall be payable on each LIBOR Loan on each applicable Interest
Payment Date, on the Maturity Date and on the date of a conversion of such LIBOR Loan to an
Alternate Base Rate Loan. The Administrative Agent shall determine the applicable LIBOR for each
Interest Period as soon as practicable on the date when such determination is to be made in respect
of such Interest Period and shall notify the Borrower and the Lenders of the applicable interest
rate so determined. Such determination shall be conclusive absent manifest error.




          (b) In the case of an Alternate Base Rate Loan, interest shall be payable at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360 days for Federal
Funds Effective Rate loans, and over a year of 365/366 days for Prime Rate loans) equal to the
Alternate Base Rate plus the Applicable Margin. Interest shall be payable in arrears on each
Alternate Base Rate Loan on each applicable Interest Payment Date and on the Maturity Date.




          (c) Anything in this Credit Agreement or any Note to the contrary notwithstanding, the
interest rate on the Loans shall in no event be in excess of the maximum permitted by Applicable
Law.




37









 








          SECTION 2.6. Fees. The Borrower agrees to pay to the Administrative Agent on the
Closing Date any and all fees, if any, that are then due and payable by it to the Administrative
Agent.




          SECTION 2.7. Termination of Commitment. Unless previously terminated, the Commitment
shall terminate upon the earlier of (a) 4:00 p.m. New York time on the Closing Date and (b) 4:00
p.m. New York time on August 30, 2008.




          SECTION 2.8. Default Interest; Alternate Rate of Interest.




          (a) If the Borrower shall default in the payment when due of the principal of, or interest on
any Loan becoming due hereunder, whether at stated maturity, by acceleration or otherwise, or the
payment of any other amount becoming due hereunder after written notification from the
Administrative Agent to the Borrower of such amount, the Borrower shall on demand in writing from
time to time pay interest, to the extent permitted by Applicable Law, on all overdue amounts
outstanding from the due date thereof up to the date of actual payment of such defaulted amount
(after as well as before judgment) (i) for the overdue principal or interest in respect of any
LIBOR Loan, at 2% in excess of the rate then in effect for each such LIBOR Loan, and (ii) for the
overdue principal or interest in respect of any Alternate Base Rate Loan and for all other overdue
amounts hereunder, at 2% in excess of the rate then in effect for Alternate Base Rate Loans.




          (b) In the event, and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a LIBOR Loan, (i) the Administrative Agent shall have
received notice from any Lender of such Lender’s determination (which determination, absent
manifest error, shall be conclusive) that Dollar deposits in the amount of the principal amount of
such LIBOR Loan are not generally available in the London Interbank Market or that the rate at
which such Dollar deposits are being offered will not adequately and fairly reflect the cost to
such Lender of making or maintaining the principal amount of such LIBOR Loan during such Interest
Period, or (ii) the Administrative Agent shall have determined that reasonable means do not exist
for ascertaining the applicable LIBOR, the Administrative Agent shall, as soon as practicable
thereafter, give written or facsimile notice of such determination to the Borrower and the Lenders,
and any request by the Borrower for a LIBOR Loan (or conversion to or continuation as a LIBOR Loan
pursuant to Section 2.9 hereof), made after receipt of such notice and until the
circumstances giving rise to such notice no longer exist, shall be deemed to be a request for an
Alternate Base Rate Loan; provided, however, that in the circumstances described in
clause (i) above such deemed request shall only apply to the affected Lender’s portion thereof.
After such notice shall have been given and until the circumstances giving rise to such notice no
longer exist, each request (or portion thereof, as the case may be) for a LIBOR Loan, to the extent
such request relates to such affected Lender’s portion shall be deemed to be a request for an
Alternate Base Rate Loan.




          SECTION 2.9. Continuation and Conversion of Loans. The Borrower shall have the right,
at any time, (i) to convert any LIBOR Loan or portion thereof to an Alternate Base Rate Loan or to
continue such LIBOR Loan or a portion thereof for a successive Interest Period, or (ii) to convert
any Alternate Base Rate Loan or a portion thereof to a LIBOR Loan, subject to the following:




38









 








          (a) the Borrower shall give the Administrative Agent prior written, facsimile or telephonic
(promptly confirmed in writing) notice of each continuation or conversion hereunder of at least
three Business Days for continuation as or conversion to a LIBOR Loan; such notice shall be
irrevocable and to be effective, must be received by the Administrative Agent on the day required
not later than 2:00 p.m., New York City time;




          (b) unless the Required Lenders otherwise consent, no Event of Default or Default shall have
occurred and be continuing at the time of any conversion to a LIBOR Loan or continuation of any
such LIBOR Loan into a subsequent Interest Period;




          (c) no Alternate Base Rate Loan may be converted to a LIBOR Loan and no LIBOR Loan may be
continued as a LIBOR Loan if, after such conversion or continuance, and after giving effect to any
concurrent prepayment of Loans, an aggregate of more than six (6) separate LIBOR Loans would be
outstanding hereunder with respect to each Lender (for purposes of determining the number of such
Loans outstanding, Loans with different Interest Periods shall be counted as different Loans even
if made on the same date);




          (d) if fewer than all Loans at the time outstanding shall be continued or converted, such
continuation or conversion shall be made pro rata among the Lenders in accordance with the
respective Percentage of the principal amount of such Loans held by the Lenders immediately prior
to such continuation or conversion;




          (e) the aggregate principal amount of Loans continued as or converted to LIBOR Loans as part
of the same Borrowing shall be $500,000 or such greater amount which is an integral multiple of
$100,000;




          (f) accrued interest on the LIBOR Loans (or portion thereof) being continued shall be paid by
the Borrower at the time of continuation;




          (g) the Interest Period with respect to a new LIBOR Loan effected by a continuation or
conversion shall commence on the date of such continuation or conversion;




          (h) if a LIBOR Loan is converted to another type of Loan prior to the last day of the Interest
Period with respect thereto, the amounts required by Section 2.10(b) shall be paid upon
such conversion;




          (i) each request for a continuation as or conversion to a LIBOR Loan which fails to state an
applicable Interest Period shall be deemed to be a request for an Interest Period of one month; and




          (j) in the event that the Borrower shall not give notice to continue or convert any LIBOR Loan
as provided above, such Loan (unless repaid) shall automatically be converted to an Alternate Base
Rate Loan at the expiration of the then current Interest Period.



The Administrative Agent shall, after it receives notice from the Borrower, promptly give the
Lenders notice of any continuation or conversion.




39









 








          SECTION 2.10. Voluntary and Mandatory Prepayment of Loans; Reimbursement of Lenders. 




          (a) Subject to the terms of the Intercreditor Agreement and this Section 2.10, the
Borrower shall have the right at its option at any time and from time to time to prepay without
premium or penalty (i) any Alternate Base Rate Loan, in whole or in part, upon at least one
Business Day’s prior written, telephonic (promptly confirmed in writing) or facsimile notice to the
Administrative Agent, in the principal amount of $500,000 or such greater amount which is an
integral multiple of $100,000 if prepaid in part, or the remaining balance of such Loan if prepaid
in full, and (ii) any LIBOR Loan, in whole or in part, upon at least three Business Days’ prior
written, telephonic (promptly confirmed in writing) or facsimile notice, in the principal amount of
$500,000 or such greater amount which is an integral multiple of $100,000 if prepaid in part, or
the remaining balance of such Loan if prepaid in full. Each notice of prepayment shall specify the
prepayment date, each Loan to be prepaid and the principal amount thereof, shall be irrevocable and
shall commit the Borrower to prepay such Loan in the amount and on the date stated therein. All
prepayments under this Section 2.10(a) shall be accompanied by accrued but unpaid interest
on the principal amount being prepaid to (but not including) the date of prepayment. All payments
under this Section 2.10(a) consummated prior to the first anniversary of the Closing Date
will be subject to a prepayment premium of 1% of the Loans so prepaid. Notwithstanding the
foregoing, prior to the First Priority Obligations Payment Date, the Borrower may not repay the
principal amount of the Loans (but may adjust Loans for pricing alternative purposes), without the
prior written consent of the Required Lenders (as that term is defined under the First Lien
Agreement) but may engage in a Permitted Refinancing of the Loans.




          (b) The Borrower shall reimburse each Lender on demand for any loss (excluding the loss of the
Applicable Margin) incurred or to be incurred by any such Lender in the reemployment of the funds
released (i) by any prepayment (for any reason) of any LIBOR Loan if such Loan is repaid prior to
the last day of the Interest Period for such Loan, or (ii) in the event that after the Borrower
delivers a notice of borrowing under Section 2.2(c) or Section 2.9(a) in respect of
LIBOR Loans, such Loan is not made, converted to or continued as a LIBOR Loan on the first day of
the Interest Period specified in such notice of borrowing for any reason other than (A) a breach by
any such Lender of its obligation to fund such borrowing when it is otherwise required to do so
hereunder, or (B) a repayment resulting from a conversion required by a Lender pursuant to
Section 2.12(a). Such loss shall be the amount as reasonably determined by such Lender as
the excess, if any, of (I) the amount of interest which would have accrued to such Lender on the
amount so paid or not borrowed, continued or converted at a rate of interest equal to the interest
rate applicable to such Loan pursuant to Section 2.5, for the period from the date of such
payment or failure to borrow, continue or convert to the last day (x) in the case of a payment
prior to the last day of the Interest Period for such Loan, of the then current Interest Period for
such Loan, or (y) in the case of such failure to borrow, continue or convert, of the Interest
Period for such Loan which would have commenced on the date of such failure to borrow, continue or
convert, over (II) the amount realized or to be realized by such Lender in reemploying the funds
not advanced or the funds received in prepayment or realized from the Loan not so continued or
converted during the period referred to above. Each Lender shall deliver to the Borrower from time
to time one or more certificates setting forth the amount of




40









 




such loss (and in reasonable detail the manner of computation thereof) as determined by such
Lender, which certificates shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amounts shown on such certificate within thirty (30) days of the Borrower’s receipt of
such certificate.




          (c) In the event the Borrower fails to prepay any Loan on the date specified in any prepayment
notice delivered pursuant to Section 2.10(a), the Borrower shall pay to the Administrative
Agent for the account of the applicable Lender any amounts required to compensate such Lender for
any actual loss incurred by such Lender as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition of deposits or other
funds by such Lender to fulfill deposit obligations incurred in anticipation of such prepayment.
Each Lender shall deliver to the Borrower and the Administrative Agent from time to time one or
more certificates setting forth the amount of such loss (and in reasonable detail the manner of
computation thereof) as determined by such Lender, which certificates shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amounts shown on such certificate within
ten (10) Business Days of the Borrower’s receipt of such certificate.




          (d) Any remaining Obligations under the Facility shall be paid in full on the Maturity Date.




          (e) [Intentionally Omitted.]




          (f) From and after the First Priority Obligations Payment Date, the Borrower shall prepay the
Obligations in an amount equal to (i) 100% of the Net Proceeds from Dispositions by any Credit
Party; provided however, that the Borrower shall have no obligation to prepay any
portion of the Net Proceeds from such Dispositions if (x) the Borrower or the relevant Credit
Party, as applicable, reinvests such Net Proceeds in, or enters into a binding agreement to acquire
with such Net Proceeds, Productive Assets and/or Permitted Business Acquisitions within three
hundred and sixty (360) days of such Disposition, (y) such Disposition is in connection with the
sale or license of any Item of Product in the ordinary course of business or in connection with a
sale and leaseback transaction or similar financial incentive transaction as permitted herein, or
(z) after giving effect to such Disposition, the Leverage Ratio is less than 6.0:1.0 and (ii) 100%
of the Net Proceeds from issuance of any Indebtedness for borrowed money by any Credit Party (other
than Indebtedness permitted pursuant to Section 6.1).




          (g) [Intentionally Omitted.]




          (h) [Intentionally Omitted.]




          (i) All prepayments shall be accompanied by accrued but unpaid interest on the principal
amount being prepaid to but not including the date of prepayment.




          (j) If on any day on which the Loans would otherwise be required to be prepaid but for the
operation of this Section 2.10(j) (each a “Prepayment Date”), the amount of such
required prepayment exceeds the then outstanding aggregate principal amount of the Loans that
constitute Alternate Base Rate Loans, and no Default or Event of Default is then continuing,




41









 




then on such Prepayment Date the Borrower may, at its option, deposit Dollars into the Cash
Collateral Account in an amount equal to such excess. If the Borrower makes such deposit then (i)
only the outstanding Alternate Base Rate Loans shall be required to be prepaid on such Prepayment
Date and (ii) on the last day of each Interest Period with respect to any LIBOR Loan in effect
after such Prepayment Date, the Administrative Agent is irrevocably authorized and directed to
apply funds from the Cash Collateral Account, if any, (and liquidate investments held in such Cash
Collateral Account as necessary) to prepay LIBOR Loans for which the Interest Period is then ending
until the aggregate of such prepayments equals the prepayment which would have been required on
such Prepayment Date but for the operation of this Section 2.10(j).




          (k) Except as otherwise specifically provided in this Article 2, should any payment or
prepayment of principal of or interest on the Loans or any other amount due hereunder, become due
and payable on a day other than a Business Day, the due date of such payment or prepayment shall be
extended to the next succeeding Business Day and, in the case of a payment or prepayment of
principal, interest shall be payable thereon at the rate herein specified during such extension.




          SECTION 2.11. Increased Costs.





	 	(a)	 	If any Change in Law shall:
	 
	 	(i)	 	impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the LIBOR); or
	 
	 	(ii)	 	impose on any Lender or the London Interbank Market any other
condition affecting this Credit Agreement or LIBOR Loans made by such Lender or
any participation therein;




and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Loan (or of maintaining its obligation to make any such Loan) or to increase
the cost to such Lender or to reduce the amount of any sum received or receivable by such Lender
hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender,
such additional amount or amounts as will compensate such Lender for such additional costs incurred
or reduction suffered; provided, however, that the Borrower shall not be obligated
to pay such compensation to any Lender on account of any Taxes pursuant to this Section
2.11 and Taxes shall be solely governed by Section 2.14.




          (b) If any Lender determines that any Change in Law regarding capital requirements has or
would have the effect of reducing the rate of return on such Lender’s capital or on the capital of
such Lender’s holding company, if any, as a consequence of this Credit Agreement or the Loans made
by such Lender to a level below that which such Lender or the or such Lender’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s policies
and the policies of such Lender’s holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender, such




42









 




additional amount or amounts as will compensate such Lender or such Lender’s holding company
for any such reduction suffered.




          (c) A certificate of a Lender setting forth in reasonable detail the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be, the changes as a
result of which such amounts are due and the manner of computing such amounts, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender, the amount shown as due on
any such certificate within 10 Business Days after receipt thereof.




          (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s right to demand such compensation.




          (e) Each Lender agrees that with reasonable promptness after it becomes aware of the
occurrence of an event or the existence of a condition that (i) would cause it to incur any
increased cost hereunder or render it unable to perform its agreements hereunder for the reasons
specifically set forth in Section 2.8(b), this Section 2.11 or Section 2.12
or (ii) would require the Borrower to pay an increased amount under Section 2.8(b), this
Section 2.11 or Section 2.14, it will use reasonable efforts to notify the Borrower
of such event or condition and, to the extent not inconsistent with such Lender’s internal
policies, will use its reasonable efforts to make, fund or maintain the affected Loans of such
Lender, through another Lending Office of such Lender if as a result thereof the additional monies
which would otherwise be required to be paid or the reduction of amounts receivable by such Lender
thereunder in respect of such Loans or participations therein would be materially reduced, or such
inability to perform would cease to exist, or the increased costs which would otherwise be required
to be paid in respect of such Loans or participations therein pursuant to Section 2.8(b),
this Section 2.11 or Section 2.14 would be materially reduced or taxes or other
amounts otherwise payable under Section 2.8(b), this Section 2.11 or Section
2.14 would be materially reduced, and if, as determined by the such Lender, in its discretion,
the making, funding or maintaining of such Loans through such other Lending Office would not
otherwise materially adversely affect such Loans or such Lender. Notwithstanding the foregoing, a
failure on the part of any Lender to provide notice or take any other action pursuant to this
Section 2.11(e) shall not affect the Borrower’s obligation to make any payments or
deductions required by this Article 2.




          SECTION 2.12. Change in Legality.




          (a) Notwithstanding anything to the contrary contained elsewhere in this Credit Agreement, if
any change after the date hereof in Applicable Law, guideline or order, or in the interpretation
thereof by any Governmental Authority charged with the administration thereof, shall make it
unlawful for any Lender to make or maintain any LIBOR Loan or to give effect to its obligations as
contemplated hereby with respect to a LIBOR Loan, then, by written notice to the Borrower and the
Administrative Agent, such Lender may (i) declare that LIBOR Loans will not thereafter be made by
such Lender hereunder for as long as such condition may be continuing, and/or (ii) require that,
subject to Section 2.10(b), all outstanding LIBOR Loans made by it be converted to
Alternate Base Rate Loans, whereupon all of such LIBOR Loans shall automatically be converted to
Alternate Base Rate Loans, as of the effective date of such




43









 




notice as provided in paragraph (b) below. Such Lender’s pro rata portion of any subsequent
LIBOR Loan shall, instead, be an Alternate Base Rate Loan unless such declaration is subsequently
withdrawn.




          (b) A notice to the Borrower by any Lender pursuant to paragraph (a) above shall be effective
for purposes of clause (ii) thereof, if lawful, on the last day of the current Interest Period for
each outstanding LIBOR Loan; and in all other cases, on the date of receipt of such notice by the
Borrower.




          SECTION 2.13. Manner of Payments. All payments of principal and interest by the
Borrower in respect of any Loans shall be pro rata among the Lenders holding such Loans in
accordance with the then outstanding principal amounts of such Loans held by them. All payments by
the Borrower hereunder and under the Notes shall be made in Dollars in Federal or other immediately
available funds at the office of JPMorgan Chase Bank, N.A., JPMorgan Loan Services Group, 21 South
Dearborn, 7th Floor, Chicago, Illinois 60603, Attention: Judy Warren (Telecopy No.: (312)
385-7095), for credit to the Clearing Account no later than 2:00 p.m., New York City time, on the
date on which such payment shall be due. Interest in respect of any Loan hereunder shall accrue
from and including the date of such Loan to but excluding the date on which such Loan is paid or
converted to a Loan of a different Type.




          SECTION 2.14. Taxes.




          (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required by Applicable Law to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with Applicable Law.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with Applicable Law.




          (c) The Borrower shall indemnify the Administrative Agent and each Lender, within ten (10)
Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to
any payment by or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this
Section), whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, except for penalties, interest and
expenses to the extent arising from gross negligence or willful misconduct on the part of the
Administrative Agent or such Lender. A certificate as to the amount of such




44









 




payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on
its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.




          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.




          (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Credit Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), on or prior to the Initial Date with respect to
such Lender (and from time to time thereafter at the time or times prescribed by Applicable Law or
upon the request of the Borrower or the Administrative Agent), such properly completed and duly
executed documentation prescribed by Applicable Law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate of withholding. Without
limiting the generality of the foregoing, any Foreign Lender shall deliver to the Borrower and the
Administrative Agent on or prior to the Initial Date with respect to such Lender (and promptly from
time to time thereafter upon the expiration, obsolescence or invalidity of any form previously
delivered, if any form previously delivered becomes inaccurate or upon the request of the Borrower
or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), two
copies of whichever of the following is applicable:




          (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States of America is a party;




          (ii) duly completed copies of Internal Revenue Service Form W-8ECI;




          (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender
is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Form  W-8BEN;




          (iv) duly completed copies of Internal Revenue Service Form W-8IMY together with the
additional documentation that must be transmitted with Form W-8IMY, including the appropriate forms
described in Sections 2.14(e)(i), (ii) and (iii); or




          (v) any other form prescribed by Applicable Law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with such supplementary
documentation as may be prescribed by Applicable Law to permit the Borrower to determine the
withholding or deduction required to be made.




45









 







Each Lender shall promptly notify the Borrower and the Administrative Agent at any time it
determines that it is no longer in a position to provide any previously delivered form or
certificate (or any other form or certification adopted by the U.S. taxing authorities for such
purpose).



Any Lender that is not a Foreign Lender and has not otherwise established to the reasonable
satisfaction of the Borrower and the Administrative Agent that it is an exempt recipient (as
defined in section 6049(b)(4) of the Code and the regulations thereunder) shall deliver to the
Borrower (with a copy to the Administrative Agent) on or prior to the Initial Date with respect to
such Lender (and from time to time thereafter as prescribed by Applicable Law or upon the request
of the Borrower or the Administrative Agent), two duly executed and properly completed copies of
Internal Revenue Service Form W-9 (or applicable successor form). Each Lender (other than a
Foreign Lender) shall deliver such forms promptly upon the obsolescence, invalidity or inaccuracy
of any form previously delivered by such Lender. Each Lender (other than a Foreign Lender) shall
promptly notify the Borrower and the Administrative Agent at any time that it determines that it is
no longer in a position to provide any previously delivered form or certification (or any other
form of certification adopted by the U.S. taxing authorities for such purpose).




          (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of or any credit for any Taxes or Other Taxes as to which it has been indemnified
by the Borrower or with respect to which the Borrower have paid additional amounts pursuant to this
Section 2.14, it shall pay over such refund or credit to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.14 with respect to the Taxes or Other Taxes giving rise to such refund or
credit), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority with respect to such
refund or credit); provided, that the Borrower, upon the request of the Administrative Agent or
such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay such refund or
credit to such Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other Person.




          (g) Each Lender agrees that when it becomes aware of the occurrence of an event that would
cause the Borrower to pay any amount pursuant to clause (a) of this Section 2.14, it will
notify the Borrower of such event and, to the extent not inconsistent with such Lender’s internal
policies, will use it reasonable efforts to make, fund or maintain the affected Loans of such
Lender through another Lending Office of such Lender if as a result thereof the additional amounts
which would otherwise be required to be paid by reason of Section 2.14(a) in respect of
such Loans would be materially reduced, and if, as determined by such Lender, in its discretion,
the making, funding or maintaining of such Loans through such other Lending Office would not
otherwise adversely affect such Loans or such Lender. Notwithstanding the foregoing, a failure on
the part of any Lender to provide notice pursuant to this Section 2.14(g)





46












 




shall not affect the Borrower’s obligation to make any payments or deductions required by
Section 2.14(a).




          SECTION 2.15. Interest Adjustments.




          (a) If the provisions of this Credit Agreement or any Note would at any time require payment
by the Borrower to a Lender of any amount of interest in excess of the maximum amount then
permitted by the law applicable to any Loan, the interest payments to that Lender shall be reduced
to the extent necessary so that such Lender shall not receive interest in excess of such maximum
amount. If, as a result of the foregoing, a Lender shall receive interest payments hereunder or
under a Note in an amount less than the amount otherwise provided hereunder, such deficit
(hereinafter called the “Interest Deficit”) will, to the fullest extent permitted by
Applicable Law, cumulate and will be carried forward (without interest) until the termination of
this Credit Agreement. Interest otherwise payable to a Lender hereunder and under a Note for any
subsequent period shall be increased by the maximum amount of the Interest Deficit that may be so
added without causing such Lender to receive interest in excess of the maximum amount then
permitted by the law applicable to the Loans.




          (b) The amount of any Interest Deficit relating to a particular Loan and Note shall be treated
as a prepayment penalty and shall, to the fullest extent permitted by Applicable Law, be paid in
full at the time of any optional prepayment by the Borrower of all the Loans at that time
outstanding pursuant to Section 2.10(a) hereof. The amount of any Interest Deficit
relating to a particular Loan and Note at the time of any complete payment of such Loans at that
time outstanding (other than an optional prepayment thereof pursuant to Section 2.10(a)
hereof) shall be canceled and not paid.




          SECTION 2.16. Incremental Loans. The Borrower may at any time and from time to time
prior to June 23, 2013 (but on no more than two occasions), by notice to the Administrative Agent
(whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders), request
that an additional single-draw term loan be extended (“Incremental Loans”) without consent
from the Lenders (but subject to the approval by the Required Lenders of the identity of the
Lenders or Additional Lenders (as defined below) making such Incremental Loans (as set forth
below); provided that all conditions and parameters set forth in this Section 2.16 have
been satisfied. Any Borrowing of Incremental Loans shall be in an aggregate principal amount that
is not less than $2,500,000 and in integral multiples of $500,000 in excess thereof, and the
Borrowings of Incremental Loans shall be in an aggregate principal amount (including any
Incremental Loans previously extended) not in excess of $20,000,000. The Incremental Loans (A)
shall rank pari passu in right of payment and of security with the other Loans, (B)
shall mature on the Maturity Date and (C) except as set forth in an Incremental Amendment (as
defined below), shall have terms identical to, and be treated the same as, the other Loans
hereunder (including with respect to mandatory and voluntary prepayments, the proceeds of which
shall be shared pro rata among the Lenders (including the Lenders that extended the Incremental
Loans)). The Incremental Loans may be made by any existing Lender or by any Eligible Assignee (any
such Eligible Assignee which is not a Lender at the time of the making of the Incremental Loans
being called an “Additional Lender”), provided, that both the Administrative Agent
and the Required Lenders (each in their sole discretion) have approved the identity of all Lenders
or Additional Lenders making such Incremental Loans; provided, further,




47









 







that, subject to the other conditions set forth herein with respect to the making of
Incremental Loans, the following entities are pre-approved as Additional Lenders so long as the
applicable entity constitutes an Eligible Assignee at the time of making the relevant Incremental
Loans: (x) Kelso & Company L.P. and any of its Affiliates are pre-approved with respect to
Incremental Loans in the aggregate principal amount not to exceed $6,000,000, and (y) Kelso AIV
VII, L.P. and KEP VI AIV, LLC are pre-approved for any portion of the Incremental Loans. The
commitments in respect of the Incremental Loans shall become “Commitments” under this Credit
Agreement, and the Incremental Loans shall become “Loans” under this Credit Agreement, pursuant to
an amendment to this Credit Agreement (an “Incremental Amendment”) and, as appropriate, the
other Fundamental Documents. An Incremental Amendment may effect such amendments to this Credit
Agreement and the other Fundamental Documents as may be necessary or appropriate, in the reasonable
opinion of the Administrative Agent and the Borrower, to effect the provisions and intent of this
Section and the application of the proceeds of the relevant Incremental Loans; provided,
that the Incremental Amendment may not contain any terms which would have the effect of treating
the Incremental Loans differently from the other Loans hereunder other than (in each case, subject
to the provisions of this Section 2.16) interest rates and use of proceeds. No Lender shall be
obligated to provide any Incremental Loans, unless it so agrees. The Borrower may use the proceeds
of the Incremental Loans for any purpose not prohibited by this Credit Agreement or the relevant
Incremental Amendment. In the event that it is necessary for the interest rates (whether as a
function of the reference rate or the Applicable Margin) of the Incremental Loans to be higher than
the interest rates applicable to the previously extended Loans, the interest rates on such
previously extended Loans shall be automatically increased to the interest rates applicable to such
Incremental Loans, but if the interest rates of the Incremental Loans are lower than those
applicable to the previously extended Loans, the interest rates applicable to the previously
extended loans shall be unaffected. In addition to the contemplated Incremental Loans meeting the
parameters set forth above in this Section 2.16 the following conditions precedent shall have been
satisfied with respect to thereto:




          (a) at the time of the request for the extension of the Incremental Loans, upon the
effectiveness of the Incremental Amendment, and at the time that the Incremental Loans are made
(and immediately after giving effect thereto), no Default or Event of Default shall exist;




          (b) the Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis after
giving effect to the borrowing of the Incremental Loans, with the provisions of Section
6.21;




          (c) The Administrative Agent shall have received one or more certificates dated as of the
effective date of the proposed extension of the Incremental Loans certifying as to the matters set
forth in clauses (a) and (b) above as well as to the accuracy of all representations and warranties
made by the Borrower herein, and attaching certified copies of resolutions of the governing body of
the Borrower approving the Incremental Loans and the corresponding modifications, if any, to the
Fundamental Documents required under an Incremental Amendment; and




          (d) The Borrower shall have (i) delivered to the Administrative Agent a borrowing notice
which, in addition to the information contained in the Borrowing Certificate, shall set forth the
requested amount and proposed interest rates for, and use of proceeds of, the




48









 







relevant Incremental Loans, and (ii) paid any fees required under any Fee Letter in connection
with the issuance of the Incremental Loans.




3. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES




          In order to induce the Administrative Agent and the Lenders to enter into this Credit
Agreement and to make the Loans provided for herein, as applicable, the Credit Parties, jointly and
severally, make the following representations and warranties, all of which shall survive the
execution and delivery of this Credit Agreement, the issuance of the Notes and the making of the
Loans.




          SECTION 3.1. Existence and Power.




