8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: October 31, 2001

THE KUSHNER-LOCKE COMPANY
(Exact name of registrant as specified in its charter)

California	0-17295	95-4079057
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

11601 Wilshire Boulevard, 21st Floor
Los Angeles, California	90025
(Address of Principal Executive Offices)	(Zip Code)

(310) 481-2000
(Registrant’s telephone number, including area code)

TABLE OF CONTENTS

	Item 5. Other Events.
	Item 7. Financial Statements and Exhibits.
SIGNATURE
Exhibit 10.78

Item 5. Other Events.

Effective as of October 31, 2001, The Kushner-Locke Company (the “Company”) entered into Amendment No. 9 (“Amendment No. 9”) to its Limited Forbearance Agreement (the “Limited Forbearance Agreement”), dated as of January 11, 2001, as amended by Amendment No. 1 dated as of January 29, 2001, by Amendment No. 2 dated as of February 27, 2001, by Amendment No. 3 dated as of March 30, 2001, by Amendment No. 4 dated as of May 4, 2001, by Amendment No. 5 dated as of June 1, 2001, by Amendment No. 6 dated as of June 29, 2001, by Amendment No. 7 dated as of August 3, 2001 and by Amendment No. 8 dated as of September 14, 2001, with its lenders and The Chase Manhattan Bank (“Chase”) as Agent and as Fronting Bank for the lenders with respect to its Credit, Security, Guaranty and Pledge Agreement, dated as of June 19, 1996, among the Company, the Guarantors named therein, the lenders named therein (the “Lenders”) and Chase (as such agreement has been amended from time to time, the “Credit Agreement”).

Amendment No. 9 extends the forbearance period under the Limited Forbearance Agreement until 5:00 p.m., Eastern Standard Time, November 21, 2001 or until the earlier occurrence of certain termination events (the “Forbearance Period), including the commencement of involuntary bankruptcy proceedings against the Company by any other creditor of the Company, the attempt by any other creditor of the Company to execute a judgment against any asset of the Company, the commencement by the Company of voluntary bankruptcy proceedings, the payment by the Company of any interest or principal to any holder of the Company’s subordinated debt, a change in control of the Company, a change in the management of the Company, the Company’s failure to properly fund its employee benefit plans, the Credit Agreement becoming null and void for any reason other than by action of the lenders, or the failure of the company to timely comply with any term or covenant of the Limited Forbearance Agreement.

Amendment No. 9 permits Chase to draw one hundred percent (100%) of any amounts in the Company’s existing accounts with certain Lenders in excess of $1,200,000 at the end of each week during the Forbearance Period and apply such amounts toward payment of the Company’s outstanding obligations under the Credit Agreement.

Item 7. Financial Statements and Exhibits.

Exhibit 10.78 Amendment No. 9 dated as of October 31, 2001 to Limited Forbearance Agreement dated as of January 11, 2001 among The Kushner-Locke Company, its subsidiaries, the Lenders party to the Credit Agreement and The Chase Manhattan Bank, as Agent and Fronting Bank for the Lenders.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 31, 2001	THE KUSHNER-LOCKE COMPANY
	By:	/s/ DONALD KUSHNER
		Donald Kushner Co-Chairman of the Board and Co-Chief Executive Officer

EX-10.78

                                                                   EXHIBIT 10.78



                               AMENDMENT NO. 9 TO
                         LIMITED FORBEARANCE AGREEMENT


      AMENDMENT NO. 9 dated as of October 31, 2001 (the "Amendment"), to Limited
Forbearance Agreement dated as of January 11, 2001, as heretofore amended (the
"Forbearance Agreement") among THE KUSHNER-LOCKE COMPANY (the "Borrower"), its
subsidiaries (the "Guarantors", and together with the Borrower, the "Credit
Parties"), the Lenders party to the Credit Agreement defined below (the
"Lenders") and THE CHASE MANHATTAN BANK   (formerly known as Chemical Bank), as
Agent and as Fronting Bank for the Lenders (the "Agent").