          (a) Each Credit Party is a corporation, limited liability company or limited partnership (w)
duly incorporated or otherwise organized, (x) validly existing, (y) in jurisdictions in which it is
applicable, in good standing under the laws of its jurisdiction of organization and (z) where
applicable, in good standing as a foreign entity in all jurisdictions where the nature of its
properties or business so requires, except to the extent that the failure to be so qualified or be
in good standing could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. A list of such jurisdictions as of the date hereof is attached hereto as
Schedule 3.1.




          (b) Each Credit Party has the power and authority (i) to own its respective properties and
carry on its respective business as now being conducted, (ii) to execute, deliver and perform, as
applicable, its obligations under the Fundamental Documents and any other documents contemplated
thereby to which it is or will be a party, and (iii) to grant to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, a security interest in the Collateral as
contemplated by Article 8 hereof and in the Pledged Securities as contemplated by
Article 11 hereof; and in the case of the Guarantors, to guaranty the Obligations as
contemplated by Article 9 hereof.




          SECTION 3.2. Authority and No Violation.




          (a) The execution, delivery and performance of this Credit Agreement and the other Fundamental
Documents to which it is a party by each Credit Party, the grant to the Administrative Agent for
the benefit of the Administrative Agent and the Lenders of the security interest in the Collateral
and the Pledged Securities as contemplated herein and by the other Fundamental Documents by each
Credit Party and, in the case of the Borrower, the Borrowings hereunder and the execution, delivery
and performance of the Notes and, in the case of each Guarantor, the guaranty of the Obligations as
contemplated in Article 9 hereof, (x) have been duly authorized by all necessary corporate
action (or similar action) on the part of each Credit Party or (y) will not (i) constitute a
violation of any provision of Applicable Law or any order of any Governmental Authority applicable
to such Credit Party, or any of its properties or assets, (ii) violate any provision of the
Certificate of Incorporation, By–Laws, operating agreement, partnership agreement or any other
organizational document of such Credit Party, (iii) violate any provision of any Distribution
Agreement, indenture, agreement, bond, note or other similar instrument to which such Credit Party
is a party or by which such Credit Party or any of its




49









 







properties or assets are bound, (iv) be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under, or create any right to terminate, any
such Distribution Agreement, indenture, agreement, bond, note or other similar instrument, other
than where any such violation referred to in clauses (x) and (y) (i)-(iv) could not, either
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and
(v) result in the creation or imposition of any Lien, charge or encumbrance of any nature
whatsoever (other than Permitted Encumbrances) upon any of the properties or assets of any of such
Credit Parties other than pursuant to this Credit Agreement or the other Fundamental Documents.




          (b) Other than the restrictions listed on Schedule 3.2(b), there are no restrictions
on the transfer of any of the Pledged Securities other than as a result of this Credit Agreement or
applicable securities laws and the regulations promulgated thereunder.




          SECTION 3.3. Governmental Approval. All authorizations, approvals, registrations or
filings from or with any Governmental Authority (other than UCC financing statements, the Copyright
Security Agreement and the Trademark Security Agreement which will be delivered to the
Administrative Agent on or prior to the Closing Date, in form suitable for recording or filing with
the appropriate filing office) required for the execution, delivery and performance by any Credit
Party of this Credit Agreement and the other Fundamental Documents to which it is a party, and the
execution and delivery by the Borrower of the Notes, have been duly obtained or made or duly
applied for, and are in full force and effect, except those which, if not obtained, could not,
either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and if any further authorizations, approvals, registrations or filings should hereafter become
necessary, the Credit Parties shall obtain or make all such authorizations, approvals,
registrations or filings, except those which, if not obtained, could not reasonably be expected to
have a Material Adverse Effect.




          SECTION 3.4. Binding Agreements. The First Lien Agreement constitutes, and this
Credit Agreement and the other Fundamental Documents when executed, will constitute, the legal,
valid and binding obligations of each Credit Party that is a party thereto, enforceable against
each Credit Party in accordance with their respective terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights generally and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and implied covenants of
good faith and fair dealing.




          SECTION 3.5. Financial Statements. (a) The (i) audited consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at December 31, 2007 and related audited
consolidated statements of operations, member’s equity (deficit) and comprehensive loss and cash
flows for the fiscal year then ended, together with related notes and (ii) the unaudited
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at March 31, 2008,
and, in each case, together with the related statements of operations, member’s equity (deficit)
and comprehensive loss and cash flows and for the fiscal quarter then ended, but without related
notes thereto have, in each case, been prepared in accordance with GAAP in effect as of such date
consistently applied, except as otherwise indicated in the notes, if any, to such financial
statements and subject in the case of unaudited financial statements to changes resulting from
year-end and audit adjustments. All of such financial statements fairly present the financial




50









 







position or the results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis at the dates or for the periods indicated, subject, in the case of the financial
statements referred to in clause (ii) above, to year-end and audit adjustments. Except as
disclosed on Schedule 3.5(a) or as, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, the Borrower does not have any material Guaranties,
contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or
long-term commitments, including any interest rate or foreign currency swap or exchange transaction
or other obligations in respect of derivatives, that are not reflected in the most recent financial
statements referred to in this paragraph.




          (b) [Intentionally Omitted].




          SECTION 3.6. No Material Adverse Change. There has been no material adverse change
with respect to the business, assets, operations, properties or financial condition of the Credit
Parties, in each case taken as a whole, from December 31, 2007.




          SECTION 3.7. Ownership of Pledged Securities, Subsidiaries, etc.




          (a) Annexed hereto as Schedule 3.7(a) is a correct and complete list as of the date
hereof, of each Credit Party showing, as to each, (i) its name, (ii) the jurisdiction in which it
was incorporated or organized and (iii) its authorized capitalization, the number of Equity
Interests outstanding, the ownership of its Equity Interests and whether or not its Equity
Interests are certificated.




          (b) Except as set forth on Schedule 3.7(b), no Credit Party owns any voting stock,
Equity Interest or other beneficial interest, either directly or indirectly, in any Person other
than another Credit Party or an entity formed under the laws of a jurisdiction located outside of
the United States of America with respect to which an investment therein is permitted under the
terms of Section 6.4 hereof.




          SECTION 3.8. Copyrights, Trademarks and Other Rights.




          (a) The Items of Product listed on Schedule 3.8(a) hereto, comprise all of the
Valuation Items of Product. Except as set forth on Schedule 3.8(a), the copyright
registration number assigned to a Credit Party’s interest therein (when issued) and whether such
Credit Party owns or licenses from a third party such Completed Items of Product are set forth
across from the description of such Completed Item of Product, and as to each Valuation Item of
Product listed on Schedule 3.8(a), the Credit Party owning or licensing a copyright therein
has duly filed for recordation (or, on the Closing Date, will duly file for recordation) its
interests in the United States Copyright Office. Schedule 3.8(a) also identifies the
location of the best available Physical Materials related to each Valuation Item of Product owned
by the Credit Parties. To the best of each Credit Party’s knowledge, all Valuation Items of
Product and all component parts thereof do not violate or infringe upon any copyright, right of
privacy or publicity, trademark, patent, trade name, performing right or any literary, dramatic,
musical, artistic, personal, private, several, care, contract, property or copyright right or any
other right of any Person or contain any libelous or slanderous material. Except as set forth in
Schedule 3.12, there is no claim, suit, action or proceeding pending relating to the
foregoing or, to the best of each Credit Party’s




51









 







knowledge, threatened against any Credit Party or any other Person with respect to any
Valuation Item of Product, and no Credit Party has any knowledge of any existing infringement by
any other Person of any copyright or trademark held by any Credit Party with respect to any
Valuation Item of Product which, in each case, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.




          (b) Schedule 3.8(b) hereto (i) lists all the trademarks registered by any Credit Party
as of the date hereof (or to be registered on the Closing Date) and identifies the Credit Party
which registered (or which will register) each such trademark, (ii) specifies as to each such
trademark, the jurisdictions in which such trademark has been issued or registered (or, if
applicable, in which an application for such issuance or registration has been or will be filed),
including the respective registration or application numbers and applicable dates of registration
or application, and (iii) specifies as to each such trademark, as applicable, material licenses,
sublicenses and other material agreements as of the date hereof (other than any Distribution
Agreements), to which any Credit Party is a party and/or pursuant to which any Person is authorized
to use such trademark. Each U.S. trademark set forth on Schedule 3.8(b) that is registered
in the name of a Credit Party (other than “intent to use” trademark and service mark applications
for which a statement of use has not been filed) will be included on Schedule A to the Trademark
Security Agreement to be delivered to the Administrative Agent on or prior to the Closing Date
pursuant to Section 4.1(h).




          (c) Except as set forth on Schedule 3.8(c), all applications and registrations for (i)
all registered copyright interests owned by or licensed to a Credit Party and relating to all
Valuation Items of Product and (ii) all registered trademarks, service marks, trade names and
service names owned by or licensed to any Credit Party, are subsisting and in full force and effect
(other than trademarks, service marks, trade names and service names that individually or in the
aggregate are not material). The Credit Parties have taken and will take any other reasonable
actions necessary to maintain such applications and registrations and the effectiveness thereof.




          SECTION 3.9. Fictitious Names. Except as disclosed on Schedule 3.9, no Credit
Party has done business, is doing business or intends to do business other than under its full
corporate name, including, without limitation, under any trade name or other doing business name.




          SECTION 3.10. Title to Properties. As of the Closing Date, the Credit Parties will
have good title to each of the material properties and assets reflected in the most recent
financial statements delivered pursuant to Section 5.1(a) hereof and all such properties
and assets are free and clear of Liens, except Permitted Encumbrances, in each case, except for
defects in title that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties and assets for their intended purpose and except where the
failure to have such title could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.




          SECTION 3.11. Places of Business. The chief executive office of each Credit Party is,
on the date hereof, as set forth on Schedule 3.11 hereto.




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          SECTION 3.12. Litigation. Except as set forth on Schedule 3.12, there are no
actions, suits or other proceedings at law or in equity by or before any arbitrator, arbitration
panel or Governmental Authority (including, but not limited to, matters relating to environmental
liability) or, to the Borrower’s knowledge, any threatened action, suit or other proceeding against
or affecting, any Credit Party or of any of their respective properties or rights which either (A)
if adversely determined, could reasonably be expected to have a Material Adverse Effect, or
(B) relate to this Credit Agreement, any other Fundamental Documents or any of the transactions
contemplated hereby. No Credit Party is in default with respect to any order, writ, injunction,
decree, rule or regulation of any Governmental Authority binding upon such Person.




          SECTION 3.13. Federal Reserve Regulations. None of the Credit Parties is engaged
principally or as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans will be
used, directly or indirectly, whether immediately, incidentally or ultimately (i) to purchase or
carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock, or (ii) for any other purpose, in each case, violative of or inconsistent with any of
the provisions of any regulation of the Board, including, without limitation, Regulations T, U and
X thereto.




          SECTION 3.14. Investment Company Act. None of the Credit Parties is, or will during
the term of this Credit Agreement be, (i) an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended or (ii) a “holding company” under the Public Utility
Holding Company Act of 1935, as amended.




          SECTION 3.15. Taxes. Each Credit Party has filed or caused to be filed all material
federal, state, local and foreign tax returns which are required to be filed with any Governmental
Authority after giving effect to applicable extensions, and has paid or has caused to be paid all
material taxes as shown on said returns or on any assessment received by it in writing, to the
extent that such taxes have become due, except as permitted by Section 5.13 hereof. No
Credit Party knows of any material additional assessments or any basis therefor. The Credit
Parties believe that the charges, accruals and reserves on its books in respect of taxes or other
governmental charges are accurate and adequate.




          SECTION 3.16. Compliance with ERISA. Except as individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect: (a) each of the Credit Parties’
Plans, each of which has been maintained and operated in all material respects in accordance with
all Applicable Laws, including ERISA and the Code, and each Plan intended to qualify under section
401(a) of the Code satisfies the requirements of such section; (b) no Reportable Event has occurred
in the last five years as to any Plan, and the present value of all benefits under all Plans
subject to Title IV of ERISA (based on those assumptions used to fund such Plans) did not, in the
aggregate, as of the last annual valuation date (if any) applicable thereto, exceed the actuarial
value of the assets of such Plans allocable to such benefits; (c) no liability has been, and no
circumstances exist pursuant to which any material liability is reasonably likely to be, imposed
upon any Credit Party or ERISA Affiliate (i) under sections 4971 through 4980E of the Code,
sections 502(i) or 502(l) of ERISA, or Title IV of ERISA with respect to any Plan or Multiemployer
Plan, (ii) for the failure to fulfill any obligation to contribute to any Multiemployer Plan, or
(iii) with respect to any Plan that provides post-




53









 







retirement welfare coverage (other than as required pursuant to Section 4980B of the Code);
and (d) neither any Credit Party nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization or has been terminated within the meaning of Title IV of
ERISA, and no Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated.




          SECTION 3.17. Agreements.




          (a) No Credit Party is in default in the performance, observance or fulfillment of any of the
material obligations, covenants or conditions contained in any Material Agreement which either (i)
relates to any Item of Product for which credit is provided under the Borrowing Base or (ii) would,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.




          (b) Schedule 3.17 is a true and complete listing as of the date hereof of all Material
Agreements.




          SECTION 3.18. Security Interest. This Credit Agreement and the other Fundamental
Documents, when executed and delivered and upon the making of the initial Loan hereunder, will
create and grant to the Administrative Agent for the benefit of the Administrative Agent and the
Lenders (upon (i) the filing of the appropriate UCC-1 financing statements with the filing offices
listed on Schedule 3.18, (ii) the filing of the Copyright Security Agreement with the U.S.
Copyright Office, (iii) the filing of a Trademark Security Agreement with the U.S. Patent and
Trademark Office, and (iv) following the First Priority Obligations Payment Date, the delivery of
the Pledged Securities with (in the case of Pledged Securities comprising capital stock)
appropriate stock powers to the Administrative Agent) valid and perfected security interests in the
Collateral including in the Pledged Securities (other than (x) letter of credit rights, (y)
insurance and (z) with respect to perfection in intellectual property in any jurisdiction other
than the United States) and subject only to Specified Permitted Encumbrances. Each Credit Party’s
taxpayer identification number and organizational identification number is listed on Schedule
3.18 hereto.




          SECTION 3.19. Environmental Liabilities.




          (a) Except as set forth in Schedule 3.19, no Credit Party has used, stored, treated,
transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on,
under, at, from or in any way affecting, any of its properties or assets owned or leased by a
Credit Party, in any manner which at the time of the action in question materially violated any
Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials and to the best of each Credit Party’s
knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior
subtenant thereof has used Hazardous Materials on or affecting such property or asset, or
otherwise, in any manner which at the time of the action in question materially violated any
Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials.




54









 








          (b) To the best of each Credit Party’s knowledge (i) no Credit Party has any obligations or
liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or
unassessed, which could reasonably be expected to have a Material Adverse Effect, and (ii) no
claims have been made against any of the Credit Parties in the past five years and no presently
outstanding citations or notices have been issued against any of the Credit Parties, which in
either case could reasonably be expected to have a Material Adverse Effect and which in either case
have been or are imposed by reason of or based upon any provision of any Environmental Law,
including, without limitation, any such obligations or liabilities relating to or arising out of or
attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation or handling of any Hazardous Materials by any Credit Party, or
any of its employees, agents, representatives or predecessors in interest in connection with or in
any way arising from or relating to any of the Credit Parties or any of their respective owned or
leased properties, or relating to or arising from or attributable, in whole or in part, to the
manufacture, processing, distribution, use, treatment, storage, disposal, transportation or
handling of any such substance, by any other Person at or on or under any of the real properties
owned or used by any of the Credit Parties or any other location where such obligations or
liabilities could reasonably be expected to have a Material Adverse Effect.




          SECTION 3.20. Pledged Securities.




          (a) All of the Pledged Securities are duly authorized, validly issued, fully paid and
non-assessable, and are owned and held by the Pledgors, free and clear of any Liens, other than
those created pursuant to this Credit Agreement and other Permitted Encumbrances, and there are no
restrictions on the transfer of the Pledged Securities other than as a result of this Credit
Agreement, the First Lien Agreement or applicable securities laws and the regulations promulgated
thereunder. The Pledged Securities are owned by the Persons specified on Schedules 3.7(a)
and (b).




          (b) Except as set forth on Schedules 3.7(a) and (b), there are no outstanding
rights, warrants, options, conversion or similar rights currently outstanding with respect to, and
no agreements to purchase or otherwise acquire, any shares of the capital stock or other Equity
Interests of any issuer of any of the Pledged Securities; and there are no securities or
obligations of any kind convertible into any shares of the capital stock or other Equity Interests
of any issuer of any of the Pledged Securities.




          SECTION 3.21. Compliance with Laws. No Credit Party is in violation of any Applicable
Law except for such violations in the aggregate which could not reasonably be expected to have a
Material Adverse Effect. The Borrowings hereunder, the intended use of the proceeds of the Loans
as described in the Introductory Statement hereto and as contemplated by Section 5.18
hereof and any other transactions contemplated hereby will not violate any Applicable Law, except
to the extent that any such violations would not, individually or in the aggregate, have a Material
Adverse Effect.




          SECTION 3.22. Subsidiaries. As of the Closing Date, no Credit Party has a direct or
indirect Subsidiary other than as listed on Schedule 3.7(b).




55









 








          SECTION 3.23. Solvency. No Credit Party has entered or is entering into the
arrangements contemplated hereby and by the other Fundamental Documents, or intends to make any
transfer or incur any obligations hereunder or thereunder, with actual intent to hinder, delay or
defraud either present or future creditors. As of the Closing Date, (i) the aggregate fair market
value of the business and/or assets of each of (x) the Borrower and (y) the Credit Parties, taken
as a whole, will in each case exceed its or their respective liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) the Borrower will, and the Credit
Parties, taken as a whole will, have sufficient cash flow to enable it or them (as the case may be)
to pay its or their debts as they mature and (iii) the Borrower will not, and the Credit Parties,
taken as a whole will not, have unreasonably small capital for the business in which it or they (as
the case may be) is or are engaged.




          SECTION 3.24. Distribution Rights. Each Credit Party has sufficient right, title and
interest in each Valuation Item of Product (including both rights under copyright and ownership of
or access to Physical Materials) to enable it (i) to enter into and perform all of the Material
Agreements to which it is a party and (ii) to charge, earn, realize and retain all fees and profits
to which such Credit Party is entitled thereunder, and is not in breach of any of its obligations
under such agreements, nor does any Credit Party have any knowledge of any breach or anticipated
breach by any other parties thereto, which breach in either case either individually or when
aggregated with all other such breaches could reasonably be expected to have a Material Adverse
Effect.




          SECTION 3.25. Bank Accounts. Schedule 3.25 sets forth a complete list as of
the Closing Date of all bank accounts of each Credit Party.




          SECTION 3.26. Disclosure. The written information contained in this Credit Agreement,
any other Fundamental Document or any Material Agreement, or other document, certificate or
statement (other than the Initial Projections, estimates and information of a general economic or
industry nature) furnished to the Administrative Agent and the Lenders by or on behalf of any
Credit Party in connection with the transactions contemplated hereby, when taken as a whole at the
time they were furnished, did not contain any untrue statement of a material fact made by or on
behalf of any Credit Party regarding the Credit Parties or omit to state a material fact, under the
circumstances under which it was made, necessary in order to make the statements contained herein
or therein not misleading (considered in the context of all other information provided to the
Lenders). The Initial Projections, estimates and information of a general economic or industry
nature, unless otherwise disclosed, were prepared in good faith based upon assumptions believed by
the Borrower to be reasonable at the time made, it being understood that actual results may vary
materially therefrom. At the date hereof, there is no fact known to any Credit Party (other than
general industry conditions) which could reasonably be expected to have a Material Adverse Effect.




4. CONDITIONS OF LENDING




          SECTION 4.1. Conditions Precedent to Initial Loan. The obligation of each initial
Lender to make its initial Loan is subject to the satisfaction in full of the following conditions
precedent:




56









 








          (a) Corporate Documents. The Administrative Agent shall have received, with copies
for each of the Lenders:





	 	(i)	 	a copy of the articles or certificate of incorporation or
certificate of formation (or equivalent document) of each Credit Party,
certified on a recent date (not more than five (5) Business Days prior to the
Closing Date) by the Secretary of State or other relevant office of such
Person’s jurisdiction of incorporation or organization, as the case may be;
	 
	 	(ii)	 	from each jurisdiction in which it is available, a certificate
of the Secretary of State of such jurisdiction of organization, dated as of a
recent date (not more than five (5) Business Days prior to the Closing Date) as
to the good standing of, and payment of taxes by, each Credit Party, which
certificate lists (if available) the charter documents on file in the office of
such Secretary of State;
	 
	 	(iii)	 	from each jurisdiction in which it is available, a certificate
dated as of a recent date (not more than five (5) Business Days prior to the
Closing Date) as to the good standing of each Credit Party issued by the
Secretary of State or other relevant office of each jurisdiction in which such
Credit Party is qualified as a foreign corporation as listed in Schedule
3.1 hereto;
	 
	 	(iv)	 	a certificate of the Secretary, Assistant Secretary or other
appropriate officer acceptable to the Administrative Agent of each Credit
Party, dated the Closing Date and certifying (A) that attached thereto is a
true and complete copy of the by-laws, articles of organization, limited
liability company agreement (or equivalent document) of such party as in effect
on the date of such certification; (B) that attached thereto is a true and
complete copy of the resolutions adopted by the board of directors (or
equivalent body) of such party authorizing the execution, delivery and
performance in accordance with their respective terms of the Fundamental
Documents executed by such Credit Party, as applicable, and any other documents
required or contemplated hereunder or thereunder, the grant of the security
interests in the Collateral, and in the case of the Borrower, the borrowings
hereunder, and that such resolutions have not been amended, rescinded or
supplemented and are currently in effect; (C) that the articles, certificate of
incorporation or certificate of formation (or equivalent document) of such
party has not been amended since the date of the last amendment thereto
indicated on the certificates of the Secretary of State or other appropriate
office furnished pursuant to clause (i) above; (D) as to the incumbency and
specimen signature of each officer of such party executing any Fundamental
Document (such certificate to contain a certification by another officer of
such party as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iv)) and (E) that all copies or
originals of documents delivered pursuant to this Section 4.1 are true,
correct and complete; and




57









 






	 	(v)	 	an organizational chart of the Borrower and its subsidiaries
reflecting the organizational structure of such entities.





          (b) Credit Agreement; Notes. The Administrative Agent shall have received
(i) executed counterparts of this Credit Agreement, which, when taken together, bear the signatures
of the Administrative Agent, all of the Credit Parties and all of the Lenders, and (ii) the Notes
which have been requested by Lenders, executed by the Borrower.




          (c) Opinion of Counsel. The Administrative Agent shall have received the written
opinion of Latham & Watkins LLP, counsel to the Credit Parties, dated the Closing Date and
addressed to the Administrative Agent and the Lenders which opinion shall be in form and substance
satisfactory to the Administrative Agent, a copy of which is attached hereto as Exhibit B.




          (d) Termination of Existing Second Lien Facility. (i) The Administrative Agent shall
have received evidence reasonably satisfactory to it that (a) all Loans extended and other
obligations (including any prepayment premiums) under the Existing Second Lien Agreement have been,
or on the Closing Date shall be, paid or repaid (as applicable) in full and all other Obligations
(as defined under the Existing Second Lien Agreement) have been, or on the Closing Date shall be,
retired (including any prepayment premiums thereunder), together with any accrued interest thereon
and any accrued fees payable under the Existing Second Lien Facility, and (b) all security
interests granted by the Credit Parties under the Existing Second Lien Agreement have been, or on
the Closing Date shall be, terminated.




          (e) Guaranty of Crown Media’s Performance. The Hallmark Guaranty shall be in effect.




          (f) No Material Adverse Effect. No event shall have occurred that has had or could
reasonably be expected to have a Material Adverse Effect on the Credit Parties, taken as a whole,
since December 31, 2007.




          (g) Insurance. The Credit Parties shall have furnished the Administrative Agent with
(i) evidence acceptable to the Administrative Agent that the insurance policies required by
Section 5.5 have been obtained and are in full force and effect and (ii) certificates of
insurance with respect to all existing insurance coverage which certificates shall name JPMorgan
Chase Bank, N.A., as Administrative Agent, as the certificate holder (i.e., as additional insured
or loss payee, as appropriate) and shall evidence the Credit Parties’ compliance with Section
5.5 with respect to all insurance coverage existing as of the Closing Date.




          (h) Security and Other Documentation. The Administrative Agent shall have received:
(i) fully executed copies of Pledgeholder Agreements for each Valuation Item of Product; (ii) fully
executed copy of the Copyright Security Agreement listing each U.S. copyright registration owned by
a Credit Party in a Valuation Item of Product and each other U.S. registered copyright interest
licensed, acquired or otherwise held by a Credit Party therein executed by each such Credit Party;
(iii) fully executed copy of a Trademark Security Agreement for each U.S. registered trademark
owned by any Credit Party, other than “intent to use” trademark and service use applications for
which a statement of use has not been filed (as listed




58









 







on Schedule 3.8(b) hereto) executed by each such Credit Party; and (iv) appropriate
UCC-1 financing statements relating to the Collateral.




          (i) Payment of Fees. All fees and expenses then due and payable by the Parent or any
Credit Party to the Administrative Agent, the Arranger and/or the Lenders in connection with the
Facility, including those set forth in the Fee Letters, shall have been paid.




          (j) Searches. The Administrative Agent shall have received UCC and other searches
satisfactory to it indicating that no other filings, encumbrances or transfers (other than in
connection with Permitted Encumbrances) with regard to the Collateral are of record in any
jurisdiction in which it shall be necessary for the Administrative Agent to make a UCC filing in
order to provide the Administrative Agent (for the benefit of the Administrative Agent and the
Lenders) with a perfected security interest in the Collateral.




          (k) Account Control Agreement. The Administrative Agent shall have received fully
executed Account Control Agreements for each account of a Credit Party other than accounts for
which, pursuant to the provisions of Section 5.20 hereof, the Credit Parties do not need to
maintain Account Control Agreements.




          (l) Compliance with Laws. The Administrative Agent shall be satisfied that the
transactions contemplated hereby will not (i) violate any provision of Applicable Law, or any order
of any court or other agency of the United States of America or any state thereof applicable to any
of the Credit Parties or any of their respective properties or assets, other than such as could not
reasonably be expected to have a materially adverse effect upon the business, assets, properties,
operations, financial condition, liabilities (including contingent liabilities) and Material
Agreements of the Borrower and its Subsidiaries, taken as a whole or (ii) conflict with, or result
in a default, breach or right of termination or acceleration under, any Material Agreement to which
any Credit Party is a party, other than such as could not reasonably be expected to result in a
Material Adverse Effect.




          (m) USA Patriot Act. The Administrative Agent shall have received any information
required and requested by the Administrative Agent or any Lender under or in connection with the
USA Patriot Act.




          (n) Borrowing Certificate. The Administrative Agent shall have received a Borrowing
Certificate with respect to such Borrowing, duly executed by an Authorized Officer of the Borrower.




          (o) Representations and Warranties. The representations and warranties set forth in
Article 3 hereof (as updated from time to time by any amendment of the Schedules attached
to this Credit Agreement in accordance with Section 5.1(g) hereof) and in the other
Fundamental Documents shall be true and correct in all material respects on and as of the date of
the Borrowing.




          (p) No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing, nor shall any such event occur by reason of the making of such Loan.




59









 








          (q) Consummation of 2008 Transactions. The simultaneous consummation of the 2008
Transactions, including (a) that the Registration Statement shall have been declared effective, (b)
the consummation of a Qualified IPO of Public Co., (c) the consummation of the Reorganization and
(d) the retirement of all Parent Note Obligations.




          (r) Conditions of First Lien Amendment No. 2. All conditions to the effectiveness of
the First Lien Amendment No. 2 shall have been satisfied or waived by the Administrative Agent.




          (s) Availability Under Senior Facilities. The Administrative Agent shall have
received evidence satisfactory to it that the following have been satisfied on the Closing Date
with respect to the Revolving Credit Facility (as defined in the First Lien Agreement, as such
revolving credit facility is being increased contemporaneously with the occurrence of the Closing
Date): (i) the total commitments under the Revolving Credit Facility exceed sum of the
aggregate principal amount of the outstanding loans under the Revolving Credit Facility
plus the L/C Exposure (as defined in the First Lien Credit Agreement) by at least
$25,000,000; and (ii) the Borrowing Base exceeds sum of the aggregate principal amount of
outstanding loans under the First Lien Credit Agreement plus the L/C Exposure by at least
$25,000,000.




          (t) Parent LLC Agreement. The Administrative Agent shall have received, and be
satisfied with (in its reasonable discretion; provided that it is agreed that the copy
provided to the Administrative Agent prior to the date hereof is satisfactory) the provisions of an
executed copy, certified by Borrower to be true and correct, of the Parent LLC Agreement.




          (u) Intercreditor Agreement. The Administrative Agent shall have received a
fully-executed copy of the Intercreditor Agreement duly executed by each party thereto.




          (v) Contribution Agreement. The Administrative Agent shall have received a fully
executed Contribution Agreement duly executed by each of the Credit Parties.




          (w) Other Documents. The Administrative Agent shall have received such other closing
documentation as the Administrative Agent may reasonably request.




5. AFFIRMATIVE COVENANTS




          From the date hereof and for so long as any amount shall remain outstanding under any Note or
any other Obligation shall remain unpaid or unsatisfied, each of the Credit Parties agrees that,
unless the Required Lenders shall otherwise consent in writing, it will (it being understood that,
for purposes of this Article 5, to the extent that any Credit Party is required to act
within a certain number of days the last day of which is not a Business Day, then the due date for
such action shall be extended to the next succeeding Business Day):




          SECTION 5.1. Financial Statements and Reports. Furnish or cause to be furnished to
the Administrative Agent and each of the Lenders:




          (a) Within one hundred twenty (120) days after the end of each fiscal year of the Borrower
commencing with the fiscal year ending December 31, 2008, the audited




60









 







consolidated balance sheet of Borrower and its Consolidated Subsidiaries as at the end of, and
the related consolidated statements of operations, member’s equity (deficit) and comprehensive loss
for, such fiscal year, accompanied by an unqualified report and opinion of KPMG LLP or such other
independent public accountants of nationally recognized standing as shall be retained by the
Borrower, which report and opinion shall be prepared in accordance with generally accepted auditing
standards relating to reporting and which report and opinion shall contain no material exceptions
or qualifications except for qualifications relating to accounting changes (with which such
independent public accountants concur) in response to FASB releases or other authoritative
pronouncements, together with a certificate signed by an Authorized Officer of the Borrower, to the
effect that such financial statements fairly present the financial position of the Borrower ands
its Consolidated Subsidiaries as at the dates indicated and the results of their operations for the
periods indicated in conformity with GAAP;




          (b) Within sixty (60) days after the end of each of the first three fiscal quarters of each of
fiscal year of the Borrower and its Consolidated Subsidiaries, commencing with the fiscal quarter
ending June 30, 2008, the unaudited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of, and the related unaudited consolidated operation, member’s equity
(deficit) and comprehensive loss for, such fiscal quarter, and for the portion of the fiscal year
through the end of such fiscal quarter, together with a certificate signed by an Authorized Officer
of the Borrower to the effect that such financial statements, while not examined by independent
public accountants, reflect, in the opinion of the Borrower, all adjustments necessary to present
fairly in all material respects the financial position of the Borrower ands its Consolidated
Subsidiaries as at the end of the fiscal quarter and the results of operations for the quarter then
ended in conformity with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes;




          (c) Prior to the First Priority Obligations Payment Date, copies of each Borrowing Base
Certificate delivered under the First Lien Facilities simultaneous with such delivery (the
“Borrowing Base Certificate”);




          (d) Simultaneously with or prior to the delivery of the statements referred to in paragraph
(a) of this Section 5.1, both (i) a detailed consolidated annual budget for the
then-current fiscal year in a form consistent with the Business Plan (including a projected
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year, and the related consolidated statements of projected cash flow and projected income
for such fiscal year), which budget shall be accompanied by the statement of an Authorized Officer
of the Borrower to the effect that, to the best of his or her knowledge, such budget is a
reasonable estimate for the period covered thereby and (ii) the calculation of the Eligible Library
Amount computed as of the last Business Day of the prior fiscal year as contemplated by the
definition of “Eligible Library Amount”;




          (e) Simultaneously with the delivery of the statements referred to in paragraphs (a) and (b)
of this Section 5.1, a certificate of an Authorized Officer of the Borrower, as applicable,
in form and substance reasonably satisfactory to the Administrative Agent (i) stating whether or
not such Authorized Officer has knowledge of any Event of Default or Default and, if so, specifying
each such condition or event, the nature thereof and any action taken or proposed to be taken with
respect thereto, (ii) demonstrating in reasonable detail




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compliance with the provisions of Section 6.21 hereof and including supporting
schedules, (iii) certifying that all filings required under Section 5.7 hereof have been
made and listing each such filing that has been made since the date of the last certificate
delivered in accordance with this Section 5.1(e), (iv) stating whether any change in GAAP
or in the application thereof has occurred (x) since the date of the most recent audited financial
statements delivered to the Administrative Agent hereunder (but until the delivery of any audited
financial statements hereunder, since the date of the unaudited financial statements referred to in
Section 3.5) and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate or (y) since April 13, 2007 that would
affect the calculations described in clause (ii) above and reconciling such calculations with the
most recent financial statements delivered hereunder and (v) identifying all Subsidiaries existing
on the date of such certificate and indicating, for each such Subsidiary, whether such Subsidiary
was formed or acquired since the end of the previous fiscal quarter;




          (f) Promptly upon their becoming publicly available, copies of (i) all registration
statements, proxy statements, notices and reports any Credit Party shall file with any securities
exchange or with the Securities and Exchange Commission or any successor agency, if any, and (ii)
all reports, financial statements, press releases and other information which any Credit Party
shall release, send or make available to its common stockholders generally; provided, that
any such documents that are filed or furnished with the Securities and Exchange Commission on via
EDGAR or any successor electronic document submission program shall be deemed to have been provided
to the Administrative Agent when so filed or furnished;




          (g) From time to time such information as may be required to keep current each of
Schedules 3.7(a), 3.7(b), 3.8(a) and 3.18;




          (h) Simultaneously with delivery of financial statements required under Section 5.1(a)
and (b) above, a report by management outlining the financial condition and results of
operations of the Credit Parties, taken as a whole, as well as comparisons against the prior period
performance in a form reasonably acceptable to the Administrative Agent in its sole discretion;




          (i) Simultaneously with delivery of the financial statements required under Sections
5.1(a) and (b) above, (x) a direct cash flow statement for the fiscal period presented
in such financial statements, prepared with a methodology consistent in all material respects with
Initial Projections and (y) a reconciliation of operating cash flow only for that fiscal period
between the Section 5.1(a) or (b) financial statements and such direct cash flow statement;




          (j) Promptly upon request therefor, any information required by the Administrative Agent on
behalf of itself or any Lender under or in connection with the USA Patriot Act;




          (k) From time to time such additional information regarding the financial condition or
business of any Credit Party, any Item of Product, any Distribution Agreement, any Eligible
Receivable or the Collateral, as the Administrative Agent may reasonably request, including, but
not limited to, management letters issued to a Credit Party by its auditors; and




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          (l) Promptly upon receipt thereof, any and all correspondence delivered or received by
(whether originating from or to Public Co., Parent or KRH) any Credit Party to the extent that such
correspondence relates to any calculation of Tax Distributions.




          SECTION 5.2. Corporate Existence; Compliance with Laws. Do or cause to be done all
things reasonably necessary (i) to preserve, renew and keep in full force and effect its legal
existence and material rights, licenses, permits and franchises and (ii) to comply with all
applicable statutes, regulations and orders of, and all applicable restrictions imposed by, any
Governmental Authority, except (a) as otherwise permitted under Section 6.6, (b)
that any Credit Party other than the Borrower may be liquidated or dissolved if (x) in the
reasonable judgment of the governing body of the Borrower, such Credit Party is no longer necessary
or desirable for the proper conduct of the business of the Borrower and (y) such liquidation or
dissolution could not reasonably be expected to have a Material Adverse Effect or (c) in the case
of clause (ii) only, where the failure to do so could not individually or in the aggregate
reasonably be expected to result in a Material Adverse Effect.




          SECTION 5.3. Maintenance of Properties. Keep its tangible properties which are
material to its business in good repair, working order and condition (ordinary wear and tear
excepted) and, from time to time (i) make (or cause to be made) all necessary and proper repairs,
renewals, replacements, additions and improvements thereto, and (ii) comply at all times with the
provisions of all material leases and other material agreements to which it is a party so as to
prevent any loss or forfeiture thereof or thereunder unless compliance therewith is being currently
contested in good faith by appropriate proceedings and appropriate reserves, if any, have been
established in accordance with GAAP; provided, however, that nothing in this
Section 5.3 shall prevent any Credit Party from discontinuing the use, operation or
maintenance of such properties or disposing of them if (x) such discontinuance or disposal is, in
the reasonable judgment of such Credit Party, desirable in the conduct of business and (y) such
discontinuance or disposal could not reasonably be expected to result in a Material Adverse Effect.




          SECTION 5.4. Notice of Material Events.




          (a) Upon any executive officer of the Borrower obtaining knowledge of (i) any Default or Event
of Default, (ii) any event which could reasonably be expected to result in a Material Adverse
Effect or (iii) any other event which could reasonably be expected to materially and adversely
impact upon the collection of at least $17,000,000 worth of Eligible Receivables (as defined in the
First Lien Agreement) of the Credit Parties, in each case, the Borrower shall promptly give written
notice thereof to the Administrative Agent specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by such Person and the
nature of such claimed Event of Default or condition and what action any Credit Party has taken, is
taking and proposes to take with respect thereto.




          (b) Upon any Authorized Officer of the Borrower obtaining actual knowledge of the filing or
commencement of, or any written threat or notice of intention of any Person to file or commence,
any action, suit or proceeding, whether at law or in equity or by or before any Governmental
Authority or in arbitration, against the Borrower or any of its Subsidiaries as to which a
determination in favor of the Borrower or such Subsidiary is not reasonably probable and which, if
adversely determined, would reasonably be expected to result in a judgment in




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excess of $17,000,000, the Borrower shall promptly (and, in any event, within five (5)
Business Days after such Authorized Officer obtains such knowledge) give notice to the
Administrative Agent specifying the nature of such action, suit or proceeding and what actions the
Credit Parties have taken, are taking and propose to take with respect thereto.




     SECTION 5.5. Insurance.



          (a) Keep its assets which are of an insurable character insured (to the extent and for the
time periods consistent with customary industry standards) by financially sound and reputable
insurers against loss or damage by fire, explosion, theft or other hazards which are included under
extended coverage in amounts not less than the insurable value of the property insured or such
lesser amounts, and with such self-insured retention or deductible levels, as are consistent with
normal industry standards for companies similarly situated owning similar properties and engaged in
similar business as the Credit Parties.




          (b) Maintain with financially sound and reputable insurers, insurance against other hazards
and risks and liability to Persons and property to the extent and in the manner consistent with or
customary standards for companies similarly situated owning similar properties and engaged in
similar business as the Credit Parties.




          (c) Maintain, or cause to be maintained, in effect during the period from the commencement of
production of each Item of Product produced by any Credit Party or from the date of acquisition of
each Item of Product acquired by any Credit Party, through the third anniversary of the date on
which such Item of Product is Completed and as otherwise required by applicable contracts, a
so-called “Errors and Omissions” policy covering all such Items of Product, and cause such Errors
and Omissions policy to provide coverage to the extent and in such manner as is customary for Items
of Product of like type for companies similarly situated owning similar properties and engaged in
similar business as the Credit Parties but, at minimum, to the extent and in such manner as is
required under all applicable contracts relating thereto.




          (d) Maintain, or cause to be maintained, in effect during the period from the commencement of
production of each Item of Product produced by any Credit Party, (i) until such time as the
Administrative Agent shall have been provided with satisfactory evidence of the existence of one
negative or master tape in one location and an interpositive, internegative or duplicate master
tape in another location of the final version of the Completed Item of Product, insurance on the
negatives and sound tracks or master tapes of such Item of Product in such amounts and in such
manner as is consistent with customary industry standards for companies similarly situated owning
similar properties and engaged in similar business as the Credit Parties for similar Items of
Product, and (ii) until production of such Item of Product has been concluded, a cast insurance
policy with respect to such Item of Product, which provides coverage to the extent and in such
manner as is customary for Items of Product of a like type, but at minimum, to the extent required
under all applicable contracts relating thereto.




          (e) Maintain, or cause to be maintained, in effect distributor’s “Errors and Omissions”
insurance to the extent and in amounts consistent with or customary industry standards for
companies similarly situated owning similar properties and engaged in similar business as the
Credit Parties.




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     (f) Cause all such above-described insurance (excluding worker’s compensation insurance) to:
(i) use commercially reasonable efforts to provide for the benefit of the Lenders that ten (10)
days’ prior written notice (or, for the policies described in clauses (c) and (e) above, thirty
(30) days) of cancellation, termination, non-renewal or lapse or material change of coverage shall
be given to the Administrative Agent; (ii) name the Administrative Agent for the benefit of the
Administrative Agent and the Lenders as a loss payee (except for “Errors and Omissions” insurance
and other third party liability insurance); provided, however, that production
insurance recoveries received prior to Completion or abandonment of an Item of Product may be
utilized to finance the production of such an Item of Product, and; provided,
further, that so long as no Event of Default has occurred or is continuing, property
insurance proceeds may be used to repair damage in respect of which such proceeds were received;
and (iii) to the extent that none of the Administrative Agent and the Lenders shall be liable for
premiums or calls, name the Administrative Agent (for the benefit of the Administrative Agent and
the Lenders) as additional insureds including, without limitation, under any “Errors and Omissions”
policy.



     (g) Subject to Section 5.27, maintain a key man life insurance policy for the life of Robert
J. Halmi, Jr. in an amount of at least $5,000,000 with an insurer reasonably acceptable to the
Administrative Agent; provided that, so long as no Event of Default has occurred
and is continuing, key man life insurance recoveries may be used to pay any compensation or similar
“signing bonuses” necessary to obtain a replacement for Robert J. Halmi, Jr.



     SECTION 5.6. [Intentionally Omitted.]



     SECTION 5.7. Copyrights and Trademarks.



     (a) Within sixty (60) days after the initial release or broadcast of each Item of Product, to
the extent any Credit Party (i) is or becomes the U.S. or foreign copyright proprietor thereof or
otherwise acquires a U.S. or foreign copyrightable interest therein, or (ii) acquires any material
U.S. or foreign trademark, service mark, trade name or service name, such Credit Party shall take
any and all actions necessary to register such copyright or trademark, service mark, trade name or
service name, in the name of such Credit Party (subject, in the case of the Credit Parties, to a
Lien in favor of the Administrative Agent for the benefit of itself and the Lenders to the extent
such copyright, trademark or service mark would be included as Collateral hereunder) in conformity
with the laws of the United States of America and such other jurisdictions as the Administrative
Agent may reasonably specify, and promptly deliver to the Administrative Agent (x) written evidence
of the registration of any and all such copyrights and trademarks for inclusion in the Collateral
under this Credit Agreement, and (y) a Copyright Security Agreement Supplement or a Trademark
Security Agreement relating to such copyright or such trademark, service mark, trade name or
service name, executed by such Credit Party; provided that such registration shall only be required
for foreign copyrights, copyrightable interests, trademarks, service marks, trade names or service
names upon the reasonable request of the Administrative Agent after consultation with the Borrower
if, in the reasonable judgment of the Administrative Agent, such foreign registration is necessary
in order to perfect its security interest in the related distribution rights.




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          (b) Obtain instruments of transfer of ownership or other documents evidencing the exclusive
license of any Credit Party with respect to (i) the copyright relating to Items of Product in which
such Credit Party is not entitled to be the initial copyright proprietor and (ii) any trademark,
service mark, trade name or service name which such Credit Party acquires, and promptly record if
such interest may be registered with the United States Copyright Office, the United States Patent
and Trademark Office or such other jurisdictions, any such assignments of ownership or documents
evidencing such exclusive license at the United States Copyright Office or the United States Patent
and Trademark Office and such other jurisdictions as the Administrative Agent may reasonably
request after consultation with the Borrower if, in the reasonable judgment of the Administrative
Agent, such foreign registration is necessary in order to perfect its security interest in the
related distribution rights.




          SECTION 5.8. Books and Records, Examination.




          (a) Maintain or cause to be maintained at all times true and complete books and records of its
financial operations and permit any Persons designated by the Administrative Agent (as a single
group) or, upon the occurrence and during the continuance of an Event of Default, any Lender to
visit and inspect the financial records and the properties of the Credit Parties at reasonable
times, upon reasonable prior notice to the Borrower, and as often as reasonably requested and to
make extracts from and copies of such financial records, and permit any Persons designated by the
Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any
Lender upon reasonable prior notice to the Borrower to discuss the affairs, finances and condition
of any of the Credit Parties with the officers thereof and independent accountants therefor
(subject to reasonable requirements of confidentiality, including requirements imposed by law or by
contract); provided that the Borrower shall be entitled to participate in any such meeting with
accountants. The Administrative Agent and the Lenders agree to use reasonable efforts to
coordinate and manage the exercise of their rights under this Section 6.6 so as to minimize
the disruption to the business of the Borrower and its Subsidiaries resulting therefrom.




          (b) If, at any time when an Event of Default is not in existence, the Administrative Agent
wishes to confirm with account debtors and other payors the amounts and terms of any or all
Eligible Receivables, the Administrative Agent will so notify the Credit Parties. The
Administrative Agent agrees to have such confirmation made through the Credit Parties’ auditors.
If for any reason such auditors fail to proceed with the confirmations in a timely manner and the
First Lien Agent has not itself commenced such confirmations, the Administrative Agent may proceed
to make such confirmations directly with account debtors and other payors after prior written
notice to the Borrower. Each of the Credit Parties hereby agrees that, upon the occurrence and
during the continuance of an Event of Default, if the First Lien Agent has not itself commenced
such confirmations, the Administrative Agent shall be entitled to confirm directly with account
debtors and other payors, the amounts and terms of all accounts receivable.




          SECTION 5.9. Third Party Audit Rights. Upon the Administrative Agent’s request,
promptly notify the Administrative Agent of, and at all times allow the Administrative Agent access
to the results of, all audits conducted by any Credit Party of any third party licensee,
partnership or joint venture under any agreement with respect to any Item of Product





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included in the Collateral. After an Event of Default has occurred and is continuing, the
Administrative Agent shall have the right to exercise directly or through any Credit Party at the
option of the Administrative Agent, such Credit Party’s right to audit any obligor under an
agreement with respect to any Item of Product included in the Collateral.




          SECTION 5.10. Observance of Agreements. Except to the extent that the failure to so
observe and perform could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, duly observe and perform all material terms and conditions of all material
agreements to which a Credit Party is a party with respect to the production, development and/or
exploitation of Items of Product, including but not limited to production services agreement,
Distribution Agreements and any agreement included in the chain of title for an Item of Product,
and diligently protect and enforce the rights of the Credit Parties under all such agreements in a
manner consistent with and subject to the terms and conditions of such agreements as from time to
time in effect.



          SECTION 5.11. Film Properties and Rights; Borrower to Act as Pledgeholder. Act as
pledgeholder for the Administrative Agent for the benefit of the Lenders with the same effect as if
the Administrative Agent for the benefit of the Lenders were a pledgee in possession of all
Physical Materials relating to an Item of Product that a Credit Party owns or licenses and/or for
which a Credit Party has access which are now or hereafter in the actual or constructive possession
of any Credit Party, subject to such access as shall be necessary to produce and distribute such
Item of Product.



          SECTION 5.12. Laboratories; No Removal. With respect to each Item of Product
Completed from and after the Closing Date, deliver a Pledgeholder Agreement promptly upon the
delivery of the related Physical Materials to a Laboratory (or, if applicable, a revised schedule
of Completed Items of Product with respect to an existing Pledgeholder Agreement). Prior to any
Credit Party requesting any such Laboratory to deliver any first generation negative or other first
generation preprint or first generation sound track material or first generation master tapes with
respect to a Completed Item of Product to another Laboratory, such Credit Party shall provide the
Administrative Agent with a Pledgeholder Agreement, executed by such other Laboratory and all other
parties to such Pledgeholder Agreement (including the Administrative Agent). Each Credit Party
hereby agrees not to deliver or remove or cause the delivery or removal of the first generation
negative and film or first generation sound materials or first generation master tapes with respect
to any Completed Item of Product owned by any Credit Party or in which any Credit Party has an
interest to a location outside the United States of America, Canada or the United Kingdom;
provided that the Completed Items of Product may only be stored in Canada or the
United Kingdom if and for so long as such jurisdiction permits the perfection of the Administrative
Agent’s security interest in such Item of Product by filing notice of such security interest with a
governmental recording body.



          SECTION 5.13. Taxes and Charges. Duly pay and discharge, or cause to be paid and
discharged, before the same shall become in arrears (after giving effect to applicable extensions),
all material taxes, assessments, levies and other governmental charges, imposed upon any Credit
Party or its properties, sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies which if unpaid might by law
become a Lien (other than a Permitted Encumbrance) upon any property of any



67









 







Credit Party; provided, however, that any such tax, assessment, levy or charge
need not be paid if the validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if such Credit Party shall have set aside on its books reasonable
reserves (the presentation of which is segregated to the extent required by GAAP) adequate with
respect thereto if reserves shall be deemed necessary; and provided, further, that
such Credit Party will pay all such taxes, assessments, levies or other governmental charges
forthwith upon the commencement of proceedings to foreclose any Lien which may have attached as
security therefor or post a bond or other security therefor.



          SECTION 5.14. Liens. Defend the Collateral (including, without limitation, the
Pledged Securities) against any and all Liens howsoever arising, other than Permitted Encumbrances,
and in any event defend against any attempted foreclosure on Collateral.



          SECTION 5.15. Further Assurances; Security Interests.



          (a) Upon the reasonable request of the Administrative Agent, duly execute and deliver, or
cause to be duly executed and delivered, at the cost and expense of the Credit Parties, such
further instruments as may be necessary in the reasonable judgment of the Administrative Agent to
carry out the provisions and purposes of this Credit Agreement and the other Fundamental Documents.



          (b) Upon the reasonable request of the Administrative Agent, promptly execute and deliver or
cause to be executed and delivered, at the cost and expense of the Credit Parties, such further
instruments as may be appropriate in the reasonable judgment of the Administrative Agent, to
provide the Administrative Agent for the benefit of the Administrative Agent and the Lenders a
perfected Lien in the Collateral (subject only to Specified Permitted Encumbrances) and any and all
documents (including, without limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other statement) for filing under the provisions
of the UCC and the rules and regulations thereunder, or any other Applicable Law, and perform or
cause to be performed such other ministerial acts which are reasonably necessary or advisable, from
time to time, in order to grant and maintain in favor of the Administrative Agent for the benefit
of itself and the Lenders the security interest in the Collateral contemplated hereunder and under
the other Fundamental Documents, subject only to Permitted Encumbrances.



          SECTION 5.16. ERISA Compliance and Reports. Furnish to the Administrative Agent (a)
as soon as possible, and in any event within thirty (30) days after any Authorized Officer of a
Credit Party has knowledge that (i) any Reportable Event with respect to any Plan has occurred, a
statement of an Authorized Officer of the Credit Party, setting forth on behalf of such Credit
Party details as to such Reportable Event and the action which it proposes to take with respect
thereto, together with a copy of the notice, if any, required to be filed of such Reportable Event
given to the PBGC, or (ii) an accumulated funding deficiency has been incurred or an application
has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding
standard or an extension of any amortization period under Section 412 of the Code with respect to a
Plan, a Plan or Multiemployer Plan has been or is proposed to be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA, proceedings have been instituted to
terminate a Plan, a proceeding has been instituted



68









 







pursuant to Section 515 of ERISA to collect a material delinquent contribution to a
Multiemployer Plan, or any such Credit Party or ERISA Affiliate will incur any material liability
(including any contingent or secondary liability) to or on account of the termination of or
withdrawal from a Plan or Multiemployer Plan under Sections 4062, 4063, 4201 or 4204 of ERISA, a
statement of an executive officer of the Credit Party, setting forth details as to such event and
the action the applicable Credit Party proposes to take with respect thereto, (b) promptly upon
reasonable request of the Administrative Agent, copies of each annual and other report with respect
to each Plan subject to Title IV of ERISA and (c) promptly after receipt thereof, a copy of any
notice any Credit Party or ERISA Affiliate may receive from the PBGC relating to the PBGC’s
intention to terminate any Plan or to appoint a trustee to administer any Plan.



          SECTION 5.17. Environmental Laws.



          (a) Promptly notify the Administrative Agent upon an executive officer of any Credit Party
becoming aware of any violation or potential violation or non-compliance with, or liability or
potential liability under any Environmental Laws which, when taken together with all other pending
violations could reasonably be expected to have a Material Adverse Effect, and promptly furnish to
the Administrative Agent all notices of any nature which any Credit Party may receive from any
Governmental Authority or other Person with respect to any violation, or potential violation or
non-compliance with, or liability or potential liability under any Environmental Laws which, in any
case or when taken together with all such other notices, could reasonably be expected to have a
Material Adverse Effect.



          (b) Comply with and use reasonable efforts to ensure compliance by all tenants and subtenants
with all Environmental Laws, and obtain and comply in all respects with and maintain and use best
efforts to ensure that all tenants and subtenants (if applicable) obtain and comply in all respects
with and maintain any and all licenses, approvals, registrations or permits required by
Environmental Laws, except where failure to do so could not have a Material Adverse Effect.



          (c) Conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under all Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities, except where
failure to do so could not have a Material Adverse Effect. Any order or directive whose lawfulness
is being contested in good faith by appropriate proceedings shall be considered a lawful order or
directive when such proceedings, including any judicial review of such proceedings, have been
finally concluded by the issuance of a final non-appealable order; provided,
however, that the appropriate Credit Party shall have set aside on its books reasonable
reserves (the presentation of which is segregated to the extent required by GAAP) adequate with
respect thereto if reserves shall be deemed necessary.



          (d) Defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective employees, agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature,
known or unknown, contingent or otherwise, arising out of, or in any way related to the violation
of or non-compliance by any Credit Party with any Environmental



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Laws, or any orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney and consultant fees, investigation and
laboratory fees, court costs and litigation expenses, but excluding therefrom all claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses arising out of or resulting
from (i) the gross negligence or willful acts or willful misconduct of any indemnified party, (ii)
any claims, demand, penalties, fines, liabilities, settlements, damages, costs and expenses against
an indemnified party by any Credit Party in which (but only to the extent that) such Credit Party
is the prevailing party or (iii) any acts or omissions of any indemnified party occurring after any
indemnified party is in possession of, or controls the operation of, any property or asset.



          (e) Refrain from causing or permitting any of its properties or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance in all material respects with all applicable
Environmental Laws, or releasing, discharging, disposing of or permitting or suffering any release
or disposal as a result of any intentional act or omission on its part of Hazardous Materials onto
any such property or asset in violation of any Environmental Law, in each case, except where the
same could not reasonably be expected to result in a Material Adverse Effect.



          SECTION 5.18. Use of Proceeds. Use the proceeds of the Facility extended on the
Closing Date to fund the 2008 Transactions (including to refinance outstanding loans under the
Existing Second Lien Facility (including the 1% prepayment premium set forth in section 2.10(a)
thereof)) and to pay fees, commissions and expenses incurred in connection with the 2008
Transactions.



          SECTION 5.19. Distribution Agreements, Letters of Credit, Etc.



          (a) Promptly upon receipt thereof (but in any event no later than thirty (30) days), deliver
to the Administrative Agent to be held as part of the Collateral, a copy of all letters of credit
(including any amendments thereto) which are received by a Credit Party (whether pursuant to a
Distribution Agreement or otherwise) after the date hereof and provide the Administrative Agent
access to the originals of all such letters of credit (to the extent such letter of credit is
assignable).



          (b) Furnish to the Administrative Agent, concurrently with the delivery of each quarterly
compliance certificate, a list in the form of Schedule 3.17 hereto of all Material
Agreements executed during the preceding quarter and all material amendments to existing Material
Agreements which amendments were executed during the preceding quarter.



          (c) Take all action on its part to be performed necessary to effect timely payments under all
letters of credit, including, without limitation, timely preparation, acquisition and presentation
of all documents, drafts or other instruments required to effect payment thereunder.



          SECTION 5.20. Deposit Accounts. With respect to all deposit accounts that are not
Excluded Accounts, either (i) maintain such accounts at the Administrative Agent or, prior to the
First Priority Obligations Payment Date, the First Lien Agent or (ii) provide the Administrative
Agent with written notice prior to opening or maintaining any account with any



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financial institution other than the Administrative Agent and deliver to the Administrative
Agent an Account Control Agreement with respect thereto. For purposes of complying with Section
5.20 only, the following types of accounts shall be “Excluded Accounts”: (a) Production Accounts
and (b) deposit accounts maintained in the ordinary course of business maintained solely for
funding: (v) 401(k) and other retirement plans and employee benefits, including rabbi trusts for
deferred compensation, (w) payroll, (x) health care benefits, (y) escrow arrangements and (z)
deposit accounts or defeasance accounts, in each case under this clause (z) set up in connection
with sale leaseback agreements in existence on the Closing Date or permitted to be completed
thereafter pursuant to Section 6.8 hereof.