      The Borrower, the Guarantors, the Lenders and the Agent are parties to a
Credit, Security, Guaranty and Pledge Agreement, dated as of June 16, 1996, as
amended (the "Credit Agreement").

      As set forth in Section 1 of the Forbearance Agreement, Defaults and
Events of Default under the Credit Agreement have occurred and are continuing.
In order to allow the Borrower additional time to prepare for the proposed sale
of its film library and related accounts receivable and to explore various
restructuring options, the Borrower has requested that the Agent and the Lenders
amend the Forbearance Agreement to (i) extend the Lenders' agreement to forebear
from applying collections in respect of the Credit Parties' receivables to
repayment of the Loans, (ii) release an additional portion of such collections
to fund operating expenses of the Credit Parties and (iii) make certain other
modifications to the Forbearance Agreement.

      The Agent and the Lenders have agreed to the foregoing requests, all on
the terms and subject to the conditions hereinafter set forth.

      Accordingly, the parties hereby agree as follows:

      1.    Defined Terms.  All capitalized terms not otherwise defined herein
are used as defined in the Forbearance Agreement.

      2.    Amendments to Forbearance Agreement. Subject to the satisfaction of
the condition precedent set forth in Section 3 hereof, the Forbearance
Agreement is hereby amended effective as of the Effective Date (as hereinafter
defined) as follows:

            (a)   The reference to "October 31, 2001" as the Stated Expiration
Date set forth in Section 2 of the Forbearance Agreement is hereby amended to be
"November 21, 2001."

            (b)   The Disbursement Schedule attached as Exhibit A to the
Forbearance Agreement is hereby replaced in its entirety with the Disbursement
Schedule attached as Exhibit A to this Amendment.






     3.   Condition to Effectiveness. The provisions of Section 2 of this
Amendment shall not become effective unless and until the Agent shall have
received counterparts of this Agreement executed by each of the parties
hereto (the date of such receipt, the "Effective Date").

     4.   Full Force and Effect. Except as expressly amended hereby, the
Forbearance Agreement shall continue in full force and effect in accordance
with the provisions thereof on the date hereof. As used in the Forbearance
Agreement, the terms "Agreement", "this Agreement", "herein", "hereafter",
"hereto", "hereof", and words of similar import shall, unless the context
otherwise requires, mean the Forbearance Agreement as amended by this Amendment.

     5.   APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     6.   Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.

     7.   Headings. The headings of this Amendment are for the purposes of
reference only and shall not affect the construction of this Amendment.

                                       2

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date and year
first above written.

                                   BORROWER:

                                   THE KUSHNER-LOCKE COMPANY


                                   By: /s/ PETER LOCKE
                                      ------------------------------------
                                      Name:  Peter Locke
                                      Title: CO-CEO

                                   GUARANTORS:

                                   KL PRODUCTIONS, INC.
                                   POST AND PRODUCTION SERVICES, INC.
                                   TWILIGHT ENTERTAINMENT, INC.
                                   KLF GUILD CO.
                                   KLTV DEVELOPMENT CO.
                                   KUSHNER-LOCKE INTERNATIONAL, INC.
                                   KL INTERACTIVE MEDIA, INC.
                                   DAYTON WAY PICTURES III, INC.

                                   By: /s/ PETER LOCKE
                                      ------------------------------------
                                      Name:  Peter Locke
                                      Title: CO-CEO

                                   KLC/NEW CITY
                                   By its General Partner
                                   THE KUSHNER-LOCKE COMPANY

                                   By: /s/ PETER LOCKE
                                      ------------------------------------
                                      Name:  Peter Locke
                                      Title: CO-CEO


                                          LENDERS:

Executed in                               THE CHASE MANHATTAN BANK (formerly
New York, New York                        known as Chemical Bank), individually
                                          and as Agent


                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


                                          NIB CAPITAL BANK N.V. (formerly known
                                          as De Nationale Investeringsbank N.V.)


                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


                                          COMERICA BANK -- CALIFORNIA


                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


                                          FAR EAST NATIONAL BANK


                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


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