          SECTION 5.21. Subsidiaries. Simultaneously with any Subsidiary which is not a
Guarantor hereunder becoming a “Guarantor” under the First Lien Facilities in connection with a
refinancing thereof and within ten (10) Business Days of the acquisition or formation of any new
Subsidiary of a Credit Party with assets valued at $250,000 or greater and promptly following any
Subsidiary that is not a Credit Party holding assets valued at $250,000 or greater, the Credit
Parties shall cause such Subsidiary to deliver to the Administrative Agent: (x) with respect to
each such Subsidiary that is not a Controlled Foreign Subsidiary, (i) an Instrument of Assumption
and Joinder duly executed by such Subsidiary, (ii) an appropriate UCC-1 financing statement for
such Subsidiary, (iii) to the extent that 100% of the Equity Interests of such Subsidiary have not
previously been pledged to the Administrative Agent (for the benefit of the Lenders), an executed
pledge agreement and, unless delivered to the First Lien Agent, the certificates representing 100%
of the Equity Interests of such Subsidiary held by a Credit Party together (in the case of Pledged
Securities comprising capital stock) with undated stock powers executed in blank, as applicable, or
any comparable documents for non-corporate entities and (iv) organizational documents to the extent
set forth in Section 4.1 hereof, and (y) with respect to each such Subsidiary that is a
Controlled Foreign Subsidiary (that is not a Subsidiary of another Controlled Foreign Subsidiary),
to the extent that 65% of the Equity Interests of such Subsidiary have not previously been pledged
to the Administrative Agent (for the benefit of the Lenders), an executed pledge agreement and
(unless delivered to the First Lien Agent) the certificates representing 65% of the Equity
Interests of such Subsidiary held by a Credit Party together (in the case of Pledged Securities
comprising capital stock) with undated stock powers executed in blank, as applicable, or any
comparable documents for non-corporate entities.



          SECTION 5.22. [Intentionally Omitted.]



          SECTION 5.23. [Intentionally Omitted.]



          SECTION 5.24. Negative Cost Statements. If reasonably requested by the
Administrative Agent, deliver to the Administrative Agent, within ninety (90) days after each
miniseries constituting an Item of Product with a Budgeted Negative Cost of more than $17,000,000
produced by a Credit Party is Completed, a tentative negative cost statement, and/or within one
hundred twenty 120 days after each such Item of Product is Completed, a final negative cost
statement.



          SECTION 5.25. Cash Receipts. Except to the extent remitted to the First Lien Agent,
in the event any Credit Party receives (i) payment from any account debtor or obligor, which
payment should have been remitted to the Administrative Agent or (ii) the proceeds of any



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sale of an Item of Product, in the form of cash or otherwise, such Credit Party shall as soon
as practicable remit such payment or proceeds to the Administrative Agent for deposit to the
Collection Account for application in accordance with Section 2.10 herein.



          SECTION 5.26. Guild Undertakings. Deliver to the Administrative Agent within thirty
(30) days (or such longer period as is agreed in the sole discretion of the Administrative Agent,
of the Closing Date undertakings from any guild holding a senior lien on any material portion of
the Collateral that such guild will give the Administrative Agent notice of and an opportunity to
cure any payment default by the Borrower or any Guarantor prior to exercising any remedies it may
have with respect to such liens.



          SECTION 5.27. Key Man Life Insurance. Pay the periodic premiums on the key man life
insurance policy in the amount of $5,000,000 on the life of Robert J. Halmi, Jr. held by the
Administrative Agent and maintain such policy in full force and effect unless replaced by a
comparable policy from any insurance company reasonably acceptable to the Administrative Agent.



          SECTION 5.28. Copyrights and Trademarks. The Credit Parties shall use commercially
reasonable efforts to transfer ownership of any copyright or trademark related to any Completed
Item of Product with a fair market value of more than $17,000,000 to RHI Entertainment
Distribution, LLC or any successor to RHI Entertainment Distribution, LLC permitted by this Credit
Agreement (the “Distribution Entity”), to the extent not already held thereby, within
thirty (30) days of the Completion of such Item of Product; provided that this covenant
shall be satisfied with respect to any such Completed Item of Product that is the subject of a sale
and leaseback permitted under Section 6.8 or any similar arrangement permitted by this
Credit Agreement involving a co-production treaty or other arrangements with Governmental
Authorities for the purposes of receiving tax or other incentives so long as beneficial ownership
is held by the Distribution Entity. The Distribution Entity shall maintain ownership of any such
copyright or trademark interests; provided that the Distribution Entity may sell or
transfer such copyright interests to a person that is not an Affiliate of the Distribution Entity
in any manner permitted by Section 6.6.



          SECTION 5.29. Post-Closing Covenant. Upon the request of the Administrative Agent,
use commercially reasonable efforts to cause any third party who is party to any pledgeholder
agreement, account control agreement or other Fundamental Document (as defined in the Existing
Second Lien Facility) in connection with the Existing Second Lien Facility to confirm in a writing
reasonably satisfactory to the Administrative Agent that such third party shall afford to the
Administrative Agent the same treatment as such third party had afforded to the Administrative
Agent (as defined in the Existing Second Lien Facility) pursuant to the relevant documentation
entered into in the context of the Existing Second Lien Facility.



          SECTION 5.30. Greenshoe Proceeds. Within three (3) Business Days of any Greenshoe
Proceeds having been raised, cause such Greenshoe Proceeds to (a) be contributed to Borrower, and
(b) be used by the Borrower to repay Indebtedness under the Revolving Credit Facility (as defined
in the First Lien Agreement), but without a requirement that the revolving credit commitments
thereunder be permanently reduced in connection with such repayment.



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6. NEGATIVE COVENANTS




          From the date hereof and for so long as any amount shall remain outstanding under any Note or
any other Obligation shall remain unpaid or unsatisfied, each of the Credit Parties agrees that,
unless the Required Lenders shall otherwise consent in writing, it will not:



          SECTION 6.1. Limitations on Indebtedness. Incur, create, assume or suffer to exist
any preferred stock or Indebtedness or permit any partnership or joint venture in which any Credit
Party is a general partner, subject to Section 6.4(c), to incur, create, assume or suffer
to exist any Indebtedness other than (in each case, including to the extent constituting
Indebtedness, all premium (if any), interest, fees, expenses, charges and additional or contingent
interest on the obligations described):



          (a) the Indebtedness represented by the Notes and the other Obligations or otherwise arising
pursuant to any Fundamental Document in favor of the Administrative Agent and the Lenders;



          (b) Guaranties permitted pursuant to Section 6.3 hereof;



          (c) Indebtedness in respect of secured purchase money financing (including Capital Leases) to
the extent permitted by Section 6.2(d), including any Refinancing Indebtedness in respect
thereof in an amount not to exceed $11,000,000 in the aggregate at any time outstanding;



          (d) unsecured liabilities for acquisition of rights or Items of Product and trade payables
incurred in the ordinary course of business and payable on normal trade terms and not otherwise
prohibited hereunder;



          (e) liabilities relating to net or gross profit participations and other contingent
compensation, including royalties, deferments and guild residuals with respect to the production,
distribution, acquisition or other exploitation of Items of Product;



          (f) Indebtedness in respect of inter-company advances constituting Investments permitted under
Section 6.4(c) or currently in effect or pursuant to Refinancing Indebtedness relating
thereto;



          (g) existing Indebtedness listed on Schedule 6.1 hereto;



          (h) Indebtedness incurred under the First Lien Agreement in an amount not to exceed the Cap
Amount and under any Permitted First Lien Refinancing;



          (i) other Indebtedness provided (i) after giving effect to the incurrence thereof, the
Leverage Ratio on a Pro Forma Basis is less than 7.0:1.0 and (ii) such Indebtedness is unsecured,
does not provide for any amortization or a final maturity date earlier than 6 months subsequent to
the later of the Maturity Date, and does not have covenants or events of default more restrictive
than the covenants or Events of Default contained in this Credit Agreement;



          (j) [Intentionally Omitted];



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          (k) Refinancing Indebtedness of Indebtedness permitted under clause (a), (c), (g), (i) or (l)
of this Section 6.1;



          (l) Indebtedness of any Credit Party to another Credit Party or to any wholly-owned domestic
Subsidiary of the Borrower; provided that (i) all such Indebtedness in excess of $1,000,000
shall be evidenced by promissory notes and all such promissory notes shall be subject to a Lien in
favor of the Administrative Agent (for the benefit of itself and the Lenders) and delivered to the
Administrative Agent pursuant to this Credit Agreement and (ii) all such Indebtedness shall be
unsecured and subordinated to the Obligations;



          (m) Indebtedness in respect of netting services, overdraft protections and otherwise in
connection with deposit accounts;



          (n) Indebtedness in respect of workers’ compensation claims, self-insurance obligations,
performance bonds, bid bonds, appeal bonds, surety bonds, financial assurances and completion
guarantees and similar obligations, in each case provided in the ordinary course of business,
including those incurred to secure health, safety and environmental obligations in the ordinary
course of business;



          (o) (i) Indebtedness of a Credit Party acquired after the Closing Date or of a corporation
merged into or consolidated with the Borrower or any Credit Party after the Closing Date and
Indebtedness assumed in connection with the acquisition of assets, which Indebtedness in each case,
exists at the time of such acquisition, merger or consolidation and is not created in contemplation
of such event and where such acquisition, merger or consolidation is permitted by this Credit
Agreement and (ii) any Refinancing Indebtedness incurred to Refinance such Indebtedness permitted
by subclause (i), provided that the aggregate principal amount of such Indebtedness at the time of,
and after giving effect to, such acquisition, merger or consolidation, such assumption or such
incurrence, as applicable (together with Indebtedness (including Refinancing Indebtedness) then
outstanding pursuant to this paragraph (o)), would not exceed $11,000,000 at any time outstanding;



          (p) Sale and leaseback transactions as permitted under Section 6.8 and Swap Agreements as
permitted under Section 6.17, in each case to the extent characterized as indebtedness;



          (q) Indebtedness of any Credit Party arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn by such Credit Party in the
ordinary course of business against insufficient funds, so long as such Indebtedness is repaid
within five (5) Business Days; and



          (r) Indebtedness of any Credit Party pursuant to Swap Agreements entered into as a risk
management strategy and not for speculative purposes.



          SECTION 6.2. Limitations on Liens. Incur, create, assume or suffer to exist any Lien
on any of its revenue stream, property or assets, whether now owned or hereafter acquired, except:



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          (a) the Liens of the Administrative Agent (for the benefit of the Administrative Agent and the
Lenders) under this Credit Agreement, the other Fundamental Documents and any other document
contemplated hereby or thereby;



          (b) existing Liens listed on Schedule 6.2 hereof;



          (c) Liens securing any Indebtedness incurred under Section 6.1(h), subject, in the
case of such Indebtedness, to the terms of the Intercreditor Agreement;



          (d) purchase money Liens in connection with Capital Expenditures granted to the vendor or
Person financing the acquisition of property, plant or equipment if: (x) the Lien is limited to the
particular assets acquired and proceeds thereof and (y) the Indebtedness secured by the Lien does
not exceed the acquisition cost of the particular assets acquired;



          (e) Liens pursuant to written security agreements in favor of guilds which are required
pursuant to collective bargaining agreements on terms consistent with those in existence as of the
Closing Date or otherwise reasonably satisfactory to the Administrative Agent;



          (f) deposits under worker’s compensation, unemployment insurance and social security and
similar laws or to secure statutory obligations or surety, appeal, performance or other similar
bonds (other than completion bonds) or to secure performance as lessee under leases of real or
personal property and other obligations of a like nature, in each case incurred in the ordinary
course of business;



          (g) Liens customarily granted or incurred in the ordinary course of business with regard to
goods provided or services rendered by laboratories and production houses, record warehouses,
common carriers, landlords, warehousemen, mechanics and suppliers of materials and equipment or
other service providers;



          (h) Liens arising out of attachments, judgments or awards as to which an appeal or other
appropriate proceedings for contest or review are timely commenced (and as to which foreclosure and
other enforcement proceedings shall not have been commenced (unless fully bonded or otherwise
effectively stayed)) and as to which appropriate reserves, if any, have been established in
accordance with GAAP;



          (i) Liens for taxes, assessments or other governmental charges or levies the validity or
amount of which is not yet due or is currently being contested in good faith by appropriate
proceedings pursuant to the terms of Section 5.13 hereof;



          (j) possessory Liens (other than those of Laboratories and production houses) which (i) occur
in the ordinary course of business, (ii) secure normal trade debt which is not yet due and payable
and (iii) do not secure Indebtedness;



          (k) Liens arising by virtue of any statutory or common law provision relating to banker’s
Liens, rights of setoff or similar rights with respect to deposit accounts;



          (l) easements, rights of way, restrictions, minor defects or irregularities in title and other
similar encumbrances on real property which do not materially detract from the



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value of the property subject thereto or materially interfere with the ordinary conduct of
business of the Borrower or any of its Subsidiaries;



          (m) Liens in favor of licensees to secure their right to enjoy their licensed rights pursuant
to Distribution Agreements entered into in the ordinary course of business on terms reasonably
satisfactory to the Administrative Agent;



          (n) Liens in favor of a co-financier of an Item of Product, provided that (i) such
Lien shall only secure the co-financier’s pro-rata share of any proceeds of the Item of Product,
(ii) such Lien is upon terms reasonably acceptable to the Administrative Agent; (iii) the
co-financier, the Borrower or relevant Credit Party, the Administrative Agent and the First Lien
Agent (prior to the First Priority Obligations Payment Date) enter into an intercreditor agreement
with respect to the priority of such Lien; and (iv) such Lien shall not affect the control of the
First Priority Agent (prior to the First Priority Obligations Payment Date and the Administrative
Agent thereafter) over such Item of Product upon the occurrence of an Event of Default;



          (o) Liens to secure purchase money Indebtedness permitted under Section 6.1(c);



          (p) Liens to secure sale leaseback transactions permitted under Section 6.8;



          (q) Liens in favor of completion guarantors in connection with Items of Product to secure the
rights of such completion guarantors to recoup their contributions to negative cost of such Items
of Product, provided that such Liens are in form and substance reasonably satisfactory to
the Administrative Agent;



          (r) Liens to secure Refinancing Indebtedness of secured Indebtedness in each case permitted to
be incurred under Section 6.1 hereof and this Section 6.2; provided that
such Liens shall encumber only those assets that secured the Indebtedness that is being Refinanced
and are of the same rank as the Liens that secured the Indebtedness that is being Refinanced;



          (s) Liens to secure Indebtedness of acquired assets permitted under Section 6.1(o),
provided that such Liens shall encumber only those assets being so acquired;



          (t) Liens with respect to operating leases not prohibited under this Credit Agreement and
entered into in the ordinary course of business;



          (u) other Liens securing Indebtedness permitted hereunder in an aggregate principal amount not
to exceed $11,000,000 at any time outstanding;



          (v) Liens on an Item of Product in favor of a licensor of that Item of Product to secure the
licensor’s right to receive from a Credit Party the licensor’s share of the revenues from the
exploitation of that Item of Product where the Credit Party (i) is acting as the distributor or
sales agent thereof, (ii) has not made an investment in the production or acquisition cost thereof,
(iii) is not guaranteeing the economic performance thereof and (iv) is not taking the risk of
recoupment of substantial amounts of distribution expenses (including the cost of duplicating home
video devices); and



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          (w) Liens in favor of a Slate Financing Permitted Counterparty in a Permitted Slate Financing.



          SECTION 6.3. Limitation on Guaranties. Incur, create, assume or suffer to exist any
Guaranty (including any obligation as a general partner of a partnership or as a joint venturer of
a joint venture in respect of Indebtedness of such partnership or joint venture), either directly
or indirectly, except:



          (a) performance guarantees in the ordinary course of business under guild agreements, or to
suppliers, licensees or laboratories which are providing services in connection with the
production, acquisition, distribution or exploitation of any Item of Product by or for a Credit
Party;



          (b) the endorsement of negotiable instruments for deposit or collection in the ordinary course
of business;



          (c) the Guaranties made by the Guarantors pursuant to Article 9 hereof;



          (d) existing Guaranties listed on Schedule 6.3 hereto and any extensions and renewals
thereof on the same terms or on terms no more adverse to the interests of the Lenders hereunder
than the applicable listed Guaranty, or as otherwise reasonably acceptable to the Administrative
Agent;



          (e) Guaranties under the First Lien Agreement and any other document contemplated thereby; and



          (f) any Guaranty by any Credit Party of the obligations of any other Credit Party or any
wholly-owned Subsidiary of the Borrower, provided that the obligation being so guaranteed
is permitted pursuant to Section 6.1 hereof and if the Subsidiary is not a wholly-owned
domestic subsidiary, such Guaranty is of performance of services or payments for goods or services
where the asset or value to be created will be beneficially owned by a Credit Party.



          SECTION 6.4. Limitations on Investments. Create, make or incur any Investment after
the date hereof, except:



          (a) the purchase of Cash Equivalents;



          (b) Indebtedness permitted under Section 6.1 and Guaranties permitted under
Section 6.3, in each case, to the extent constituting Investments;



          (c) Investments by any Credit Party in any Subsidiaries which are not Credit Parties not to
exceed $4,000,000 in the aggregate at any time outstanding;



          (d) Investments (including debt obligations) received (i) in connection with the bankruptcy or
reorganization of, or disputes with or judgments against, suppliers, customers or other debtors or
(ii) in settlement of delinquent obligations arising in the ordinary course of business;



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          (e) Investments constituting Permitted Business Acquisitions;



          (f) Investments consisting of deposits, prepayments and other credits to suppliers made in the
ordinary course of business of the Credit Parties or any wholly-owned domestic Subsidiary of the
Borrower;



          (g) other Investments, whether in the form of cash or library assets, in an aggregate amount
(or the value of such Investments if not cash) not to exceed $11,000,000 at any one time
outstanding;



          (h) Investments constituting promissory notes or non-cash consideration received from third
parties as a portion of the purchase price for an asset disposition permitted pursuant to the terms
hereof so long as any such notes or non-cash consideration are, to the extent received in
connection with dispositions of assets that constitute Collateral, pledged to the Administrative
Agent as Collateral hereunder;



          (i) Investments existing on the Closing Date and listed on Schedule 6.4 hereto;



          (j) Investments in (i) any Credit Party and (ii) non-domestic wholly-owned Subsidiaries for
the purpose of funding the production of Items of Product the value of which will be beneficially
owned by a Credit Party;



          (k) Swap Agreements permitted pursuant to Section 6.17;



          (l) Investments of a Credit Party acquired after the Closing Date or of a corporation merged
into the Borrower or merged into or consolidated with a Credit Party in accordance with Section
6.6 after the Closing Date to the extent that such Investments were not made in contemplation
of or in connection with such acquisition, merger or consolidation and were in existence on the
date of such acquisition, merger or consolidation;



          (m) (i) loans and advances to employees or consultants of the Borrower or any Subsidiary in
the ordinary course of business not to exceed $550,000 in the aggregate at any time outstanding and
(ii) advances of payroll payments and expenses to employees in the ordinary course of business;



          (n) acquisitions by the Borrower of obligations of one or more officers or other employees of
the Borrower or its Subsidiaries in connection with such officer’s or employee’s acquisition of
Equity Interests of the Borrower, so long as no cash is actually advanced by the Borrower or any of
the Subsidiaries to such officers or employees in connection with the acquisition of any such
obligations;



          (o) Investments in Foreign Production Subsidiaries, provided, that such Investments
are (i) managed by but not beneficially owned by any such Foreign Production Subsidiary but are
rather beneficially owned directly by a Credit Party and (ii) made solely for the purpose of such
Foreign Production Subsidiary producing Items of Product for delivery to a Credit Party;



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          (p) Investments at any one time outstanding that do not exceed the aggregate amount of all
cash proceeds received from the issuance by the Borrower of Equity Interests after the Closing
Date, other than Specified Equity Contributions minus the amount of any such Equity
Interest proceeds used to make Restricted Payments pursuant to Section 6.5(d) or otherwise
utilized to justify an exception from a negative covenant contained in this Article 6
(i.e., to fund a Permitted Business Acquisition); and



          (q) Investments in (a) any co-financed Items of Product or (b) any Slate Financing Item of
Product in connection with a Permitted Slate Financing.



          SECTION 6.5. Restricted Payments. Pay or declare or enter into any agreement to pay
or otherwise become obligated to make any Restricted Payment, other than:



          (a) dividends or distributions payable solely in additional shares of common or preferred
stock of a Credit Party;



          (b) so long as no Event of Default or Default has occurred and is continuing or would be
created thereby, distributions by the Borrower to the Parent (i) in an amount necessary to pay all
Tax Distributions (provided that the Borrower shall have certified to the Administrative
Agent that all correspondence and other documents described in Section 5.1(l) have been
delivered to the Administrative Agent and shall have provided a certificate of either (x) its
independent auditor or (y) its Chief Financial Officer and its Tax Director, confirming the
computation thereof), and for any purpose, provided that (w) the Leverage Ratio is less
than 7.0:1.0 (calculated on a Pro Forma Basis after giving effect to the contemplated dividend),
(x) the Liquidity Ratio of the Borrower and the Guarantors (calculated on a Pro Forma Basis after
giving effect to the contemplated dividend) is at least 1.125:1 for the ensuing four fiscal
quarters, (y) the aggregate amount of all dividends paid under this clause (ii) does not exceed
$55,000,000 and (z) no dividends are paid under this clause (ii) until the first anniversary of the
Closing Date; provided, however, that such dividends may not be used for (A) payments of
principal of Indebtedness which is subordinate or otherwise junior to the Obligations or (B)
payments of principal of Indebtedness incurred in accordance with the provisions of Section
6.1(i) hereof;



          (c) so long as no Event of Default has occurred and is continuing, for any purpose, the
payment of dividends with cash proceeds received from the issuance by the Borrower of Equity
Interests after the Closing Date, other than (i) the Specified Equity Contributions, (ii) the
Refinancing IPO Proceeds, (iii) any Greenshoe Proceeds (iv) to the extent such proceeds have been
otherwise utilized consistent with an exception from a negative covenant contained in this
Article 6 (i.e., as an Investment permitted under Section 6.4(p) or to fund a Permitted
Business Acquisition);



          (d) payments to the Borrower or to any other Credit Party that is directly or indirectly
wholly owned by the Borrower from any other Credit Party;



          (e) payments with respect to intercompany Indebtedness permitted by Sections 6.1(f) or
6.1(l), intercompany receivables permitted by Sections 6.1(f) or 6.1(l) or
intercompany advances constituting Investments permitted under Section 6.4(c) hereof;



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          (f) repurchases of Equity Interests in a Credit Party that is directly or indirectly
wholly-owned by the Borrower;



          (g) the repurchase, redemption, defeasance or other acquisition or retirement for value of
unsecured Indebtedness with the net cash proceeds from a substantially concurrent incurrence of
Refinancing Indebtedness relating thereto;



          (h) repurchases of Equity Interests in the Borrower, or warrants, puts, options or rights to
purchase or otherwise acquire an Equity Interest in the Borrower from any present or former
officer, director or employee of a Credit Party (other than an officer of the Kelso Group) or the
estates or family members thereof pursuant to an agreement (including, without limitation, an
employment agreement) or plan approved in good faith by the board of directors of such Credit Party
under which such Person purchases or sells or is granted an option to purchase or sell such Equity
Interests, in each fiscal year in an amount not to exceed $5,000,000; provided that the
aggregate unspent amount permitted to be used in any fiscal year may be rolled over and added to
the amount available under this clause (i) in subsequent fiscal years;



          (i) non-cash repurchases of Equity Interests deemed to occur upon exercise of stock options if
such Equity Interests represent a portion of the exercise price of such options;



          (j) other Restricted Payments in an aggregate amount not to exceed $17,000,000 for purposes
other than (i) payments of principal of Indebtedness that is subordinate or otherwise junior to the
Obligations or (ii) payments of principal of Indebtedness incurred in accordance with the
provisions of Section 6.1(i) hereof, provided that no Default or Event of Default shall have
occurred and be continuing or would occur as a result of such Restricted Payment;



          (k) the payment of dividends or other distributions by any Credit Party that is a Subsidiary
of the Borrower to the owners of its Equity Interests on a pro rata basis based on their relative
ownership interests; and



          (l) So long as no Event of Default has occurred and is continuing, distributions by the
Borrower to the Parent in an amount necessary to pay corporate overhead expenses and legal,
accounting and other professional fees and expenses of Parent, Public Co. and KRH, without
duplication in each case incurred in connection with any activity not prohibited by this Credit
Agreement, not to exceed $2,200,000 in the aggregate per fiscal year.



          SECTION 6.6. Consolidation, Merger, Recapitalization or Sale of Assets, etc. Whether
in one transaction or a series of transactions, wind up, liquidate or dissolve its affairs, or
enter into any transaction of merger or consolidation, or engage in any recapitalization, or sell
or otherwise dispose of all or substantially all of its property, stock, Equity Interests or assets
or a sale or disposition of Items of Product representing more than 50% of the Eligible Library
Amount or agree to do or suffer any of the foregoing, except that (a) any Credit Party or
Subsidiary of the Borrower may merge with and into, or transfer assets to, another Credit Party
(including without limitation any Person which becomes a Guarantor immediately upon the completion
of such merger or transfer; provided, that at the time of such merger or transfer
and after giving effect thereto no Default or Event of Default shall have occurred and be
continuing;



80









 




provided further, that in any such merger or consolidation involving
the Borrower, the Borrower must be the surviving entity), (b) any Credit Party other than the
Borrower may be liquidated in accordance with Section 5.2 hereof, (c) any sale, transfer,
lease or other disposition that would not constitute a Disposition shall be permitted under this
Section 6.6 unless otherwise specifically prohibited elsewhere in this Article 6,
(d) sales, transfers, leases or other dispositions of assets not otherwise permitted by this
Section 6.6 for aggregate gross proceeds (including non-cash proceeds) not exceeding
$17,000,000 in any fiscal year shall be permitted, provided that (i) such sale is for fair
market value, (ii) to the extent that any such sales, transfers, leases or other dispositions
involves assets in excess of $6,000,000, at least 75% of the consideration shall be in cash and
(iii) prior to the First Priority Obligations Payment Date, within 360 days of the such
Disposition, the Credit Parties (A) apply the Net Proceeds of such Disposition to the repayment of
First Priority Obligations and/or (B) reinvest the Net Proceeds of such Disposition, or enter into
a binding agreement to acquire with such Net Proceeds, Productive Assets and/or a business
acquisition not prohibited by this Credit Agreement (including any Permitted Business Acquisition)
and from and after the First Priority Obligations Payment Date, the Net Proceeds thereof are
applied in accordance with Section 2.10(f) hereof, and (e) any merger or consolidation in
connection with a Permitted Business Acquisition; provided that, with respect to any such
merger or consolidation involving a Credit Party, the Credit Party is the surviving entity.




          SECTION 6.7. Receivables. Sell, discount or otherwise dispose of notes, accounts
receivable or other obligations owing to any Credit Party except for the purpose of collection in
the ordinary course of business.



          SECTION 6.8. Sale and Leaseback.



          (a) Enter into any arrangement with any Person or Persons, whereby in contemporaneous
transactions any Credit Party sells essentially all of its right, title and interest in an Item of
Product and acquires or licenses the right to distribute or exploit such Item of Product in media
and markets accounting for substantially all the value of such Item of Product, unless such
arrangement does not impair the collateral position of the Administrative Agent and the Lenders and
is evidenced by documentation reasonably acceptable to the Administrative Agent; provided
that a sale and leaseback transaction shall be permitted if either (x) at any time prior to
the First Priority Obligations Payment Date, such transaction would be permitted under the First
Lien Agreement, as such agreement exists on the date hereof and without giving effect to any
subsequent amendments thereto (unless, in the case of a proposed sale and leaseback transaction
which is substantially identical to a preceding transaction for which the First Lien Agent was
unwilling to deliver a consent and step-back letter, in which case, such transaction shall be
evidenced by documentation reasonably acceptable to the Administrative Agent), or (y) (1) it is
substantially similar to sale and leaseback transactions previously approved by legal counsel for
the First Lien Agent in the context of previous credit facilities between the Credit Parties and
the First Lien Agent or their predecessors and (2) the Borrower delivers to the Administrative
Agent a certificate from an Approved Officer certifying that (i) the underlying documents for such
transaction are substantially similar to previously approved transactions in the same jurisdiction
or otherwise setting forth any immaterial differences, (ii) based upon the advice of its counsel,
there is no structural risk inherent in such transaction (i.e. there is no risk that a bankruptcy
or other adverse credit event with respect to the tax licensor would result in a



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loss or reduction of the applicable Credit Party’s rights in the distribution rights or income
stream from the applicable Item of Product or the loss of the Administrative Agent’s Lien thereon),
(iii) to its knowledge, having made no independent inquiry, no similarly-situated theatrical motion
picture or television producer or its production lender has suffered a material loss in the
applicable jurisdiction as a result of an adverse credit event of its relevant tax licensor and
(iv) such documents contain a provision requiring notice to the Administrative Agent of, and
permitting the Administrative Agent to cure, if such breach is curable, any material default by the
applicable Credit Party prior to the exercise of remedies by any other party to such transaction.



          (b) Upon satisfaction of sub-clause (x) set forth in clause (a) above or receipt of the
officer’s certificate described in clause (a) above, as applicable, the Administrative Agent will
issue a customary consent and step back letter or Lien release (as applicable) in standard form
consistent with past practice unless the Administrative Agent notifies the Borrower in writing that
in the Administrative Agent’s reasonable judgment, a change in the relevant circumstances has made
it unwilling to issue such a letter (including, without limitation, the occurrence of any
circumstances set forth in clauses (a)(ii) or (iii) above). The Credit Parties shall not incur any
Indebtedness in connection with a sale and leaseback except as permitted pursuant to Section
6.1(i).



          (c) Notwithstanding anything to the contrary in this Section 6.8, Items of Product
which are part of a Permitted Slate Financing shall only be subject to this Section 6.8 if
the Credit Parties have equity exposure with respect to such Items of Product.



          SECTION 6.9. Places of Business; Change of Name, Jurisdiction. Change the location
of its chief executive office or principal place of business or change its name or jurisdiction of
organization without in each case giving the Administrative Agent ten (10) Business Days’ prior
written notice of such change, and providing any information reasonably requested by the
Administrative Agent in order to file additional Uniform Commercial Code financing statements or
other relevant security documents.



          SECTION 6.10. Transactions with Affiliates. Enter into any transaction with any of
its Affiliates unless such transaction meets any of the following criteria: (i) occurs in the
ordinary course of business on an arm’s-length basis, (ii) is described on Schedule 6.10
hereto, (iii) is between or among any of the Credit Parties or any wholly-owned Subsidiary of the
Borrower, (iv) subject to the terms of Section 6.5 and not otherwise inconsistent with the
terms hereof, involves any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and
stock ownership plans approved by the board of directors (or other governing body) of the Borrower,
(v) constitutes loans or advances to employees or consultants of any Credit Party in accordance
with Section 6.4(n), (vi) involves the payment of reasonable fees and indemnities to
directors, officers, consultants and employees of the Borrower and the Subsidiaries in the ordinary
course of business and consistent with industry practice, (vii) consists of (A) any employment
agreements entered into by any Credit Party in the ordinary course of business, and (B) any
employee compensation, benefit plan or arrangement, any health, disability or similar insurance
plan which covers employees, and any reasonable employment contract and transactions pursuant
thereto, (viii) constitutes dividends, redemptions and repurchases permitted



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under Section 6.5, (ix) [intentionally omitted], (x) is a transaction in respect of
which the Borrower delivers to the Administrative Agent (for delivery to the Lenders) a letter
addressed to the board of directors of the Borrower from an accounting, appraisal or investment
banking firm, in each case of nationally recognized standing that is (A) in the good faith
determination of the Borrower qualified to render such letter and (B) reasonably satisfactory to
the Administrative Agent, which letter states that such transaction is on terms that are no less
favorable to the applicable Credit Party, than would be obtained in a comparable arm’s-length
transaction with a Person that is not an Affiliate; provided, that such transaction is not
otherwise prohibited under the terms of this Article VI, (xi) involves any purchase of or
contributions to, the equity capital of the Borrower by the Parent and (xii) involves the
consummation of the Qualified IPO and/or the Reorganization or the performance of any obligations
under the Reorganization Agreement (as described in the Registration Statement), the Parent LLC
Agreement, the Director Designation Agreement (as described in the Registration Statement), the
Registration Rights Agreement (as described in the Registration Statement) or the KRH Value Units
(as described in the Registration Statement).



          SECTION 6.11. Business Activities. Engage in any business activities other than
activities in which Hallmark Entertainment, LLC engaged on January 12, 2006, the Borrower and/or
one of its Subsidiaries is currently engaged or any business or business activities incidental or
related thereto, or any business activity that is reasonably similar thereto or a reasonable
extension, development or expansion thereof or ancillary thereto (including, but not limited to,
activities relating to the production, development, distribution or exploitation of Items of
Product and Slate Financings), but specifically excluding the production, development or investment
in theatrical motion pictures; provided, however, that if an Item of Product
developed for television is thereafter released theatrically, such release shall not be deemed a
violation of this Section 6.11; provided, further, that Borrower shall not
be allowed to engage in theatrical distribution of Items of Product where it is either advancing or
taking the economic risk of recoupment of print and advertising expenses, except with respect to
limited theatrical releases necessary to qualify for sale and leaseback or similar financial
incentives for which the aggregate unrecouped exposure for theatrical distribution expenses does
not exceed $2,500,000 for all such releases. In amplification and not in limitation of the
foregoing, the Credit Parties (x) may act as sales agent and/or distributor for an Item of Product
owned by other parties provided (i) the Credit Parties do not make an investment in the Items of
Product other than as permitted with regard to a Permitted Slate Financing Item of Product and do
not have an economic risk for the recoupment of distribution expenses or guaranty any specific
level of economic performance of the applicable Slate Financing Item of Product and (y) may engage
in the acquisition, production and exploitation of Items of Product in Permitted Slate Financings.



          SECTION 6.12. Fiscal Year End. Change its fiscal year end to other than December 31,
for any year.



          SECTION 6.13. [Intentionally Omitted.]



          SECTION 6.14. [Intentionally Omitted.]



          SECTION 6.15. [Intentionally Omitted.]



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          SECTION 6.16. [Intentionally Omitted.]



          SECTION 6.17. Swap Agreements. Enter into any Swap Agreement, except Swap Agreements
entered into in order to (a) hedge or mitigate risks to which any Credit Party has actual exposure,
including currency exchange risks or (b) effectively cap, collar or exchange interest rates on
Material Agreements (from fixed to floating rates, from one floating rate to another floating rate
or otherwise, including foreign currency hedging exchanges) with respect to any interest-bearing
liability or investment of a Credit Party.



          SECTION 6.18. Modification of Indebtedness, Material Agreements. Make or permit to
be made any modification to the terms of any Material Agreement without the prior consent of the
Administrative Agent if the modification of such Material Agreement would be materially adverse to
the Lenders; provided, that without limiting any of the other covenants or agreements
contained in this Credit Agreement modifications to the First Lien Agreement shall be permitted to
the extent permitted under the Intercreditor Agreement.



          SECTION 6.19. No Negative Pledge. Enter into any agreement (i) prohibiting the
creation or assumption of any Lien in favor of (a) the Administrative Agent (for the benefit of
itself and the Lenders) or (b) an administrative agent or collateral agent (including any successor
to the Administrative Agent) under a potential refinancing of the Facility, upon the properties or
assets of any Credit Party, whether now owned or hereafter acquired, or (ii) requiring an
obligation to be secured as a result of any Lien being granted to the Administrative Agent (for the
benefit of itself and the Lenders), except this Credit Agreement and the other Fundamental
Documents and the First Lien Agreement; provided, however, that this provision shall not
apply to any agreement executed pursuant to Section 6.2(e) hereof to the extent of such
assets and proceeds thereof.



          SECTION 6.20. [Intentionally Omitted.]



          SECTION 6.21. Coverage Ratio. Subject to adjustments in connection with Specified
Equity Contributions as specified in Section 1.2 hereof, permit the ratio (the
“Coverage Ratio”), of (i) the Eligible Library Amount (without any advance rate discount)
plus, the Adjusted Receivables Amount, plus to the extent contributed, Specified
Equity Contributions (but only to the extent such contributions are held by the First Lien Agent as
cash collateral (or after the First Priority Obligations Payment Date, the Administrative Agent),
which may be released if no Event of Default is continuing and the Borrower is in compliance with
such test, without taking credit for the amount of cash collateral to be released) to (ii) the
aggregate amount of secured Indebtedness to be less than 1:1.



          SECTION 6.22. Additional Limitation on Production and Acquisition of Product.
(a) Produce or acquire any Item of Product that is a miniseries after the Closing Date with a
Production Exposure at any time in excess of 40% of the Budgeted Negative Cost or (b) cause the
total Production Exposure of the Borrower at any time for all Items of Product (other than
miniseries) to exceed $40,000,000 in the aggregate, in the case of each of (a) and (b), without the
prior written consent of the Required Lenders.



          SECTION 6.23. Activities of Parent and Public Co.



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          (a) Permit the Parent to (i) own assets other than the membership interests of the Borrower,
(ii) engage in any business activities other than such ownership or (iii) incur any lien upon its
ownership of membership interests of the Borrower.



          (b) Permit Public Co. to incur any lien upon its ownership of the membership interests of the
Parent.



          (c) Permit Public Co. to engage in any business activities which are currently engaged in by
the Borrower or any of its Subsidiaries or which may be engaged in by the Borrower and its
Subsidiaries pursuant to Section 6.11 hereof.



          SECTION 6.24. Certification of Equity Interests. Permit its Equity Interests to
become certificated without simultaneously (unless remitted to the First Lien Agent) delivering to
the Administrative Agent the definitive instruments representing all its Equity Interests,
accompanied by undated stock powers, duly endorsed or executed in blank by the appropriate Pledgor,
and such other instruments or documents as the Administrative Agent or its counsel shall reasonably
request.



7. EVENTS OF DEFAULT




          In the case of the happening and during the continuance of any of the following events (herein
called “Events of Default”):




     (a) any representation, warranty or certification made by a Credit Party in this Credit
Agreement or any other Fundamental Document to which it is a party or in any report,
financial statement, certificate or other document furnished to the Administrative Agent or
any Lender pursuant to this Credit Agreement or any other Fundamental Document, shall prove
to have been false or misleading in any material respect when made or delivered;




     (b) default shall be made in the payment of principal of the Loans hereunder as and
when due and payable, whether by reason of maturity, mandatory prepayment, acceleration or
otherwise;




     (c) default shall be made in the payment of interest on the Loans hereunder or any
other monetary Obligations, when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for payment thereof or otherwise and such default
shall continue unremedied for three (3) Business Days;




     (d) default shall be made in the due observance or performance of any covenant,
condition or agreement contained in Section 5.4 or, subject to Section 1.2
hereof, Article 6 of this Credit Agreement;




     (e) default shall be made in the due observance or performance of any covenant,
condition or agreement contained in Section 5.1 (a), (b) or (e) or
Sections 5.20 of this Credit Agreement and such default shall continue unremedied
for ten (10) days after date on which such performance is required under such section;



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     (f) default shall be made by any Credit Party in the due observance or performance of
any other covenant, condition or agreement to be observed or performed pursuant to the terms
of this Credit Agreement or any other Fundamental Document, and such default shall continue
unremedied for thirty (30) days after the applicable Credit Party receives written notice or
obtains knowledge of such occurrence;




     (g) default shall be made with respect to any payment of any Indebtedness of any Credit
Party (excluding Indebtedness pursuant to Section 6.1(f) or Section 6.1(l))
in excess of $17,000,000 in the aggregate (other than the Obligations) of principal or
interest on such Indebtedness when due, or in the performance of any other obligation
incurred in connection with any such Indebtedness if the effect of such non-payment default
is to accelerate the maturity of such Indebtedness or (other than the First Priority
Obligations) to permit the holder thereof to cause such Indebtedness to become due prior to
its stated maturity and such payment or non-payment default shall not be remedied, cured,
waived or consented to within the period of grace with respect thereto;




     (h) any Credit Party shall generally not pay its debts as they become due or shall
admit in writing its inability to pay its debts, or shall make a general assignment for the
benefit of creditors; any Credit Party shall commence any case, proceeding or other action
seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a
bankrupt or insolvent or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any substantial part of
its property or shall file an answer or other pleading in any such case, proceeding or other
action admitting the material allegations of any petition, complaint or similar pleading
filed against it or consenting to the relief sought therein; any Credit Party shall take any
action to authorize, or in contemplation of, any of the foregoing;




     (i) any involuntary case, proceeding or other action against any Credit Party shall be
commenced seeking to have an order for relief entered against it as debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any substantial part of
its property, and such case, proceeding or other action (i) results in the entry of any
order for relief against it, or (ii) shall remain undismissed for a period of sixty (60)
days;




     (j) any final judgment(s) for the payment of money in the case of any Credit Party, in
excess of $17,000,000 in the aggregate shall be rendered against any Credit Party (to the
extent not adequately covered by insurance issued by a solvent and unaffiliated insurance
company which has acknowledged such coverage in writing) and within sixty (60) days from the
entry of such judgment shall not have been discharged or stayed pending appeal or shall not
have been discharged or bonded in full within sixty (60) days from the entry of a final
order of affirmance on appeal;



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     (k) (i) failure by any Credit Party or ERISA Affiliate to make any contributions
required to be made to a Plan subject to Title IV of ERISA or Multiemployer Plan, (ii) any
accumulated funding deficiency (within the meaning of Section 4971 of the Code) shall exist
with respect to any Plan (whether or not waived), (iii) the present value of all benefits
under all Plans subject to Title IV of ERISA (based on those assumptions used to fund such
Plans) exceeds, in the aggregate, as of the last annual valuation date applicable thereto,
the actuarial value of the assets of such Plans allocable to such benefits, (iv) any Credit
Party or ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred withdrawal liability to such Multiemployer Plan, or that a
Multiemployer Plan is being terminated, (v) a Reportable Event with respect to a Plan shall
have occurred which is reasonably likely to result in a termination of such Plan for
purposes of ERISA, (vi) the termination of a Plan, or the filing of a notice of intent to
terminate a Plan under section 4041(c) of ERISA, (vii) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, a Plan by the PBGC, (viii) any
other event or condition which could constitute grounds under section 4042(a) of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or (ix) the
imposition of a Lien pursuant to section 412 of the Code or section 302 of ERISA as to any
Credit Party or ERISA Affiliate; provided that with respect to items (i)
through (ix), only if such event or condition would reasonably be expected to result in a
Material Adverse Effect;




     (l) this Credit Agreement, the Copyright Security Agreement, any Copyright Security
Agreement Supplement, any Trademark Security Agreement, any Pledgeholder Agreement, or any
Account Control Agreement (each a “Security Document”) shall, for any reason other
than the action or inaction of the Administrative Agent or any Lender, with respect to
Collateral having an aggregate value in excess of $250,000, not be or shall cease to be in
full force and effect or shall be declared null and void or any of the Security Documents
shall not give or shall cease to give the Administrative Agent the Liens, rights, powers and
privileges purported to be created thereby with respect to Collateral having an aggregate
value in excess of $250,000 in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders, superior to and prior to the rights of all third
Persons and subject to no other Liens (other than Permitted Encumbrances, excluding those
under Section 6.2(c)), or the validity or enforceability of the Guaranties under
Article 9 hereof or the Liens granted, to be granted, or purported to be granted, by
any of the Fundamental Documents shall be contested by any Credit Party or any of their
respective Affiliates;




     (m) the validity or enforceability of the Guaranties under Article 9 hereof or
the Liens granted, to be granted, or purported to be granted, by any of the Fundamental
Documents shall be contested by any Credit Party or any of their respective Affiliates; or




     (n) a Change in Control shall occur;


then, in every such event and at any time thereafter during the continuance of such event, the
Administrative Agent may, or if directed by the Required Lenders, shall, take any or all of the
following actions, at the same or different times: (x) terminate forthwith the Commitments, and/or
(y) declare the principal of and the interest on the Loans and the Notes and all other


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amounts payable hereunder or thereunder to be forthwith due and payable, whereupon the same shall
become and be forthwith due and payable, without presentment, demand, protest, notice of
acceleration or other notice of any kind, all of which are hereby expressly waived, anything in
this Credit Agreement or in the Notes to the contrary notwithstanding. If an Event of Default
specified in paragraph (h) or (i) above shall have occurred, the principal of, and interest on, the
Loans and the Notes and all other amounts payable hereunder and thereunder shall automatically
become due and payable without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived, anything in this Credit Agreement or the Notes to the contrary
notwithstanding. Such remedies shall be in addition to any other remedy available to the
Administrative Agent or the Lenders pursuant to Applicable Law or otherwise.




8. GRANT OF SECURITY INTEREST; REMEDIES




          SECTION 8.1. Security Interests. The Borrower, as security for the due and punctual
payment of the Obligations (including interest accruing on and after the filing of any petition in
bankruptcy or of reorganization of the Borrower whether or not post filing interest is allowed in
such proceeding), and each of the Guarantors, as security for its obligations under Article
9 hereof, hereby mortgage, pledge, collaterally assign and deliver to the Administrative Agent
(for the benefit of the Administrative Agent, the Lenders) and grant to the Administrative Agent
(for the benefit of the Administrative Agent and the Lenders) a security interest in the Collateral
(subject only to Specified Permitted Encumbrances).



          SECTION 8.2. Use of Collateral. So long as no Event of Default shall have occurred
and be continuing, and subject to the various provisions of this Credit Agreement and the other
Fundamental Documents, a Credit Party may use its Collateral (including amounts held in the
Collection Accounts or “Collection Accounts” maintained under the First Lien Agreement) in any
lawful manner except as otherwise provided hereunder or thereunder.



          SECTION 8.3. Collection Accounts. From and after the First Priority Obligations
Payment Date:



          (a) The Credit Parties will maintain or establish one or more collection bank accounts (each,
a “Collection Account”) maintained at an office of (i) prior to the First Priority
Obligations Payment Date, the First Lien Agent and (ii) thereafter, the Administrative Agent, and
will direct, all Persons who become licensees, buyers or account debtors under receivables with
respect to any Item of Product included in the Collateral to make payments under or in connection
with the license agreements, sales agreements or receivables directly to the Collection Account.
Upon agreement between the Administrative Agent and the Credit Parties, the Collection Account
maintained by the First Lien Agent or the Administrative Agent, as applicable, may also serve as
the Cash Collateral Account; provided, that such Collection Account is in the name of the
Administrative Agent (for the benefit of itself and the Lenders) and is under the control (within
the meaning of Section 9-104 of the UCC) of the Administrative Agent.



          (b) The Credit Parties will execute such documentation as may be reasonably required by the
Administrative Agent in order to effectuate the provisions of this Section 8.3.



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          (c) In the event a Credit Party receives payment from any Person or proceeds under a letter of
credit or otherwise, which payment should have been remitted directly to the Collection Account,
such Credit Party shall promptly remit such payment or proceeds to the appropriate Collection
Account to be applied in accordance with the terms of this Credit Agreement.



          SECTION 8.4. Credit Parties to Hold in Trust. From and after the First Priority
Obligations Payment Date, upon the occurrence and during the continuance of an Event of Default,
each of the Credit Parties will, upon receipt by it of any revenue, income, profits or other sums
in which a security interest is granted by this Article 8, payable pursuant to any
agreement or otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the sum or instrument in trust for the
Administrative Agent (for the benefit of itself and the Lenders), segregate such sum or instrument
from their own assets and forthwith, without any notice, demand or other action whatsoever (all
notices, demands, or other actions on the part of the Administrative Agent or the Lenders being
expressly waived), endorse, transfer and deliver any such sums or instruments or both, to the
Administrative Agent to be applied to the repayment of the Obligations in accordance with the
provisions of Section 8.7 hereof.



          SECTION 8.5. Collections, etc. Subject to the provisions of the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of Default and written notice
to the Credit Parties, the Administrative Agent may, in its sole discretion, in its name (on behalf
of the Administrative Agent and the Lenders) or in the name of any Credit Party or otherwise,
demand, sue for, collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed desirable with respect
to, any of the Collateral, but shall be under no obligation to do so, or the Administrative Agent
may extend the time of payment, arrange for payment in installments, or otherwise modify the terms
of, or release, any of the Collateral, without thereby incurring responsibility to, or discharging
or otherwise affecting any liability of, any Credit Party. The Administrative Agent will not be
required to take any steps to preserve any rights against prior parties to the Collateral. Upon
the occurrence and during the continuance of an Event of Default, if any Credit Party fails to make
any payment or take any action required hereunder, the Administrative Agent may make such payments
and take all such actions as the Administrative Agent reasonably deems necessary to protect the
Administrative Agent’s (on behalf of the Administrative Agent and the Lenders) security interests
in the Collateral and/or the value thereof, and the Administrative Agent is hereby authorized
(without limiting the general nature of the authority hereinabove conferred) to pay, purchase,
contest or compromise any Liens that in the judgment of the Administrative Agent appear to be equal
to, prior to or superior to the security interests of the Administrative Agent (on behalf of the
Administrative Agent and the Lenders) in the Collateral (other than Permitted Encumbrances) and any
Liens not expressly permitted by this Credit Agreement.



          SECTION 8.6. Possession, Sale of Collateral, etc. Upon the occurrence and during the
continuance of an Event of Default, subject to the provisions of the Intercreditor Agreement, the
Administrative Agent and the Lenders may, upon reasonable notice to the applicable Credit Party,
enter upon the premises of any Credit Party or wherever the Collateral may be, and take possession
of the Collateral, and may demand and receive such possession



89









 







from any Person who has possession thereof, and the Administrative Agent and the Lenders may
take such measures as they deem necessary or proper for the care or protection thereof, including
the right to remove all or any portion of the Collateral, and with or without taking such
possession may sell or cause to be sold, whenever the Administrative Agent and the Lenders shall
decide, in one or more sales or parcels, at such prices as the Administrative Agent and the Lenders
may deem appropriate, and for cash or on credit or for future delivery, without assumption of any
credit risk, all or any portion of the Collateral, at any broker’s board or at public or private
sale, without demand of performance but with 10 days’ prior written notice to the Credit Parties of
the time and place of any such public sale or sales (which notice the Credit Parties hereby agree
is reasonable) and with such other notices as may be required by Applicable Law and cannot be
waived, and none of the Administrative Agent and the Lenders shall have any liability should the
proceeds resulting from a private sale be less than the proceeds realizable from a public sale, and
the Administrative Agent, on behalf of itself, the Lenders or any other Person may be the purchaser
of all or any portion of the Collateral so sold and thereafter hold the same absolutely, free (to
the fullest extent permitted by Applicable Law) from any claim or right of whatever kind, including
any equity of redemption, of any Credit Party, any such demand, notice, claim, right or equity
being hereby expressly waived and released. At any sale or sales made pursuant to this Article
8, the Administrative Agent, on behalf of itself and the Lenders may bid for or purchase, free
(to the fullest extent permitted by Applicable Law) from any claim or right of whatever kind,
including any equity of redemption, of any Credit Party, any such demand, notice, claim, right or
equity being hereby expressly waived and released, any part of or all of the Collateral offered for
sale, and may make any payment on account thereof by using any claim for moneys then due and
payable to the Administrative Agent and Lenders by any Credit Party hereunder as a credit against
the purchase price. The Administrative Agent, on behalf of itself and the Lenders shall in any
such sale make no representations or warranties with respect to the Collateral or any part thereof,
and none of the Administrative Agent and the Lenders shall be chargeable with any of the
obligations or liabilities of any Credit Party. Each Credit Party hereby agrees (i) that it will
indemnify and hold the Administrative Agent and the Lenders harmless from and against any and all
claims with respect to the Collateral asserted before the taking of actual possession or control of
the relevant Collateral by the Administrative Agent pursuant to this Article 8, or arising
out of any act of, or omission to act on the part of, any Person (other than the Administrative
Agent or Lenders) prior to such taking of actual possession or control by the Administrative Agent
(whether asserted before or after such taking of possession or control), or arising out of any act
on the part of any Credit Party or its Affiliates or agents before or after the commencement of
such actual possession or control by the Administrative Agent, but excluding therefrom all claims
with respect to the Collateral resulting from (x) the gross negligence or willful misconduct of any
of the Administrative Agent or the Lenders (y) any claims with respect to the Collateral asserted
against an indemnified party by a Credit Party in which such Credit Party is the prevailing party,
or (z) claims of parties under the First Lien Agreement; and (ii) none of the Administrative Agent
and the Lenders shall have any liability or obligation to any Credit Party arising out of any such
claim except for acts of willful misconduct or gross negligence. Subject only to the lawful rights
of third parties, any laboratory which has possession of any of the Collateral is hereby
constituted and appointed by the Credit Parties as pledgeholder for the Administrative Agent, on
behalf of itself, and the Lenders and, upon the occurrence and during the continuation of an Event
of Default, each such pledgeholder is hereby authorized (to the fullest extent permitted by
Applicable Law) to sell all or any portion



90









 







of the Collateral upon the order and direction of the Administrative Agent, and each Credit
Party hereby waives any and all claims, for damages or otherwise, for any action taken by such
pledgeholder in accordance with the terms of the UCC not otherwise waived hereunder. In any action
hereunder, the Administrative Agent shall be entitled if permitted by Applicable Law to the
appointment of a receiver without notice, to take possession of all or any portion of the
Collateral and to exercise such powers as the court shall confer upon the receiver.
Notwithstanding the foregoing, upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent and the Lenders shall be entitled to apply, without prior notice
to any of the Credit Parties, any cash or cash items constituting Collateral in the possession of
the Administrative Agent, and the Lenders to payment of the Obligations.



          SECTION 8.7. Application of Proceeds after Event of Default. Subject to the
provisions of the Intercreditor Agreement, upon the occurrence and during the continuance of an
Event of Default, the balances in the Clearing Account, the Collection Account(s), the Cash
Collateral Account(s) or in any other account of any Credit Party with a Lender, all other income
on the Collateral, and all proceeds from any sale of the Collateral pursuant hereto shall be
applied first toward payment of the reasonable out-of-pocket costs and expenses paid or incurred by
the Administrative Agent in enforcing this Credit Agreement, in realizing on or protecting any
Collateral and in enforcing or collecting any Obligations or any Guaranty thereof, including,
without limitation, court costs and the reasonable attorney’s fees and expenses incurred by the
Administrative Agent, and then to the payment in full of the Obligations in accordance with
Section 12.2 hereof; provided, however, that, the Administrative Agent may
in its discretion apply funds comprising the Collateral to pay the cost (i) of completing any Item
of Product owned in whole or in part by any Credit Party in any stage of production, and (ii) of
making delivery to the distributors of such Item of Product. Any amounts remaining after such
payment in full shall be remitted to the appropriate Credit Party or as a court of competent
jurisdiction may otherwise direct.



          SECTION 8.8. Power of Attorney. Upon the occurrence and during the continuance of an
Event of Default which is not waived in writing by the Required Lenders, (a) each Credit Party does
hereby irrevocably make, constitute and appoint the Administrative Agent or any of its officers or
designees its true and lawful attorney-in-fact with full power in the name of the Administrative
Agent, such other Person or such Credit Party to (in each case, subject to the provisions of the
Intercreditor Agreement) receive, open and dispose of all mail addressed to any Credit Party,
endorse any notes, checks, drafts, money orders or other evidences of payment relating to the
Collateral that may come into the possession of the Administrative Agent with full power and right
to cause the mail of such Persons to be transferred to the Administrative Agent’s own offices or
otherwise, and to do any and all other acts necessary or proper to carry out the intent of this
Credit Agreement and the grant of the security interests hereunder and under the Fundamental
Documents, and each Credit Party hereby ratifies and confirms all that the Administrative Agent or
its substitutes shall properly do by virtue hereof; and (b) each Credit Party does hereby further
irrevocably make, constitute and appoint the Administrative Agent or any of its officers or
designees its true and lawful attorney-in-fact in the name of the Administrative Agent or any
Credit Party (in each case, subject to the provisions of the Intercreditor Agreement) (i) to
enforce all of such Credit Party’s rights under and pursuant to all agreements with respect to the
Collateral, all for the sole benefit of the Administrative Agent



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for the benefit of the Administrative Agent and the Lenders as contemplated hereby and under
the other Fundamental Documents and to enter into such other agreements as may be necessary or
appropriate in the judgment of the Administrative Agent to complete the production, distribution or
exploitation of any Item of Product which is included in the Collateral, (ii) to enter into and
perform such agreements as may be necessary in order to carry out the terms, covenants and
conditions of the Fundamental Documents that are required to be observed or performed by such
Credit Party, (iii) to execute such other and further mortgages, pledges and assignments of the
Collateral, and related instruments or agreements, as the Administrative Agent may reasonably
require for the purpose of perfecting, protecting, maintaining or enforcing the security interests
granted to the Administrative Agent for the benefit of the Administrative Agent and the Lenders
hereunder and under the other Fundamental Documents, and (iv) to do any and all other things
necessary or proper to carry out the intention of this Credit Agreement and the grant of the
security interests hereunder and under the other Fundamental Documents. Each of the Credit Parties
hereby ratifies and confirms in advance all that the Administrative Agent as such attorney-in-fact
or its substitutes shall properly do by virtue of this power of attorney.



          SECTION 8.9. Financing Statements, Direct Payments. Each Credit Party hereby
authorizes the Administrative Agent to file UCC financing statements and any amendments thereto or
continuations thereof, the Copyright Security Agreement, any Copyright Security Agreement
Supplement, any Trademark Security Agreement and any other appropriate security documents or
instruments and to give any notices necessary or desirable to perfect the Lien of the
Administrative Agent for the benefit of itself and the Lenders in the Collateral, in all cases
without the signature of any Credit Party or to execute such items as attorney-in-fact for any
Credit Party; provided, that the Administrative Agent shall provide copies of any such
documents or instruments to the Borrower. Each Credit Party authorizes the Administrative Agent to
use the collateral description “all assets” in any such UCC financing statements. Each Credit
Party further authorizes the Administrative Agent to notify, at the time from and after the First
Priority Obligations Payment Date that any Event of Default shall have occurred and be continuing,
any account debtors that all sums payable to such Credit Party relating to the Collateral shall be
paid directly to the Administrative Agent.



          SECTION 8.10. Further Assurances. Upon the request of the Administrative Agent, each
Credit Party hereby agrees to duly and promptly execute and deliver, or cause to be duly executed
and delivered, at the cost and expense of the Credit Parties, such further instruments as may be
necessary or proper, in the reasonable judgment of the Administrative Agent, to carry out the
provisions and purposes of this Article 8 or to perfect and preserve the Liens of the
Administrative Agent (for the benefit of itself and the Lenders) hereunder and under the
Fundamental Documents in the Collateral or any portion thereof.



          SECTION 8.11. Termination and Release. The security interests granted under this
Article 8 shall terminate when all the Obligations have been fully and indefeasibly paid
and performed. Upon request by the Credit Parties (and at the sole expense of the Credit Parties)
after such termination, the Administrative Agent will promptly take all reasonable action and do
all things reasonably necessary, including executing UCC termination statements, Pledgeholder
Agreement terminations, termination letters to account debtors and copyright and trademark
releases, to terminate the security interest granted to it (for the benefit of the Administrative



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Agent and the Lenders) hereunder, provided that the Administrative Agent shall only be
required to deliver such documents to the Borrower or applicable Credit Party and shall have no
obligation to file or record any such document. In addition, the Administrative Agent shall take
steps reasonably requested by the Borrower to evidence the release of any Guarantor from its
obligations under Article 9 hereof in the event that such Guarantor ceases to be a Credit
Party in connection with a transaction permitted by the terms of this Credit Agreement.



          SECTION 8.12. Remedies Not Exclusive. The remedies conferred upon or reserved to the
Administrative Agent in this Article 8 are intended to be in addition to, and not in
limitation of, any other remedy or remedies available to the Administrative Agent. Without
limiting the generality of the foregoing, the Administrative Agent and the Lenders shall have all
rights and remedies of a secured creditor under Article 9 of the UCC and under any other
Applicable Law.



          SECTION 8.13. Quiet Enjoyment. The Administrative Agent and the Lenders acknowledge
and agree that their security interest hereunder is subject to the rights of Quiet Enjoyment (as
defined below) of parties (which are not Affiliates of any Credit Party) to Distribution
Agreements, whether existing on the date hereof or hereafter executed. For the purpose hereof,
“Quiet Enjoyment” shall mean in connection with the rights of a licensee (which is not an
Affiliate of any Credit Party) under a Distribution Agreement, the Administrative Agent and the
Lenders’ agreement that their rights under this Credit Agreement and the other Fundamental
Documents and in the Collateral are subject to the rights of such licensee to distribute, exhibit
and/or to exploit the Item of Product licensed to them under such Distribution Agreement, and to
receive prints or tapes and other delivery items or have access to preprint material or master
tapes and other items to which they are entitled in connection therewith and that even if the
Lenders shall become the owner of the Collateral in case of an Event of Default, the Lenders’
ownership rights shall be subject to the rights of said parties under such agreement;
provided, however, that such licensee shall not be in default under the relevant
Distribution Agreement. The Administrative Agent agrees that, upon the reasonable request of a
Credit Party, it will provide written confirmation (in form reasonably acceptable to the
Administrative Agent) of such rights of Quiet Enjoyment to licensees under the Distribution
Agreements. None of the foregoing constitutes an agreement by the Administrative Agent or the
Lenders to the granting of any security interest to any Person under any Distribution Agreement,
except as otherwise permitted pursuant to Section 6.2.



          SECTION 8.14. Continuation and Reinstatement. Each Credit Party further agrees that
the security interest granted hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment or any part thereof of any Obligation is rescinded or must
otherwise be restored by the Administrative Agent or the Lenders upon the bankruptcy or
reorganization of any Credit Party or otherwise.



9. GUARANTY




          SECTION 9.1. Guaranty.



          (a) Each Guarantor unconditionally and irrevocably guarantees to the Administrative Agent and
the Lenders the due and punctual payment by, and performance of,



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the Obligations (including interest accruing on and after the filing of any petition in
bankruptcy or of reorganization of the obligor whether or not post filing interest is allowed in
such proceeding). Each Guarantor further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice or further assent from it (except as may be otherwise required
herein), and it will remain bound upon this Guaranty notwithstanding any extension or renewal of
any Obligation.



          (b) Each Guarantor waives presentation to, demand for payment from and protest to, as the case
may be, any Credit Party or any other guarantor of any of the Obligations, and also waives notice
of protest for nonpayment, notice of acceleration and notice of intent to accelerate. The
obligations of each Guarantor hereunder shall not be affected by (i) the failure of the
Administrative Agent or the Lenders to assert any claim or demand or to enforce any right or remedy
against the Borrower or any Guarantor or any other guarantor under the provisions of this Credit
Agreement or any other agreement or otherwise; (ii) any extension or renewal of any provision
hereof or thereof; (iii) the failure of the Administrative Agent or the Lenders to obtain the
consent the Guarantor with respect to any rescission, waiver, compromise, acceleration, amendment
or modification of any of the terms or provisions of this Credit Agreement, the Notes or of any
other agreement; (iv) the release, exchange, waiver or foreclosure of any security held by the
Administrative Agent for the Obligations or any of them; (v) the failure of the Administrative
Agent or the Lenders to exercise any right or remedy against any other Guarantor or any other
guarantor of the Obligations; or (vi) the release or substitution of any Guarantor or any other
guarantor of the Obligations.



          (c) Each Guarantor further agrees that this Guaranty constitutes a guaranty of performance and
of payment when due and not just of collection, and waives any right to require that any resort be
had by the Administrative Agent or any Lender to any security held for payment of the Obligations
or to any balance of any deposit, account or credit on the books of the Administrative Agent or any
Lender in favor of the Borrower, or any Guarantor, or to any other Person.



          (d) Each Guarantor hereby expressly assumes all responsibilities to remain informed of the
financial condition of the Borrower, the Guarantors and any other guarantors of the Obligations and
any circumstances affecting the Collateral or the Pledged Securities or the ability of the Borrower
to perform under this Credit Agreement.



          (e) Each Guarantor’s obligations under the Guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations, the Notes or any other instrument
evidencing any Obligations, or by the existence, validity, enforceability, perfection, or extent of
any collateral therefor or by any other circumstance relating to the Obligations which might
otherwise constitute a defense to this Guaranty. The Administrative Agent and the Lenders make no
representation or warranty with respect to any such circumstances and have no duty or
responsibility whatsoever to any Guarantor in respect to the management and maintenance of the
Obligations or any collateral security for the Obligations.



          SECTION 9.2. No Impairment of Guaranty, etc. The obligations of each Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or termination for any
reason (except payment and performance in full of the Obligations), including, without



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limitation, any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense (other than payment in full) or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure
of the Administrative Agent or any Lender to assert any claim or demand or to enforce any remedy
under this Credit Agreement or any other agreement, by any waiver or modification of any provision
hereof or thereof, by any default, failure or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of such Guarantor or would
otherwise operate as a discharge of such Guarantor as a matter of law, unless and until the
Obligations are paid in full.



          SECTION 9.3. Continuation and Reinstatement, etc.



          (a) Each Guarantor further agrees that its guaranty hereunder shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or any part thereof, of any
Obligation is rescinded or must otherwise be restored by the Administrative Agent or the Lenders
upon the bankruptcy or reorganization of the Borrower or a Guarantor, or otherwise. In furtherance
of the provisions of this Article 9, and not in limitation of any other right which the
Administrative Agent or the Lenders may have at law or in equity against the Borrower, a Guarantor
or any other Person by virtue hereof, upon failure of the Borrower to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice or otherwise, each
Guarantor hereby promises to and will, upon receipt of written demand by the Administrative Agent
on behalf of itself and/or the Lenders, forthwith pay or cause to be paid to the Administrative
Agent for the benefit of itself and/or the Lenders (as applicable) in cash an amount equal to the
unpaid amount of such unpaid Obligations with interest thereon from the due date at a rate of
interest equal to the rate specified in Section 2.8(a) hereof, and thereupon the
Administrative Agent shall assign such Obligation, together with all security interests, if any,
then held by the Administrative Agent in respect of such Obligation, to the Guarantor or Guarantors
making such payment; such assignment to be subordinate and junior to the rights of the
Administrative Agent on behalf of itself and the Lenders with regard to amounts payable by the
Borrower in connection with the remaining unpaid Obligations and to be pro tanto to the extent to
which the Obligation in question was discharged by the Guarantor or Guarantors making such
payments.



          (b) All rights of each Guarantor against the Borrower, arising as a result of the payment by
such Guarantor of any sums to the Administrative Agent for the benefit of the Administrative Agent
and/or the Lenders or directly to the Lenders hereunder by way of right of subrogation or
otherwise, shall in all respects be subordinated and junior in right of payment to, and shall not
be exercised by such Guarantor until and unless, the prior final payment in full of all the
Obligations. If any amount shall be paid to such Guarantor for the account of the Borrower, such
amount shall be held in trust for the benefit of the Administrative Agent, segregated from such
Guarantor’s own assets, and shall forthwith be paid to the Administrative Agent on behalf of the
Administrative Agent and/or the Lenders to be credited and applied to the Obligations, whether
matured or unmatured.



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          SECTION 9.4. Limitation on Guaranteed Amount, etc. Notwithstanding any other
provision of this Article 9, the amount guaranteed by each Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this Article 9 shall
not be subject to avoidance under Section 548 of the Bankruptcy Code or to being set aside or
annulled under any Applicable Law relating to fraud on creditors. In determining the limitations,
if any, on the amount of any Guarantor’s obligations hereunder pursuant to the preceding sentence,
it is the intention of the parties hereto that any rights of subrogation or contribution which such
Guarantor may have under this Article 9, any other agreement or Applicable Law shall be
taken into account.



10. PLEDGE




          SECTION 10.1. Pledge. Each Pledgor, as security for the due and punctual payment of
the Obligations (including interest accruing on and after the filing of any petition in bankruptcy
or of reorganization of the Borrower whether or not post filing interest is allowed in such
proceeding) in the case of the Borrower, and as security for its obligations hereunder in the case
of a Pledgor other than the Borrower, hereby pledges, hypothecates, assigns, transfers, sets over
and delivers unto the Administrative Agent for the benefit of itself and the Lenders, a security
interest in all Pledged Collateral now owned or hereafter acquired by it. Upon the First Priority
Obligations Payment Date, the Pledgors shall deliver to the Administrative Agent the definitive
instruments (if any) representing all Pledged Securities, accompanied by undated stock powers (in
the case of Pledged Securities comprising capital stock), duly endorsed or executed in blank by the
appropriate Pledgor, and such other instruments or documents as the Administrative Agent or its
counsel shall reasonably request.



          SECTION 10.2. Covenant. Each Pledgor covenants that as the owner of Equity Interests
in each of its respective Subsidiaries it will not take any action to allow any additional shares
of common stock, preferred stock or other Equity Interests of any of its respective Subsidiaries or
any securities convertible or exchangeable into common or preferred stock or other Equity Interests
of such Subsidiaries to be issued, or grant any options or warrants, unless all of such securities
(or, in the case of a Subsidiary that is a Controlled Foreign Subsidiary, 65% of such securities)
are pledged to the Administrative Agent (for the benefit of itself and the Lenders) as security for
the Obligations and, if applicable, such Pledgor’s obligations under Article 9 hereof.



          SECTION 10.3. Registration in Nominee Name; Denominations. From and after the First
Priority Obligations Payment Date, the Administrative Agent shall have the right (in its sole and
absolute discretion) to hold the certificates representing any Pledged Securities (a) upon the
occurrence and continuance of an Event of Default, in its own name (on behalf of the Administrative
Agent and the Lenders) or in the name of its nominee, or (b) prior to such time, in the name of the
appropriate Pledgor, endorsed or assigned in blank or in favor of the Administrative Agent. Upon
receipt thereof, the Administrative Agent shall have the right to exchange the certificates
representing any of the Pledged Securities for certificates of smaller or larger denominations for
any purpose consistent with this Credit Agreement.



          SECTION 10.4. Voting Rights; Dividends; etc.



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          (a) The appropriate Pledgor shall be entitled to exercise any and all voting and/or consensual
rights and powers accruing to an owner of the Pledged Securities being pledged by it hereunder or
any part thereof for any purpose not inconsistent with the terms hereof, at all times, except as
expressly provided in paragraph (c) below.



          (b) From and after the First Priority Obligations Payment Date, all dividends or distributions
of any kind whatsoever (other than cash dividends or cash distributions paid while no Event of
Default is continuing) received by a Pledgor, whether resulting from a subdivision, combination, or
reclassification of the outstanding capital stock or Equity Interests of the issuer or received in
exchange for the Pledged Securities or any part thereof or as a result of any merger,
consolidation, acquisition, or other exchange of assets to which the issuer may be a party, or
otherwise, shall be and become part of the Pledged Securities pledged hereunder and shall
immediately be delivered to the Administrative Agent to be held subject to the terms hereof. All
dividends and distributions which are received contrary to the provisions of this subsection (b)
shall be received in trust for the benefit of the Administrative Agent and the Lenders, segregated
from such Pledgor’s own assets, and shall be delivered to the Administrative Agent.



          (c) From and after the First Priority Obligations Payment Date, upon the occurrence and during
the continuance of an Event of Default and notice from the Administrative Agent of the transfer of
such rights to the Administrative Agent, all rights of such Pledgor (i) to exercise the voting
and/or consensual rights and powers which it is entitled to exercise pursuant to this
Section, and (ii) to receive and retain cash dividends and cash distributions shall cease,
and all such rights shall thereupon become vested in the Administrative Agent, which shall have the
sole and exclusive right and authority to exercise such voting and/or consensual rights and receive
such cash dividends and cash distributions until such time as such Event of Default has been cured
or waived.



          SECTION 10.5. Remedies Upon Default. Subject to the provisions of the Intercreditor
Agreement, if an Event of Default shall have occurred and be continuing, the Administrative Agent,
on behalf of itself and the Lenders, may sell the Pledged Securities, or any part thereof, at
public or private sale or at any broker’s board or on any securities exchange, for cash, upon
credit or for future delivery as the Administrative Agent shall deem appropriate subject to the
terms hereof or as otherwise provided in the UCC. The Administrative Agent shall be authorized at
any such sale (if it deems it advisable to do so) to restrict to the full extent permitted by
Applicable Law the prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Pledged Securities for their own account for investment and not with a view
to the distribution or sale thereof, and upon consummation of any such sale, the Administrative
Agent shall have the right to assign, transfer, and deliver to the purchaser or purchasers thereof
the Pledged Securities so sold. Each such purchaser at any such sale shall hold the property sold
absolutely, free from any claim or right on the part of any Pledgor. The Administrative Agent
shall give the Pledgors ten (10) days’ prior written notice of any such public or private sale, or
sale at any broker’s board or on any such securities exchange, or of any other disposition of the
Pledged Securities. Such notice, in the case of public sale, shall state the time and place for
such sale and, in the case of sale at a broker’s board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the Pledged Securities, or
portion thereof, will first be offered for sale at such board or



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exchange. Any such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Administrative Agent may fix and shall state in the notice
of such sale. At any such sale, the Pledged Securities, or portion thereof, to be sold may be sold
in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and
absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale
of the Pledged Securities if it shall determine not to do so, regardless of the fact that notice of
sale of the Pledged Securities may have been given. The Administrative Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so adjourned. In case the sale of all
or any part of the Pledged Securities is made on credit or for future delivery, the Pledged
Securities so sold shall be retained by the Administrative Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the Pledged Securities so
sold and, in case of any such failure, such Pledged Securities may be sold again upon like notice.
At any sale or sales made pursuant to this Section 10.5, the Administrative Agent (on
behalf of itself and/or the Lenders) may bid for or purchase, free from any claim or right of
whatever kind, including any equity of redemption, of the Pledgors, any such demand, notice, claim,
right or equity being hereby expressly waived and released, any or all of the Pledged Securities
offered for sale, and may make any payment on the account thereof by using any claim for moneys
then due and payable to the Administrative Agent or any consenting Lender by any Credit Party as a
credit against the purchase price; and the Administrative Agent, upon compliance with the terms of
sale, may hold, retain and dispose of the Pledged Securities without further accountability
therefor to any Pledgor or any third party (other than the Lenders). The Administrative Agent
shall in any such sale make no representations or warranties with respect to the Pledged Securities
or any part thereof, and shall not be chargeable with any of the obligations or liabilities of the
Pledgors with respect thereto. Each Pledgor hereby agrees (i) it will indemnify and hold the
Administrative Agent and the Lenders harmless from and against any and all claims with respect to
the Pledged Securities asserted before the taking of actual possession or control of the Pledged
Securities by the Administrative Agent pursuant to this Credit Agreement, or arising out of any act
of, or omission to act on the part of, any Person prior to such taking of actual possession or
control by the Administrative Agent (whether asserted before or after such taking of possession or
control), or arising out of any act on the part of any Pledgor, its agents or Affiliates before or
after the commencement of such actual possession or control by the Administrative Agent but
excluding from therefrom all claims with respect to the Pledged Securities resulting from (x) the
gross negligence or willful misconduct of any of the Administrative Agent or the Lenders, (y) any
claims with respect to the Pledged Securities asserted against an indemnified party by a Credit
Party in which such Credit Party is the prevailing party, or (z) claims of parties under the First
Lien Agreement and the Administrative Agent and the Lenders shall have no liability or obligation
arising out of any such claim except for acts of willful misconduct or gross negligence. As an
alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may
proceed by a suit or suits at law or in equity to foreclose upon the Collateral and Pledged
Securities under this Credit Agreement and to sell the Pledged Securities, or any portion thereof,
pursuant to a judgment or decree of a court or courts having competent jurisdiction.



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          SECTION 10.6. Application of Proceeds of Sale and Cash. The proceeds of sale of the
Pledged Securities sold pursuant to Section 10.5 hereof shall, subject to the provisions of
the Intercreditor Agreement, be applied by the Administrative Agent on behalf of itself and the
Lenders as follows:




	 	(i)	 	to the payment of all reasonable out-of-pocket costs and
expenses paid or incurred by the Administrative Agent in connection with such
sale, including, without limitation, all court costs and the reasonable fees
and expenses of counsel for the Administrative Agent in connection therewith,
and the payment of all out-of-pocket costs and expenses paid or incurred by the
Administrative Agent in enforcing this Credit Agreement, in realizing or
protecting any Collateral and in enforcing or collecting any Obligations or any
guaranty thereof, including, without limitation, court costs and the attorney’s
fees and expenses incurred by the Administrative Agent in connection therewith;
and
	 
	 	(ii)	 	to the payment in full of the Obligations in accordance with
Section 12.2 hereof;




provided, however, that the Administrative Agent may in its discretion apply funds
comprising the proceeds of sale of the Pledged Securities to pay the cost (i) of completing any
Item of Product owned in whole or in part by any Credit Party in any stage of production, and (ii)
of making delivery to the distributors of such Item of Product. Any amounts remaining after such
payment in full shall be remitted to the appropriate Pledgor, or as a court of competent
jurisdiction may otherwise direct.




          SECTION 10.7. Securities Act, etc. In view of the position of each Pledgor in
relation to the Pledged Securities pledged by it, or because of other present or future
circumstances, a question may arise under the Securities Act of 1933, as amended, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such
Act and any such similar statute as from time to time in effect being hereinafter called the
“Federal Securities Laws”), with respect to any disposition of the Pledged Securities
permitted hereunder. Each Pledgor understands that compliance with the Federal Securities Laws may
very strictly limit the course of conduct of the Administrative Agent if the Administrative Agent
were to attempt to dispose of all or any part of the Pledged Securities, and may also limit the
extent to which or the manner in which any subsequent transferee of any Pledged Securities may
dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the
Administrative Agent in any attempt to dispose of all or any part of the Pledged Securities under
applicable Blue Sky or other state securities laws, or similar laws analogous in purpose or effect.
Under Applicable Law, in the absence of an agreement to the contrary, the Administrative Agent may
perhaps be held to have certain general duties and obligations to a Pledgor to make some effort
towards obtaining a fair price even though the Obligations may be discharged or reduced by the
proceeds of a sale at a lesser price. Each Pledgor waives to the fullest extent permitted by
Applicable Law any such general duty or obligation to it, and the Pledgors and/or the Credit
Parties will not attempt to hold the Administrative Agent responsible for selling all or any part
of the Pledged Securities at an inadequate price, even if the Administrative Agent shall accept the
first offer received or does not approach more than one possible purchaser. Without limiting the



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generality of the foregoing, the provisions of this Section 10.7 would apply if, for
example, the Administrative Agent were to place all or any part of the Pledged Securities for
private placement by an investment banking firm, or if such investment banking firm purchased all
or any part of the Pledged Securities for its own account, or if the Administrative Agent placed
all or any part of the Pledged Securities privately with a purchaser or purchasers.



          SECTION 10.8. Continuation and Reinstatement. Each Pledgor further agrees that its
pledge hereunder shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by
the Administrative Agent or the Lenders upon the bankruptcy or reorganization of any Pledgor or
otherwise.



          SECTION 10.9. Termination. The pledge referenced herein shall terminate when all of
the Obligations shall have been fully paid and performed, at which time the Administrative Agent
shall promptly assign and deliver to the appropriate Pledgor, or to such Person or Persons as such
Pledgor shall designate, against receipt, such of the Pledged Securities (if any) as shall not have
been sold or otherwise applied by the Administrative Agent pursuant to the terms hereof and shall
still be held by it hereunder, together with appropriate instruments of reassignment and release.
Any such reassignment shall be free and clear of all Liens, arising by, under or through the
Administrative Agent but shall otherwise be without recourse upon or warranty by the Administrative
Agent and at the expense of the Pledgors.



11. CASH COLLATERAL




          SECTION 11.1. Cash Collateral Accounts. Upon the First Priority Obligations Payment
Date, there shall be established with the Administrative Agent a collateral account in the name of
the Credit Parties subject to the security interests of Administrative Agent (the “Cash
Collateral Account”), into which the appropriate Credit Parties shall from time to time deposit
amounts pursuant to the express provisions of this Credit Agreement requiring or permitting such
deposits. Except to the extent otherwise provided in this Article 11, the Cash Collateral
Accounts shall be under the control (within the meaning of Section 9-104 of the UCC) of the
Administrative Agent.



          SECTION 11.2. Investment of Funds.



          (a) The Administrative Agent is hereby authorized and directed to invest and reinvest the
funds from time to time transferred or deposited into the Cash Collateral Account, so long as no
Event of Default has occurred and is continuing, on the instructions of the Borrower
(provided, that any such instructions given orally shall be confirmed promptly in writing
and shall be limited to instructions with respect to investments in cash and Cash Equivalents) or,
if the Borrower shall fail to give such instructions upon delivery of any such funds, in the sole
discretion of the Administrative Agent, provided that in no event may the Borrower give
instructions to the Administrative Agent to, or may the Administrative Agent in its discretion,
invest or reinvest funds in the Cash Collateral Account in other than Cash Equivalents.



          (b) Any net income or gain on the investment of funds from time to time held in the Cash
Collateral Account, shall be promptly reinvested by the Administrative Agent as a



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part of the Cash Collateral Account; and any net loss on any such investment shall be charged
against the Cash Collateral Account.



          (c) Neither the Administrative Agent nor the Lenders shall be a trustee for any Credit Party,
or shall have any obligations or responsibilities, or shall be liable for anything done or not
done, in connection with the Cash Collateral Account except for any acts of gross negligence or
willful misconduct, except as expressly provided herein and except that the Administrative Agent
shall have the obligations of a secured party under the UCC. The Administrative Agent and the
Lenders shall not have any obligation or responsibility and shall not be liable in any way for any
investment decision made in accordance with this Section 11.2 or for any decrease in the
value of the investments held in the Cash Collateral Account except for any acts of gross
negligence or willful misconduct.



          SECTION 11.3. Grant of Security Interest. For value received and to induce the
Lenders to make Loans to the Borrower as provided for in this Credit Agreement, as security for the
payment of all of the Obligations, each of the Credit Parties hereby assigns to the Administrative
Agent (for the benefit of itself and the Lenders) and grants to the Administrative Agent (for the
benefit of itself and the Lenders), a Lien upon all of such Credit Party’s rights in and to the
Cash Collateral Account, all cash, documents, instruments and securities from time to time held
therein, and all rights pertaining to investments of funds in the Cash Collateral Account and all
products and proceeds of any of the foregoing. All cash, documents, instruments and securities
from time to time on deposit in the Cash Collateral Account, and all rights pertaining to
investments of funds in the Cash Collateral Account shall immediately and without any need for any
further action on the part of any of the Credit Parties, any Lender or the Administrative Agent,
become subject to the Lien set forth in this Section 11.3, be deemed Collateral for all
purposes hereof and be subject to the provisions of this Credit Agreement.



          SECTION 11.4. Remedies. At any time during the continuation of an Event of Default,
the Administrative Agent may sell any documents, instruments and securities held in the Cash
Collateral Account and may immediately apply the proceeds thereof and any other cash held in the
Cash Collateral Account in accordance with Section 8.7.



12. THE ADMINISTRATIVE AGENT




          SECTION 12.1. Administration by the Administrative Agent.



          (a) The general administration of the Fundamental Documents and any other documents
contemplated by this Credit Agreement or any other Fundamental Document shall be by the
Administrative Agent or its designees; provided, that, at any time when a single Lender
constitutes the Required Lenders, notwithstanding anything in any Fundamental Document (including
this Section 12.1) to the contrary, the Administrative Agent shall, except with respect to
exchanging or submitting information or notices from the Borrower to the Lenders, performing the
activities permitted by Section 12.1(b), or its responsibilities under Sections 12.2 or
12.4 hereof, not act or exercise or refrain from exercising its powers or discretion
hereunder or under the Fundamental Documents, the Notes or any other documents contemplated by this
Credit Agreement or any other Fundamental Document except as directed by the Required Lenders in
writing. Except as otherwise expressly provided herein, each of the Lenders hereby



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irrevocably authorizes the Administrative Agent, at its discretion, to take or refrain from
taking such actions as agent on its behalf and to exercise or refrain from exercising such powers
under the Fundamental Documents, the Notes and any other documents contemplated by this Credit
Agreement or any other Fundamental Document as are expressly delegated by the terms hereof or
thereof, as appropriate, together with all powers reasonably incidental thereto. The
Administrative Agent shall have no duties or responsibilities except as set forth in the
Fundamental Documents. Notwithstanding the foregoing or anything to the contrary in any
Fundamental Document (including this Section 12.1), the Administrative Agent may at any time elect,
prior to performing any action (or inaction) requiring the exercise of its discretion or making any
determination requiring such determination, to notify the Lenders of the relevant issue and forbear
from taking any such action or making any such determination until it shall have been instructed to
do so by the Required Lenders;



   
        (b) The Lenders hereby authorize the Administrative Agent (in its sole discretion):




	 	(i)	 	in connection with the sale or other disposition of any asset
included in the Collateral or the capital stock of any Guarantor, to the extent
undertaken in accordance with the terms of this Credit Agreement, to release a
Lien granted to it (for the benefit of the Administrative Agent and the
Lenders) on such asset or capital stock and/or to release such Guarantor from
its obligations hereunder;
	 
	 	(ii)	 	to appoint subagents to be the holder of record of a Lien to be
granted to the Administrative Agent (for the benefit of the Administrative
Agent and the Lenders);
	 
	 	(iii)	 	to confirm in writing the right of Quiet Enjoyment of
licensees pursuant to the terms of Section 8.13; and
	 
	 	(iv)	 	to enter into the Fundamental Documents contemplated to be
entered into on the Closing Date.





             (c) The Lenders hereby authorize the Administrative Agent, (i) at any time when a single
Lender constitutes the Required Lenders, at the instruction of the Required Lenders, and (ii) at
all other times, in the Administrative Agent’s sole discretion:




	 	(i)	 	to determine that the cost to the Borrower or another Credit
Party is disproportionate to the benefit to be realized by the Administrative
Agent and the Lenders by perfecting a Lien in a given asset or group of assets
included in the Collateral and that the Borrower or other Credit Party should
not be required to perfect such Lien in favor of the Administrative Agent (for
the benefit of itself and the Lenders);
	 
	 	(ii)	 	to enter into and perform its obligations under the Fundamental
Documents entered into after the Closing Date;




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	 	(iii)	 	to enter into intercreditor and/or subordination agreements on
terms acceptable to the Administrative Agent with (A) the unions and/or the
guilds with respect to the security interests in favor of such unions and/or
guilds required pursuant to the terms of the collective bargaining agreements,
(B) any licensee or licensor having any rights to any Item of Product, (C)
Persons providing any services in connection with any Item of Product, (D)
Persons providing tax benefit and/or production subsidies or co-financing for
Items of Product or (E) any Permitted Slate Financing Intercreditor Agreement;
and
	 
	 	(iv)	 	to make determinations under the Hallmark Guaranty (including
determinations as to the acceptability of credit enhancements offered by a
purchaser of Crown Media Holdings, Inc. in connection with a potential
termination of the Hallmark Guaranty under Section 3(b)(vi) thereof).





          SECTION 12.2. Payments. As between the Administrative Agent and the Lenders, any
amounts received by the Administrative Agent in connection with the Fundamental Documents, the
application of which is not otherwise provided for in Article 2 hereof, shall be applied
(subject to the terms of the Intercreditor Agreement), first, to pay accrued but unpaid
interest on the Loans in accordance with the amount of outstanding Loans owed to each Lender and
second, to pay the principal balance outstanding on the Loans (with amounts payable on the
principal balance outstanding on the Loans in accordance with the amount of outstanding Loans owed
to each Lender), amounts outstanding under Swap Agreements and to pay any other obligations then
due under this Credit Agreement. All amounts to be paid to any Lender by the Administrative Agent
shall be credited to that Lender, after collection by the Administrative Agent, in immediately
available funds either by wire transfer or deposit in such Lender’s correspondent account with the
Administrative Agent, or as such Lender and the Administrative Agent shall from time to time agree.



          SECTION 12.3. Sharing of Setoffs and Cash Collateral. Each of the Lenders agrees
that if it shall, through the exercise of a right of banker’s Lien, setoff or counterclaim against
any Credit Party (including, but not limited to, a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu of, such secured
claim and received by such Lender under any applicable bankruptcy, insolvency or other similar law)
or otherwise, obtain payment in respect of its Loans as a result of which the unpaid portion of its
Loans is proportionately less than the unpaid portion of Loans of any of the other Lenders (a) it
shall promptly purchase at par (and shall be deemed to have thereupon purchased) from such other
Lenders a participation in the Loans of such other Lenders, so that the aggregate unpaid principal
amount of each of the Lender’s Loans shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding and as the principal amount of its Loans prior to
the obtaining of such payment was to the principal amount of all Loans outstanding prior to the
obtaining of such payment, and (b) such other adjustments shall be made from time to time as shall
be equitable to ensure that the Lenders share such payment pro rata. If all or any portion of such
excess payment is thereafter recovered from the Lender which originally received such excess
payment, such purchase (or portion thereof) shall be canceled and the purchase price restored to
the extent of such recovery. The Credit Parties expressly consent to the foregoing arrangements
and agree that any Lender or Lenders holding (or deemed



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to be holding) a participation in a Note may exercise any and all rights of banker’s Lien,
setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender or
Lenders as fully as if such Lender or Lenders held a Note and was the original obligee thereon, in
the amount of such participation.



          SECTION 12.4. Notice to the Lenders. Upon receipt by the Administrative Agent from
any of the Credit Parties of any communication calling for an action on the part of the Lenders, or
upon notice to the Administrative Agent of any Event of Default, the Administrative Agent will in
turn immediately inform the other Lenders in writing (which shall include facsimile communications)
of the nature of such communication or of the Event of Default, as the case may be.



          SECTION 12.5. Liability of the Administrative Agent.



          (a) The Administrative Agent, when acting on behalf of the Lenders, may execute any of its
duties under this Credit Agreement or the other Fundamental Documents by or through its officers,
agents or employees and neither the Administrative Agent nor its officers, agents or employees
shall be liable to the Lenders or any of them for any action taken or omitted to be taken in good
faith, nor be responsible to the Lenders or to any of them for the consequences of any oversight or
error of judgment, or for any loss, unless the same shall happen through its gross negligence or
willful misconduct. The Administrative Agent and its respective directors, officers, agents, and
employees shall in no event be liable to the Lenders or to any of them for any action taken or
omitted to be taken by it pursuant to instructions received by it from the Required Lenders or in
reliance upon the advice of counsel selected by it with reasonable care. Without limiting the
foregoing, neither the Administrative Agent nor any of its respective directors, officers,
employees, or agents shall be responsible to any of the Lenders for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any statement, warranty, or
representation in, or for the perfection of any security interest contemplated by, this Credit
Agreement, any other Fundamental Document or any related agreement, document or order, or for
freedom of any of the Collateral or any of the Pledged Securities from prior Liens or security
interests, or shall be required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Credit Party of any of the terms, conditions, covenants, or
agreements of this Credit Agreement, any other Fundamental Document, or any related agreement or
document.



          (b) Neither the Administrative Agent (in its capacity as agent for the Lenders), nor any of
its directors, officers, employees or agents shall have any responsibility to the Borrower or any
other Credit Party on account of the failure or delay in performance or breach by any of the
Lenders (other than JPMorgan Chase Bank, N.A.) of any of such Lender’s obligations under this
Credit Agreement, the other Fundamental Documents or any related agreement or document or in
connection herewith or therewith. No Lender nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrower or any other Credit Party on account of the
failure or delay in performance or breach by any other Lender of such other Lender’s obligations
under this Credit Agreement, the other Fundamental Documents or any related agreement or document
or in connection herewith or therewith.



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          (c) The Administrative Agent, in its capacity as agent for the Lenders hereunder shall be
entitled to rely on any communication, instrument or document believed by it to be genuine or
correct and to have been signed or sent by a Person or Persons believed by it to be the proper
Person or Persons, and it shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by it with reasonable care.



          SECTION 12.6. Reimbursement and Indemnification. Each of the Lenders agrees (i) to
reimburse the Administrative Agent for such Lender’s Pro Rata Share of any expenses and fees
incurred for the benefit of the Lenders under the Fundamental Documents, including, without
limitation, counsel fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders, and any other expense incurred in connection with the operations or
enforcement thereof not reimbursed by or on behalf of the Borrower and (ii) to indemnify and hold
harmless the Administrative Agent and any of its directors, officers, employees, or agents, on
demand, in accordance with such Lender’s Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against, it or any of them in any way relating to or arising out of any of the Fundamental
Documents or any related agreement or document, or any action taken or omitted by it or any of them
under any Fundamental Documents or any related agreement or document, to the extent not reimbursed
by or on behalf of the Borrower or any Credit Party (except such as shall result from its gross
negligence or willful misconduct). To the extent indemnification payments made by the Lenders
pursuant to this Section 12.6 are subsequently recovered by the Administrative Agent from a
Credit Party, the Administrative Agent will promptly refund such previously paid indemnity payments
to the Lenders.



          SECTION 12.7. Rights of Administrative Agent. It is understood and agreed that the
Administrative Agent shall have the same duties, rights and powers as a Lender hereunder (including
the right to give such instructions) as any of the other Lenders and may exercise such rights and
powers, as well as its rights and powers under other agreements and instruments to which it is or
may be party, and engage in other transactions with any Credit Party or Affiliate thereof, as
though it were not the Administrative Agent of the Lenders under this Credit Agreement and the
other Fundamental Documents.



          SECTION 12.8. Independent Investigation by Lenders. Each of the Lenders acknowledges
that it has decided to enter into this Credit Agreement and the other Fundamental Documents and to
make the Loans hereunder based on its own analysis of the transactions contemplated hereby and of
the creditworthiness of the Credit Parties and agrees that the Administrative Agent shall not bear
any responsibility therefor.



          SECTION 12.9. Agreement of Required Lenders. (a) Except as set forth in Section
13.10 hereof, upon any occasion requiring or permitting an approval, consent, waiver, election
or other action on the part of the Lenders, action shall be taken by the Administrative Agent for
and on behalf of, or for the benefit of, all Lenders upon the direction of the Required Lenders and
any such action shall be binding on all Lenders. No amendment, modification, consent or waiver
shall be effective except in accordance with the provisions of Section 13.10 hereof.



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          (b) The Administrative Agent shall not deliver a Buy Out Notice (as defined in the
Intercreditor Agreement) to the First Lien Agent in accordance with the Intercreditor Agreement
without having obtained the prior written consent of each Lender to such delivery.



          SECTION 12.10. Notice of Transfer. The Administrative Agent may deem and treat any
Lender which is a party to this Credit Agreement as the owner of such Lender’s respective portions
of the Loans for all purposes, unless and until a written notice of the assignment or transfer
thereof executed by any such Lender shall have been received by the Administrative Agent and become
effective in accordance with Section 13.3 hereof.



          SECTION 12.11. Successor Administrative Agent. The Administrative Agent may resign
at any time by giving ten days’ prior written notice thereof to the Lenders and the Borrower and
shall resign upon the written request of the Required Lenders, but such resignation shall not
become effective until acceptance by a successor agent of its appointment pursuant hereto,
provided, however, that any resignation by JPMorgan Chase Bank, N.A. from its
position as Administrative Agent shall become effective no later than thirty (30) days from the
delivery of such a resignation. Upon any such resignation, the retiring Administrative Agent shall
consult with the Borrower and shall promptly appoint a successor agent from among the Lenders;
provided, that in the case of a resignation at the Administrative Agent’s option, such
replacement is reasonably acceptable (as evidenced in writing) to the Required Lenders and, in any
case, is reasonably acceptable to the Borrower; provided, however, that (a) such
approval by the Borrower shall not be required at any time when a Default or Event of Default is
continuing and (b) in no case shall any “hedge fund”, as such term is currently understood, become
a Successor Administrative Agent. If no successor agent shall have been so appointed by the
retiring Administrative Agent and shall have accepted such appointment, within 30 days after the
retiring agent’s giving of notice of resignation, the Required Lenders may appoint a successor
agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor
agent, such successor agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Credit Agreement, the other
Fundamental Documents and any other credit documentation. After any retiring Administrative
Agent’s resignation hereunder as Administrative Agent, the provisions of this Article 12
and Article 13 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent under this Credit Agreement.



13. MISCELLANEOUS




          SECTION 13.1. Notices.



          (a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy or electronic photocopy (i.e. “PDF”), as follows:




	 	(i)	 	if to the Borrower, to it at RHI Entertainment, LLC, 1325 Sixth
Avenue, Ste. 2100, New York, New York 10022 (Telecopy No. (212) 977-9049),




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	 	 	 	Attention: William Aliber and Michael Isaacson; e-mail:
BAliber@rhifilms.com and MIsaacson@rhifilms.com, with a copy to Latham &
Watkins LLP, 885 Third Avenue, Suite 1000, New York, New York 10022,
Attention: Dennis D. Lamont, (Telecopy No. (212) 751-4864), e-mail:
dennis.lamont@lw.com;
	 
	 	(ii)	 	if to the Administrative Agent or to JPMorgan Chase Bank, N.A.,
to (x)  JPMorgan Chase Bank, N.A., 10 South Dearborn, 9th Floor, Mail Code:
IL1-0364, Chicago, Illinois 60603-5506, Attention: Stephen C. Price (Telecopy
No.: 312-325-3239; email: stepen.c.price@jpmorgan.com, with copies to (y)
JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 10 South Dearborn,
Floor 7, Chicago, Illinois 60603-2003, Attention: (A) for communications
relating to assignments, Medy Hernandez (Telecopy No. (312) 385-7096; email:
medy.hernandez@jpmchase.com) and (B) for communications not relating to
assignments, Judy Warren (Telecopy No. (312) 385-7096;
email:judy.a.warren@jpmchase.com) and to (z) J.P. Morgan Securities Inc., 1999
Avenue of the Stars, 27th Floor, Los Angeles, California 90067, Attention:
Christa Thomas (Telecopy No. (310) 860-7260; email:
christa.thomas@jpmorgan.com); and
	 
	 	(iii)	 	if to any other Lender, to it at its address (or telecopy
number) set forth on the signature pages hereto.





        (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided, that the foregoing shall not apply to notices pursuant to Article 2
unless otherwise agreed by the Administrative Agent and the applicable Lender. Each of the
Administrative Agent and the Borrower may, each in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to procedures approved
by it; provided, that approval of such procedures may be limited to particular notices or
communications.



          (c) Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to all of the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Credit Agreement
shall be deemed to have been given on the date of receipt.



          SECTION 13.2. Survival of Agreement, Representations and Warranties, etc. All
warranties, representations and covenants made by any of the Credit Parties herein, in any other
Fundamental Document or in any certificate or other instrument delivered by it or on its behalf in
connection with this Credit Agreement or any other Fundamental Document shall be considered to have
been relied upon by the Administrative Agent and the Lenders and, except for any terminations,
amendments, modifications or waivers thereof in accordance with the terms hereof, shall survive the
making of the Loans herein contemplated and the execution and delivery to the Administrative Agent
of the Notes regardless of any investigation made by the Administrative Agent or the Lenders or on
their behalf and shall continue in full force and effect



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so long as any Obligation is outstanding and unpaid. All statements in any such certificate
or other instrument shall constitute representations and warranties by the Credit Parties
hereunder.



          SECTION 13.3. Successors and Assigns; Syndications; Loan Sales; Participations.



          (a) Whenever in this Credit Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party; provided,
however, that neither the Borrower nor any other Credit Party may assign its rights
hereunder without the prior written consent of the Administrative Agent and all Lenders, and all
covenants, promises and agreements by or on behalf of any of the Credit Parties which are contained
in this Credit Agreement shall inure to the benefit of the successors and assigns of the
Administrative Agent and the Lenders.



          (b) Each of the Lenders may (but only with the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld or delayed and, at any time prior to the
occurrence of a Default or Event of Default under Section 7(b), (c), (h) or (i) with the prior
written consent of the Borrower, which consent will not be unreasonably withheld or delayed) assign
to an Eligible Assignee all or any portion of its interests, rights and obligations under this
Credit Agreement (including, without limitation, all or a portion of all Loans at the time owing to
it and the Notes, if any, held by it); provided, however, that (i) each assignment
shall be of a constant, and not a varying, percentage of the assigning Lender’s interests, rights
and obligations under this Credit Agreement, (ii) each assignment shall be in a minimum principal
amount equal to $1,000,000; provided that, such minimum amount shall not apply to
assignments by Lenders who then hold Loans in a principal amount of less than $1,000,000 in the
aggregate so long as the entirety of their remaining Loans are being assigned in full, (iii) the
parties to each such assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and Assumption, together
with the assigning Lender’s original Note if one has been issued to the Lender pursuant to
Section 2.4 hereof and a processing and recordation fee of $3,500 to be paid to the
Administrative Agent by the assigning Lender or the assignee and (iv) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an “Administrative Questionnaire” in which
the assignee designates one or more credit contacts to whom all syndicate-level information (which
may contain material non-public information about the Borrower and its related parties or their
respective securities) will be made available and who may receive such information in accordance
with the assignee’s compliance procedures and Applicable Laws, including federal and state
securities laws. Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Assumption, which effective date shall not (unless
otherwise agreed to by the Administrative Agent) be earlier than five Business Days after the date
of acceptance and recording by the Administrative Agent, (x) the assignee thereunder shall be a
party hereto and, to the extent provided in such Assignment and Assumption, have the rights and
obligations of a Lender hereunder and under the other Fundamental Documents and shall be bound by
the provisions hereof, and (y) the assigning Lender thereunder shall, to the extent provided in
such Assignment and Assumption, relinquish its rights and be released from its obligations under
this Credit Agreement except that, notwithstanding such assignment, any rights and remedies
available to the Borrower for any breaches by such assigning Lender of its obligations hereunder
while a



108









 







Lender shall be preserved after such assignment and such Lender shall not be relieved of any
liability to the Borrower due to any such breach. In the case of an Assignment and Assumption
covering all or the remaining portion of the assigning Lender’s rights and obligations under this
Credit Agreement, such assigning Lender shall cease to be a party hereto.



          (c) Notwithstanding any provision herein otherwise requiring the consent of the Borrower, each
Lender may at any time make an assignment of its interests, rights and obligations under this
Credit Agreement without the consent of the Borrower or the Administrative Agent, to any Eligible
Assignee that is (i) an Affiliate of such Lender, (ii) a Person, or Affiliate of a Person, that
manages such Lender (a “Related Fund”), (iii) another Lender hereunder or (iv) an Approved
Fund. Any such assignment to any Affiliate of the assigning Lender, a Related Fund or any other
Lender hereunder shall not be subject to the requirement of Section 13.3(b)(ii) that the
amount of the Loans of the assigning Lender subject to each assignment be in a minimum principal
amount of $1,000,000, and any such assignment to any Affiliate of the assigning Lender shall not
release the assigning Lender of its remaining obligations hereunder, if any.



          (d) By executing and delivering an Assignment and Assumption, the assigning Lender thereunder
and the assignee thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby and that such interest is free and clear of any adverse
claim, the assigning Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in connection with this Credit
Agreement or any other Fundamental Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Fundamental Documents or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assignor Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any Credit Party or the
performance or observance by any Credit Party of any of their obligations under the Fundamental
Documents or any other instrument or document furnished pursuant thereto; (iii) such assignee
confirms that it has received a copy of this Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Sections 5.1(a) and 5.1(b) (if
such financial statements shall have theretofore been delivered) and such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Assumption; (iv) such assignee agrees that it will, independently and without
reliance upon the assigning Lender, the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Credit Agreement or any other Fundamental
Document; (v) such assignee appoints and authorizes the Administrative Agent to take such action as
the agent on its behalf and to exercise such powers under this Credit Agreement as are delegated to
the Administrative Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will be bound by the provisions of this
Credit Agreement and will perform in accordance with their terms all of the obligations which by
the terms of this Credit Agreement are required to be performed by it as a Lender.



          (e) The Administrative Agent (acting for this purpose on behalf of the Borrower) shall
maintain at its address at which notices are to be given to it pursuant to Section 



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13.1 a copy of each Assignment and Assumption and a register for the recordation of
the names and addresses of the Lenders and the principal amount of the Loans owing to, each Lender
from time to time (the “Register”). The entries in the Register shall be conclusive, in
the absence of manifest error, and the Credit Parties, the Administrative Agent and the Lenders
shall treat each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of the Fundamental Documents. Any assignment of any Loan, whether or not evidenced by a
Note, shall be effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by any Credit Party or any Lender at any
reasonable time and from time to time upon reasonable prior notice.




          (f) Subject to the foregoing, upon its receipt of an Assignment and Assumption executed by an
assigning Lender and an assignee together with the assigning Lender’s original Notes, if
applicable, and the processing and recordation fee, the Administrative Agent shall, if such
Assignment and Assumption has been completed, is in the form of Exhibit I hereto, and has
been, if applicable, consented to in writing by the Borrower, (i) accept such Assignment and
Assumption, and (ii) record the information contained therein in the Register. Within five (5)
Business Days after receipt of the notice and upon the request of the assignee, the Borrower, at
its own expense, shall execute and deliver to the Administrative Agent, in exchange for the
surrendered Note (if any), a new Note payable to such assignee in an amount equal to the Loan owing
to it assumed by it pursuant to such Assignment and Assumption and if the assigning Lender has
retained a portion of the Loan owing to it hereunder and so requests, a new Note to the assigning
Lender in an amount equal to the portion of the Loan owing to it and retained hereunder. Any such
new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of the
surrendered Note, if any, and shall otherwise be substantially in the form of Exhibit A
hereto. In addition the Credit Parties will promptly, at their own expense, execute such
amendments to the Fundamental Documents to which each is a party and such additional documents, and
take such other actions as the Administrative Agent or the assignee Lender may reasonably request
in order to give such assignee Lender the full benefit of the Liens contemplated by the Fundamental
Documents.



          (g) Each of the Lenders may, without the consent of any of the Credit Parties, the
Administrative Agent or the other Lenders, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Credit Agreement (including,
without limitation, all or a portion of the Loans owing to it and the Note, if any, held by it);
provided, however, that (i) such Lender’s obligations under this Credit Agreement
shall remain unchanged, (ii)  such participant shall not be granted any voting rights or any right
to control the vote of such Lender under this Credit Agreement, except with respect to (A) proposed
reductions in, or releases (in whole or in part) of any obligation with respect to the payment of,
any interest rates, the principal amount of any Loans or any fees, (B) increases in the amounts of
Loans made hereunder, (C) extensions of any scheduled amortization or the final maturity of any
Loan, or (D) releases of all or substantially all the Collateral (in each case, only as applicable
to such participant), (iii) any such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iv) the participating banks or other entities
shall be entitled to the cost protection provisions contained in Sections 2.10,
2.11, 2.12 and 2.14 (subject to the last sentence of this Section
13.3(g)) and 13.8 hereof but a participant shall not be entitled to receive pursuant to
such provisions an amount larger than its share of the amount to which the



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Lender granting such participation would have been entitled to receive, and (v) the Credit
Parties, the Administrative Agent and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s and its participants’ rights and obligations
under this Credit Agreement. No holder of a participating interest shall be entitled to the
benefits of Section 2.14, unless the Borrower is notified of the participation sold to such
holder and such holder agrees, for the benefit of the Borrower, to comply with Section
2.14(e) and Section 2.14(f) as though it were a Lender.



          (h) A Lender may, in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 13.3, disclose to the assignee or participant or
proposed assignee or participant, any information relating to any Credit Party furnished to the
Administrative Agent or such Lender by or on behalf of the Borrower or another Credit Party
(provided that such proposed assignee or participant agrees to hold such information confidential
in accordance with Section 13.18 hereof).



          (i) Any assignment pursuant to paragraph (b) or (c) of this Section 13.3 shall
constitute an amendment of the Schedule of Commitments as of the effective date of such assignment
without any other further action required.



          (j) The Credit Parties consent that any Lender may at any time and from time to time pledge or
otherwise grant a security interest in any Loan or in any Note evidencing the Loans (or any part
thereof) to (i) any Federal Reserve Bank or (ii) in the case of any Lender that is not a commercial
bank, savings and loan association or savings bank, to any holders of obligations owed, or
securities issued, by such Lender including to any trustee for, or any other representative of,
such holders; and this Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or grant of security interest under this
Section 13.3(j) shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.



          SECTION 13.4. Expenses; Documentary Taxes. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower agrees to pay (i) all reasonable and documented
out-of-pocket expenses incurred by the Administrative Agent, the Arranger or JPM Mezzanine Capital,
LLC in connection with, or growing out of, the performance of due diligence, the syndication of the
credit facilities contemplated hereby, (ii) all reasonable and documented out-of-pocket expenses
incurred by the Administrative Agent, the Arranger or JPM Mezzanine Capital, LLC in connection
with, or growing out of, the negotiation, preparation, execution, delivery, waiver or modification
and administration of this Credit Agreement and any other documentation contemplated hereby, the
making of the Loans, the Pledged Securities or any Fundamental Document, including but not limited
to, the reasonable and documented out-of-pocket costs and reasonable internally allocated charges
of audit or field examinations of the Administrative Agent in connection with the administration of
this Credit Agreement (provided that so long as no Event of Default shall have
occurred and be continuing, the Credit Parties shall not be responsible for the cost of more than
one (1) such audit or field examination during any calendar year) and the reasonable fees and
disbursements of Morgan, Lewis & Bockius, LLP, counsel for the Administrative Agent and JPM
Mezzanine Capital, LLC and if necessary, one other local counsel per jurisdiction that the
Administrative Agent shall retain, and (iii) all reasonable and documented out-of-pocket expenses
incurred by the Administrative Agent or the



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Lenders in the enforcement or protection (as distinguished from administration) of the rights
and remedies of the Lenders in connection with this Credit Agreement, the Notes, or the other
Fundamental Documents, or as a result of any transaction, action or non-action arising from any of
the foregoing, including, the fees and disbursements of a single counsel for the Administrative
Agent or the Lenders. Such payments shall be made on the date this Credit Agreement is executed by
the Borrower and thereafter on demand. The Borrower agrees that it shall indemnify the
Administrative Agent and the Lenders from and hold them harmless against any documentary taxes,
assessments or charges made by any Governmental Authority by reason of the execution and delivery
of this Credit Agreement or the Notes. Notwithstanding any provision to the contrary, the
Borrower’s obligations under this Section 13.4 shall not be duplicative of any amounts paid
by Borrower under any other provision of this Credit Agreement. The obligations of the Borrower
under this Section shall survive the termination of this Credit Agreement and the payment
of the Loans.



          SECTION 13.5. Indemnity. The Credit Parties agree (a) to indemnify and hold harmless
the Administrative Agent, the Arranger and the Lenders and their respective directors, officers,
employees, controlling persons, Affiliates and agents (each an “Indemnified Party”) (to the
full extent permitted by Applicable Law) from and against any and all demands, losses, claims,
damages, liabilities or related out-of-pocket expenses (including liabilities for penalties and
reasonable fees, disbursements and other charges of one counsel plus one counsel per local
jurisdiction) incurred by any of them as a result of, or arising out of, or in any way related to,
or by reason of, any investigation, litigation or other proceeding (whether or not any Lender, the
Administrative Agent or the Arranger is a party thereto) related to the entering into and/or
performance of any Fundamental Document or the use of the proceeds of any Loans hereunder or the
consummation of the transaction contemplated in any Fundamental Document (but excluding (i) any
such losses, liabilities, claims, damages or expenses of an Indemnified Party to the extent they
are found in a final judgment of a court of competent jurisdiction to have been incurred by reason
of the gross negligence, bad faith or willful misconduct of, or breach of any Fundamental Document
by such Indemnified Party or its directors, officers, employees, Affiliates, agents and controlling
persons, (ii) litigation solely between a Credit Party or Credit Parties, on the one hand, and the
Administrative Agent or the Lenders, on the other hand, in connection with this Credit Agreement or
the other Fundamental Documents or in any way relating to the transactions contemplated hereby or
thereby if, after final non-appealable judgment, the Administrative Agent or the Lenders are not
the prevailing party or parties in such litigation and (iii) litigation solely among the Lenders or
solely between the Administrative Agent and the Lenders in connection with this Credit Agreement,
the Fundamental Documents or in any way relating to the transactions contemplated thereby or
hereby). If any proceeding, including any governmental investigation, shall be instituted
involving any Indemnified Party, in respect of which indemnity may be sought against the Credit
Parties, such Indemnified Party shall promptly notify the Borrower in writing. The foregoing
indemnity agreement includes any costs incurred by an Indemnified Party in connection with any
action or proceeding in connection with which any officer or employee of the Administrative Agent,
the Arranger or the Lenders is called as a witness or deponent, including, but not limited to, the
reasonable fees and disbursements of outside counsel to the Administrative Agent and the Arranger
and any reasonable out-of-pocket costs incurred by the Administrative Agent, the Arranger or the
Lenders in appearing as a witness or in otherwise complying with legal process served upon



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them. The obligations of the Borrower under this Section 13.5 shall survive the
termination of this Credit Agreement and the payment of the Loans and shall inure to the benefit of
any Lender and its associated Indemnified Parties notwithstanding the assignment by such Lender of
all of its Loans hereunder.



          If a Credit Party shall fail to do any act or thing which it has covenanted to do hereunder or
under a Fundamental Document, which failure would cause a Default or Event of Default to occur
hereunder, or any representation or warranty of a Credit Party shall be breached, the
Administrative Agent may (but shall not be obligated to) do the same or cause it to be done or
remedy any such breach and there shall be added to the Obligations hereunder the cost or expense
incurred by the Administrative Agent in so doing, and any and all amounts expended by the
Administrative Agent in taking any such action shall be repayable to it upon its demand therefor
and shall bear interest at a rate per annum of 2% in excess of the rate then in effect for
Alternate Base Rate Loans from time to time in effect from the date advanced to the date of
repayment.



          SECTION 13.6. CHOICE OF LAW. THIS CREDIT AGREEMENT AND THE NOTES SHALL IN ALL
RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH
ARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF
PROVISIONS RELATING TO INTEREST RATES, ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.



          SECTION 13.7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH CREDIT PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT
OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS CREDIT
AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR
OTHERWISE. EACH CREDIT PARTY ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER
PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS CREDIT AGREEMENT AND ANY OTHER
FUNDAMENTAL DOCUMENT. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
13.7 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY CREDIT PARTY TO THE WAIVER OF ITS
RIGHTS TO TRIAL BY JURY.



          SECTION 13.8. WAIVER WITH RESPECT TO DAMAGES. EACH CREDIT PARTY ACKNOWLEDGES THAT
NEITHER THE ADMINISTRATIVE AGENT, THE ARRANGER NOR ANY LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH,
OR FIDUCIARY DUTY TO, ANY CREDIT PARTY ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT
OR ANY OTHER FUNDAMENTAL DOCUMENT AND THE RELATIONSHIP BETWEEN THE ADMINISTRATIVE AGENT, THE



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ARRANGER AND THE LENDERS, ON THE ONE HAND, AND THE CREDIT PARTIES, ON THE OTHER HAND, IN
CONNECTION THEREWITH IS SOLELY THAT OF DEBTOR AND CREDITOR. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NO CREDIT PARTY SHALL ASSERT, AND EACH CREDIT PARTY HEREBY WAIVES, ANY CLAIMS AGAINST THE
ADMINISTRATIVE AGENT, THE ARRANGER AND THE LENDERS ON ANY THEORY OF LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS CREDIT AGREEMENT, ANY FUNDAMENTAL DOCUMENT, ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.



          SECTION 13.9. No Waiver. No failure on the part of the Administrative Agent or any
Lender to exercise, and no delay in exercising, any right, power or remedy hereunder, under the
Notes or any other Fundamental Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.



          SECTION 13.10. Amendments, etc.



          (a) No modification, amendment or waiver of any provision of this Credit Agreement, the
Intercreditor Agreement or any Fundamental Document (except to the extent expressly contemplated
herein or therein, including without limitation a up to two Incremental Amendments entered into in
accordance with Section 2.16 which shall not require the signature of the Required Lenders), and no
consent to any departure by a Credit Party herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders and the Administrative Agent, and
acknowledged and agreed to by the Borrower and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that (A) no such modification, amendment, waiver or consent shall, without the
written consent of all Lenders, (i) amend or modify any provision of this Credit Agreement which
provides for the unanimous consent or approval of the Lenders, (ii) release all or substantially
all of the Collateral and the Pledged Securities (except as contemplated herein) or release any
Guarantor from its obligations hereunder (except as contemplated herein), (iii) subordinate the
Obligations hereunder to other Indebtedness or subordinate the security interests of the
Administrative Agent in the Collateral except (A) as permitted by Section 12.1, and (B)
subordinating the security interests of the Administrative Agent to those of the First Lien Agent
with respect to Indebtedness under the First Lien Agreement and the Cap Amount, each as in effect
from time to time (it being understood and agreed that any change to the Cap Amount under this
Credit Agreement and the Intercreditor Agreement shall require the consent only of the Required
Lenders hereunder), (iv) amend the definition of “Required Lenders”, (v) amend the definition of
“Collateral” if such amendment would have the effect of releasing all or substantially all of the
Collateral, (vi) amend or modify this Section 13.10(a), (B) no such modification,
amendment, waiver or consent shall (i) increase the Commitment of any Lender or (ii) alter the
final scheduled maturity or principal amount of any Loan, or decrease the rate of interest payable
thereon, or delay the fixed scheduled maturity of any payment required to be made under this Credit
Agreement, in each case, without the written consent of each Lender so



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affected and (C) no such modification, amendment, waiver or consent shall amend Section
2.1 hereof without the written consent of the Administrative Agent. No notice to or demand on
any of the Credit Parties shall entitle such Credit Party to any other or further notice or demand
in the same, similar or other circumstances. Each holder of a Note shall be bound by any
amendment, modification, waiver or consent authorized as provided herein, whether or not such Note
shall have been marked to indicate such amendment, modification, waiver or consent and any consent
by any holder of such Note shall bind any Person subsequently acquiring such Note, whether or not
such Note is so marked.



          (b) If any Lender (i) requests compensation under Sections 2.10(b), 2.11 or
2.14 or converts Loans of a Type pursuant to Section 2.12, or (ii) defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort and upon
notice to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in Section
13.3), all of its interests, rights and obligations under this Credit Agreement to another
Lender or an Eligible Assignee which shall assume such obligations and which accepts such
assignment; provided that (i) the Borrower shall have received the prior written consent of
the Administrative Agent in its sole and absolute discretion, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon,
accrued fees and all other amounts then payable to it hereunder from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under
Section 2.11 or payments required to be made pursuant to Sections 2.10(b) or
2.14 or conversion of Loans of a Type pursuant to Section 2.12, such assignment
will result in a reduction in such compensation or payments or rate of interest thereafter. No
Lender shall be required to make any such assignment and delegation if, prior thereto, as a result
of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.



          (c) If, in connection with any proposed amendment, waiver or consent requiring the consent of
“each Lender” or “each Lender affected thereby,” the consent of the of the Lenders holding at least
662/3% of the aggregate principal amount of Loans then outstanding, but the consent of other
necessary Lenders is not obtained (any such Lender whose consent is necessary but not obtained
being referred to herein as a “Non-Consenting Lender”), then, so long as an Administrative
Agent is not a Non-Consenting Lender, the Borrower may elect to replace a Non-Consenting Lender as
a Lender party to this Credit Agreement, provided that, concurrently with such replacement,
(i) another Lender or Eligible Assignee, which is reasonably satisfactory to the Borrower and the
Administrative Agent in each’s sole and absolute discretion, shall agree, as of such date, to
purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an
Assignment and Assumption and to become a Lender for all purposes under this Credit Agreement and
to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to
comply with the requirements of Section 13.3, and (ii) such Non-Consenting Lender shall
receive in same day funds on the day of such replacement (1) an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other amounts then payable
to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest
and fees) or the Borrower (in the case of all other



115









 







amounts), including without limitation payments due to such Non-Consenting Lender under
Sections 2.11 and 2.14, and (2) an amount from the Borrower, if any, equal to the
payment which would have been due to such Lender on the day of such replacement under Section
2.10(b) had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold
to the replacement Lender.



          SECTION 13.11. Severability. Any provision of this Credit Agreement or of the Notes
which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability without invalidating
the remaining provisions hereof, and any such invalidity, illegality or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.



          SECTION 13.12. SERVICE OF PROCESS; SUBMISSION TO JURISDICTION. EACH CREDIT PARTY
(EACH A “SUBMITTING PARTY”) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE
COURTS OF THE STATE OF NEW YORK IN NEW YORK COUNTY AND TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER
FUNDAMENTAL DOCUMENT AND THE SUBJECT MATTER THEREOF. EACH SUBMITTING PARTY TO THE EXTENT PERMITTED
BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, THE OTHER FUNDAMENTAL DOCUMENTS OR THE SUBJECT MATTER
THEREOF (AS APPLICABLE) MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO
REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN
STATE COURT TO FEDERAL COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR
PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE
FROM THE SAME SUBJECT MATTER. EACH SUBMITTING PARTY HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL
AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT TO SECTION 13.1 HEREOF.
EACH SUBMITTING PARTY AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS
BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF EACH OF THE OTHER SUBMITTING PARTIES. FINAL JUDGMENT
AGAINST ANY SUBMITTING PARTY IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED
OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS




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OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER PROVIDED BY
OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE
ADMINISTRATIVE AGENT OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS AGAINST A SUBMITTING PARTY OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OF AMERICA OR OF ANY COUNTRY OR PLACE WHERE THE SUBMITTING PARTY OR SUCH ASSETS MAY
BE FOUND.




          SECTION 13.13. Headings. Section headings used herein and the Table of Contents are
for convenience only and are not to affect the construction of or be taken into consideration in
interpreting this Credit Agreement.




          SECTION 13.14. Execution in Counterparts. This Credit Agreement may be executed by
facsimile and in any number of counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same instrument.




          SECTION 13.15. Subordination of Intercompany Indebtedness, Receivables and Advances.




          (a) Each Credit Party hereby agrees that any intercompany Indebtedness or other intercompany
receivables or intercompany advances of any other Credit Party, directly or indirectly, in favor of
such Credit Party of whatever nature at any time outstanding shall be completely subordinate in
right of payment to the prior payment in full of the Obligations, and that no payment on any such
Indebtedness, receivable or advance shall be made (i) except intercompany receivables and
intercompany advances permitted pursuant to the terms hereof may be repaid and intercompany
Indebtedness permitted pursuant to the terms hereof may be repaid, in each case so long as no
Default or Event of Default shall have occurred and be continuing, and (ii) except as specifically
consented to by all the Lenders in writing, until the prior payment in full of all the Obligations.




          (b) In the event that any payment on any such Indebtedness shall be received by such Credit
Party other than as permitted by Section 13.15(a) before payment in full of all
Obligations, such Credit Party shall receive such payments and hold the same in trust for,
segregate the same from its own assets and shall immediately pay over to, the Administrative Agent
on behalf of itself and the Lenders all such sums to the extent necessary so that the
Administrative Agent and the Lenders shall have been paid all Obligations owed or which may become
owing.




          SECTION 13.16. USA Patriot Act. Each Lender hereby notifies the Borrower that,
pursuant to the requirements of the USA Patriot Act or similar foreign statutory requirements, it
is required to obtain, verify and record information that identifies the Borrower, which
information includes, among other things the name and address of the Borrower, certified copies of
a current passport or driving license of the directors of the Borrower, certified copies of utility
bills of the Borrower, local authority tax bill or building account statement for the main
directors of the Borrower, copies of resolutions authorizing the Borrower to open accounts and
details of principal directors, signatories and shareholders of the Borrower and other information



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that will allow such Lender to identify the Borrower in accordance with the USA Patriot Act or
such similar foreign statutory requirements.




          SECTION 13.17. Entire Agreement. This Credit Agreement (including the Exhibits and
Schedules hereto) represents the entire agreement of the parties with regard to the subject matter
hereof and the terms of any letters and other documentation entered into between any of the parties
hereto prior to the execution of this Credit Agreement which relate to Loans to be made hereunder
shall be replaced by the terms of this Credit Agreement.




          SECTION 13.18. Confidentiality.




          (a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a) to it and its
Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required
by Applicable Laws or by any subpoena or similar legal process, (d) to any other party to this
Credit Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action
or proceeding relating to this Credit Agreement or the enforcement of rights hereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section, to
(i) any assignee of or participant in, or any prospective assignee of or participant in, any of its
rights or obligations under this Credit Agreement, or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower, or (h) to the extent such Information (x)
becomes publicly available other than as a result of a breach of this Section, or (y)
becomes available to the Administrative Agent or any Lender on a non-confidential basis from a
source other than a Credit Party. For the purposes of this Section, “Information”
means all information received from any Credit Party relating to any Credit Party or its business,
other than any such information that is available to the Administrative Agent or any Lender on a
non-confidential basis prior to disclosure by such Credit Party; provided, that in the case
of information received from a Credit Party after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to its own
confidential information. This Section 13.18 shall replace in its entirety any
confidentiality agreements entered into by any member of the Kelso Group, the Borrower and the
Credit Parties with the Administrative Agent and the Lenders hereto prior to the Closing Date.




          (b) Each lender acknowledges that Information furnished to it pursuant to this Credit
Agreement may include material non-public Information concerning the Borrower and its related
parties or their respective securities, and confirms that it has developed compliance procedures
regarding the use of material non-public Information and that it will handle such material
non-public Information in accordance with those procedures and Applicable Law, including federal
and state securities laws.




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          (c) all Information, including requests for waivers and amendments, furnished by the Borrower
or the Administrative Agent pursuant to, or in the course of administering, this Credit Agreement
will be syndicate-level Information, which may contain material non-public Information about the
Borrower and its related parties or their respective securities. Accordingly, each Lender
represents to the Borrower and the Administrative Agent that it has identified in its
“Administrative Questionnaire” a credit contact who may receive information that may contain
material non-public Information in accordance with its compliance procedures and Applicable Law.




[Signature Pages Follow]




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     IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed
as of the day and the year first written.



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	RHI ENTERTAINMENT, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Henry S. Hoberman	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Henry S. Hoberman	 	 
	 

	 	Title:
	 	Executive Vice President, General
Counsel and Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	PARENT:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	RHI ENTERTAINMENT HOLDINGS II, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Henry S. Hoberman	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Henry S. Hoberman	 	 
	 

	 	Title:
	 	Executive Vice President, General
Counsel and Secretary	 	 






Signature
Page to Amended and Restated Credit Agreement (Second Lien)














 








GUARANTORS:




RHI ENTERTAINMENT DISTRIBUTION, LLC




	 	 	 	 	 
	By

	 	/s/ Henry S. Hoberman
	 	 
	 

	 	 	 	 
	Name: Henry S. Hoberman	 	 
	Title: Executive Vice President, General Counsel and Secretary
	 
	 	 	 	 
	RHI ENTERTAINMENT PRODUCTIONS, LLC	 	 
	 
	 	 	 	 
	By

	 	/s/ Henry S. Hoberman	 	 
	 

	 	 	 	 
	Name: Henry S. Hoberman	 	 
	Title: Executive Vice President, General Counsel and Secretary
	 
	 	 	 	 
	RHI INTERNATIONAL DISTRIBUTION, INC.	 	 
	 
	By

	 	/s/ Peter von Gal	 	 
	 

	 	 	 	 
	Name: Peter von Gal	 	 
	Title: President	 	 






Signature
Page to Post-IPO Credit Agreement (Second Lien)














 





	 	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By :	 	/s/ Kim W. Cheng	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Kim W. Cheng	 	 
	 

	 	Title:	 	Vice President	 	 






Signature
Page to Post-IPO Credit Agreement (Second Lien)














 





	 	 	 	 	 	 	 
	 	 	LENDERS	 	 
	 
	 	 	 	 	 	 
	 	 	JPM MEZZANINE CAPITAL, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ Aized Rabbani	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Aized Rabbani	 	 
	 

	 	Title:	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 






Signature
Page to Post-IPO Credit Agreement (Second Lien)














 





SCHEDULE 1




Schedule of Commitments




	 	 	 
	 	 	Second Lien
	Lenders	 	Loan Commitment
	JPM Mezzanine Capital, LLC
	 	$     55,000,000
	 
	 	 
	 	 	 
	TOTAL:
	 	$     55,000,000
	 	 	 





This Schedule of Commitments presents the identity of the Lenders and their respective Commitments
as of the Closing Date, and may be amended from time to time by operation of Assignments and
Assumptions in accordance with Section 13.3 of the Credit Agreement or, if the
Administrative Agent elects to so amend this Schedule of Commitments in connection therewith, by
amendment to the Credit Agreement that is executed by the Credit Parties in accordance with
Section 13.10 of the Credit Agreement.




i









 








SCHEDULE 2




Guarantors




ii









 





TABLE OF CONTENTS

(continued)




	 	 	 
	 	 	Page
	Schedules
	 
	 	 
	1

	 	Schedule of Commitments
	1(b)

	 	Contracts Excluded From Collateral
	2

	 	[Intentionally Omitted.]
	2A

	 	Slate Financing Permitted Counterparties
	3

	 	Guarantors
	3.1

	 	List of Jurisdictions
	3.2(b)

	 	Restrictions on Transfer of Pledged Securities
	3.5(a)

	 	Guaranties, Contingent Liabilities, Tax Liabilities, Long Term Leases, Unusual Forward

Long-Term Commitments
	3.7(a)

	 	Ownership of the Capital Stock of the Credit Parties
	3.7(b)

	 	Ownership of Pledged Securities other than Credit Parties
	3.8(a)

	 	Valuation Items of Product
	3.8(b)

	 	Trademarks
	3.8(c)

	 	Copyright and Trademark Exceptions
	3.9

	 	Fictitious Names
	3.11

	 	Chief Executive Office
	3.12

	 	Litigation
	3.17

	 	Material Agreements
	3.18

	 	Filing Offices for UCC-1 Financing Statements, Tax ID and Organizational ID
	3.19

	 	Environmental Liabilities
	3.25

	 	Bank Accounts
	6.1

	 	Existing Indebtedness
	6.2

	 	Existing Liens
	6.3

	 	Existing Guaranties
	6.4

	 	Existing Investments
	6.10

	 	Transactions with Affiliates






iii









 






TABLE OF CONTENTS

(continued)




	 	 	 
	 	 	Page
	Exhibits
	 
	 	 
	A

	 	Form of Note
	B

	 	Form of Opinion of Latham & Watkins LLP, counsel to the Credit Parties
	C-1

	 	Copyright Security Agreement
	C-2

	 	Form of Copyright Security Agreement Supplement
	D

	 	Form of Intercreditor Agreement
	E

	 	Form of Pledgeholder Agreement (Completed Items of Product)
	F

	 	Form of Trademark Security Agreement
	G

	 	Form of Contribution Agreement
	H

	 	Form of Borrowing Certificate
	I

	 	Form of Assignment and Assumption
	J

	 	Form of Instrument of Assumption and Joinder
	K

	 	Form of Account Control Agreement
	L

	 	Hallmark Guaranty
	M

	 	Form of Liquidity Certificate






iv









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	1. DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	SECTION 1.1. Definitions
	 	 	2	 
	SECTION 1.2. Determination of Financial Covenants
	 	 	31	 
	 
	 	 	 	 
	2. THE LOANS
	 	 	31	 
	 
	 	 	 	 
	SECTION 2.1. Term Loan Commitments
	 	 	31	 
	SECTION 2.2. Term Loans and Borrowings
	 	 	32	 
	SECTION 2.3. [Intentionally Omitted]
	 	 	33	 
	SECTION 2.4. Notes; Repayment
	 	 	33	 
	SECTION 2.5. Interest on Loans
	 	 	33	 
	SECTION 2.6. Fees
	 	 	34	 
	SECTION 2.7. Termination of Commitment
	 	 	34	 
	SECTION 2.8. Default Interest; Alternate Rate of Interest
	 	 	34	 
	SECTION 2.9. Continuation and Conversion of Loans
	 	 	35	 
	SECTION 2.10. Voluntary and Mandatory Prepayment of Loans;
Reimbursement of Lenders
	 	 	36	 
	SECTION 2.11. Increased Costs
	 	 	38	 
	SECTION 2.12. Change in Legality
	 	 	39	 
	SECTION 2.13. Manner of Payments
	 	 	40	 
	SECTION 2.14. Taxes
	 	 	40	 
	SECTION 2.15. Interest Adjustments
	 	 	43	 
	 
	 	 	 	 
	3. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES
	 	 	43	 
	 
	 	 	 	 
	SECTION 3.1. Existence and Power
	 	 	43	 
	SECTION 3.2. Authority and No Violation
	 	 	44	 
	SECTION 3.3. Governmental Approval
	 	 	44	 
	SECTION 3.4. Binding Agreements
	 	 	45	 
	SECTION 3.5. Financial Statements
	 	 	45	 
	SECTION 3.6. No Material Adverse Change
	 	 	45	 
	SECTION 3.7.
Ownership of Pledged Securities, Subsidiaries, etc.
	 	 	45	 
	SECTION 3.8. Copyrights, Trademarks and Other Rights
	 	 	46	 
	SECTION 3.9. Fictitious Names
	 	 	47	 
	SECTION 3.10. Title to Properties
	 	 	47	 
	SECTION 3.11. Places of Business
	 	 	47	 
	SECTION 3.12. Litigation
	 	 	47	 
	SECTION 3.13. Federal Reserve Regulations
	 	 	47	 
	SECTION 3.14. Investment Company Act
	 	 	48	 
	SECTION 3.15. Taxes
	 	 	48	 
	SECTION 3.16. Compliance with ERISA
	 	 	48	 
	SECTION 3.17. Agreements
	 	 	48	 
	SECTION 3.18. Security Interest
	 	 	48	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page
	SECTION 3.19. Environmental Liabilities
	 	 	49	 
	SECTION 3.20. Pledged Securities
	 	 	49	 
	SECTION 3.21. Compliance with Laws
	 	 	50	 
	SECTION 3.22. Subsidiaries
	 	 	50	 
	SECTION 3.23. Solvency
	 	 	50	 
	SECTION 3.24. Distribution Rights
	 	 	50	 
	SECTION 3.25. Bank Accounts
	 	 	51	 
	SECTION 3.26. Disclosure
	 	 	51	 
	 
	 	 	 	 
	4. CONDITIONS OF LENDING
	 	 	51	 
	 
	 	 	 	 
	SECTION 4.1. Conditions Precedent to Initial Loan
	 	 	51	 
	 
	 	 	 	 
	5. AFFIRMATIVE COVENANTS
	 	 	55	 
	 
	 	 	 	 
	SECTION 5.1. Financial Statements and Reports
	 	 	55	 
	SECTION 5.2. Corporate Existence; Compliance with Laws
	 	 	57	 
	SECTION 5.3. Maintenance of Properties
	 	 	58	 
	SECTION 5.4. Notice of Material Events
	 	 	58	 
	SECTION 5.5. Insurance
	 	 	58	 
	SECTION 5.6. [Intentionally Omitted.]
	 	 	60	 
	SECTION 5.7. Copyrights and Trademarks
	 	 	60	 
	SECTION 5.8. Books and Records, Examination
	 	 	61	 
	SECTION 5.9. Third Party Audit Rights
	 	 	61	 
	SECTION 5.10. Observance of Agreements
	 	 	62	 
	SECTION 5.11. Film Properties and Rights; Borrower to Act as Pledgeholder
	 	 	62	 
	SECTION 5.12. Laboratories; No Removal
	 	 	62	 
	SECTION 5.13. Taxes and Charges
	 	 	62	 
	SECTION 5.14. Liens
	 	 	63	 
	SECTION 5.15. Further Assurances; Security Interests
	 	 	63	 
	SECTION 5.16. ERISA Compliance and Reports
	 	 	63	 
	SECTION 5.17. Environmental Laws
	 	 	64	 
	SECTION 5.18. Use of Proceeds
	 	 	65	 
	SECTION
5.19. Distribution Agreements, Letters of Credit, Etc.
	 	 	65	 
	SECTION 5.20. Deposit Accounts
	 	 	65	 
	SECTION 5.21. Subsidiaries
	 	 	66	 
	SECTION 5.22. [Intentionally Omitted.]
	 	 	66	 
	SECTION 5.23. [Intentionally Omitted.]
	 	 	66	 
	SECTION 5.24. Negative Cost Statements
	 	 	66	 
	SECTION 5.25. Cash Receipts
	 	 	66	 
	SECTION 5.26. Guild Undertakings
	 	 	67	 
	SECTION 5.27. Key Man Life Insurance
	 	 	67	 
	SECTION 5.28. Copyrights and Trademarks
	 	 	67	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page
	6. NEGATIVE COVENANTS
	 	 	67	 
	 
	 	 	 	 
	SECTION 6.1. Limitations on Indebtedness
	 	 	67	 
	SECTION 6.2. Limitations on Liens
	 	 	69	 
	SECTION 6.3. Limitation on Guaranties
	 	 	71	 
	SECTION 6.4. Limitations on Investments
	 	 	72	 
	SECTION 6.5. Restricted Payments
	 	 	73	 
	SECTION 6.6.
Consolidation, Merger, Recapitalization or Sale of Assets, etc.
	 	 	75	 
	SECTION 6.7. Receivables
	 	 	76	 
	SECTION 6.8. Sale and Leaseback
	 	 	76	 
	SECTION 6.9. Places of Business; Change of Name, Jurisdiction
	 	 	77	 
	SECTION 6.10. Transactions with Affiliates
	 	 	77	 
	SECTION 6.11. Business Activities
	 	 	78	 
	SECTION 6.12. Fiscal Year End
	 	 	78	 
	SECTION 6.13. [Intentionally Omitted.]
	 	 	78	 
	SECTION 6.14. [Intentionally Omitted.]
	 	 	78	 
	SECTION 6.15. [Intentionally Omitted.]
	 	 	78	 
	SECTION 6.16. [Intentionally Omitted.]
	 	 	78	 
	SECTION 6.17. Swap Agreements
	 	 	78	 
	SECTION 6.18. Modification of Indebtedness, Material Agreements
	 	 	79	 
	SECTION 6.19. No Negative Pledge
	 	 	79	 
	SECTION 6.20. [Intentionally Omitted.]
	 	 	79	 
	SECTION 6.21. Coverage Ratio
	 	 	79	 
	SECTION 6.22. Additional Limitation on Production and Acquisition of Product
	 	 	79	 
	SECTION 6.23. Activities of Parent
	 	 	79	 
	SECTION 6.24. Certification of Equity Interests
	 	 	79	 
	 
	 	 	 	 
	7. EVENTS OF DEFAULT
	 	 	80	 
	 
	 	 	 	 
	8. GRANT OF SECURITY INTEREST; REMEDIES
	 	 	82	 
	 
	 	 	 	 
	SECTION 8.1. Security Interests
	 	 	82	 
	SECTION 8.2. Use of Collateral
	 	 	83	 
	SECTION 8.3. Collection Accounts
	 	 	83	 
	SECTION 8.4. Credit Parties to Hold in Trust
	 	 	83	 
	SECTION 8.5.
Collections, etc.
	 	 	84	 
	SECTION 8.6.
Possession, Sale of Collateral, etc.
	 	 	84	 
	SECTION 8.7. Application of Proceeds after Event of Default
	 	 	85	 
	SECTION 8.8. Power of Attorney
	 	 	86	 
	SECTION 8.9. Financing Statements, Direct Payments
	 	 	86	 
	SECTION 8.10. Further Assurances
	 	 	87	 
	SECTION 8.11. Termination and Release
	 	 	87	 
	SECTION 8.12. Remedies Not Exclusive
	 	 	87	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page
	SECTION 8.13. Quiet Enjoyment
	 	 	87	 
	SECTION 8.14. Continuation and Reinstatement
	 	 	88	 
	 
	 	 	 	 
	9. GUARANTY
	 	 	88	 
	 
	 	 	 	 
	SECTION 9.1. Guaranty
	 	 	88	 
	SECTION 9.2. No Impairment of Guaranty, etc.
	 	 	89	 
	SECTION 9.3. Continuation and Reinstatement, etc.
	 	 	89	 
	SECTION 9.4. Limitation on Guaranteed Amount, etc.
	 	 	90	 
	 
	 	 	 	 
	10. PLEDGE
	 	 	90	 
	 
	 	 	 	 
	SECTION 10.1. Pledge
	 	 	90	 
	SECTION 10.2. Covenant
	 	 	91	 
	SECTION 10.3. Registration in Nominee Name; Denominations
	 	 	91	 
	SECTION 10.4. Voting Rights; Dividends; etc.
	 	 	91	 
	SECTION 10.5. Remedies Upon Default
	 	 	92	 
	SECTION 10.6. Application of Proceeds of Sale and Cash
	 	 	93	 
	SECTION 10.7. Securities Act, etc.
	 	 	94	 
	SECTION 10.8. Continuation and Reinstatement
	 	 	94	 
	SECTION 10.9. Termination
	 	 	94	 
	 
	 	 	 	 
	11. CASH COLLATERAL
	 	 	95	 
	 
	 	 	 	 
	SECTION 11.1. Cash Collateral Accounts
	 	 	95	 
	SECTION 11.2. Investment of Funds
	 	 	95	 
	SECTION 11.3. Grant of Security Interest
	 	 	95	 
	SECTION 11.4. Remedies
	 	 	96	 
	 
	 	 	 	 
	12. THE ADMINISTRATIVE AGENT
	 	 	96	 
	 
	 	 	 	 
	SECTION 12.1. Administration by the Administrative Agent
	 	 	96	 
	SECTION 12.2. Payments
	 	 	97	 
	SECTION 12.3. Sharing of Setoffs and Cash Collateral
	 	 	97	 
	SECTION 12.4. Notice to the Lenders
	 	 	98	 
	SECTION 12.5. Liability of the Administrative Agent
	 	 	98	 
	SECTION 12.6. Reimbursement and Indemnification
	 	 	99	 
	SECTION 12.7. Rights of Administrative Agent
	 	 	99	 
	SECTION 12.8. Independent Investigation by Lenders
	 	 	99	 
	SECTION 12.9. Agreement of Required Lenders
	 	 	100	 
	SECTION 12.10. Notice of Transfer
	 	 	100	 
	SECTION 12.11. Successor Administrative Agent
	 	 	100	 
	 
	 	 	 	 
	13. MISCELLANEOUS
	 	 	101	 
	 
	 	 	 	 
	SECTION 13.1. Notices
	 	 	101	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page
	SECTION 13.2. Survival of Agreement, Representations and Warranties, etc.
	 	 	101	 
	SECTION 13.3. Successors and Assigns; Syndications; Loan Sales; Participations
	 	 	102	 
	SECTION 13.4. Expenses; Documentary Taxes
	 	 	105	 
	SECTION 13.5. Indemnity
	 	 	106	 
	SECTION 13.6. CHOICE OF LAW
	 	 	107	 
	SECTION 13.7. WAIVER OF JURY TRIAL
	 	 	107	 
	SECTION 13.8. WAIVER WITH RESPECT TO DAMAGES
	 	 	107	 
	SECTION 13.9. No Waiver
	 	 	108	 
	SECTION 13.10. Amendments, etc.
	 	 	108	 
	SECTION 13.11. Severability
	 	 	109	 
	SECTION 13.12. SERVICE OF PROCESS; SUBMISSION TO JURISDICTION
	 	 	110	 
	SECTION 13.13. Headings
	 	 	111	 
	SECTION 13.14. Execution in Counterparts
	 	 	111	 
	SECTION 13.15. Subordination of Intercompany Indebtedness,
Receivables and Advances
	 	 	111	 
	SECTION 13.16. USA Patriot Act
	 	 	111	 
	SECTION 13.17. Entire Agreement
	 	 	111	 
	SECTION 13.18. Confidentiality
	 	 	112	 
	SECTION 13.19. Termination of Agreements
	 	 	112	 
	SECTION 13.20. Effect of Amendment and Restatement
of the Existing Senior Facilities
	 	 	112	 
	SECTION 13.21. Commitments Under the Existing Senior Facilities
	 	 	113	 







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