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Exhibit 10.1

EXECUTION VERSION

CREDIT AND GUARANTY AGREEMENT

dated as of September 11, 2014

among

RLJ ENTERTAINMENT, INC.,

as Parent Borrower,

 

CERTAIN SUBSIDIARIES OF RLJ ENTERTAINMENT, INC.,

as Guarantors,

VARIOUS LENDERS,

and

MCLARTY CAPITAL PARTNERS SBIC, L.P.,

as Administrative Agent and Collateral Agent

 

and

 

MCLARTY CAPITAL PARTNERS SBIC, L.P.,

as Arranger, Bookmanager and Syndication Agent

and

 

CRYSTAL FINANCIAL LLC

as Documentation Agent

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$70,000,000 Senior Secured Credit Facility

 

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CREDIT AND GUARANTY AGREEMENT

 

This CREDIT AND GUARANTY AGREEMENT, dated as of September 11, 2014, is entered into by and among RLJ ENTERTAINMENT, INC., a Nevada corporation (“Parent Borrower”) and Subsidiaries of Parent Borrower, as Guarantors, the Lenders party hereto from time to time, MCLARTY CAPITAL PARTNERS  SBIC, L.P. (“MCP”), as Administrative Agent (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”), Collateral Agent (in such capacity, together with its successors and assigns in such capacity,  “Collateral Agent”), MCLARTY CAPITAL PARTNERS SBIC, L.P., as Arranger, Bookmanager, and Syndication Agent (in such capacities, together with its successors and assigns in such capacities, “Arranger”), and Crystal Financial LLC as Documentation Agent (in such capacity, together with its successors and assigns in such capacity, “Documentation Agent”).

 

RECITALS:

 

WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

 

WHEREAS, Lenders have agreed to extend senior secured term loans to Parent Borrower, in an aggregate amount equal to $70,000,000;

 

WHEREAS, the proceeds of the Term Loans made on the Closing Date will be used by Parent Borrower to refinance the Existing Indebtedness, to pay the Transaction Costs and for working capital and general corporate purposes;

 

WHEREAS, Parent Borrower has agreed to secure all of its Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all of its assets, including a pledge of all of the Capital Stock of each of its Domestic Subsidiaries, a pledge of all of the Capital Stock of each of its wholly-owned Foreign Subsidiaries; and

 

WHEREAS, Guarantors have agreed to guarantee the obligations of Parent Borrower hereunder and to secure their respective obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all of their respective assets, including a pledge of all of the Capital Stock of each of their respective Domestic Subsidiaries, a pledge of all of the Capital Stock of each of their respective wholly-owned Foreign Subsidiaries.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

 

SECTION 1.

DEFINITIONS AND INTERPRETATION

 

 

“Accounting Changes” means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions).

 

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“Accounts” means all “accounts” (as defined in the UCC) of a Person, including, without limitation, accounts, accounts receivable, monies due or to become due and obligations in any form (whether arising in connection with contracts, contract rights, instruments, general intangibles, or chattel paper), in each case whether arising out of goods sold or services rendered or from any other transaction and whether or not earned by performance, now or hereafter in existence, and all documents of title or other documents representing any of the foregoing, and all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

 

“ACL” means Agatha Christie Limited, a private company limited by shares organized under the laws of England and Wales with registered number 00550864.

 

“ACL Group” means ACL and any of its current and/or future Subsidiaries.

 

“Acorn” means Acorn Media Group, Inc., a District of Columbia corporation.

 

“Acorn Productions” means Acorn Productions Ltd., a private company limited by shares organized under the laws of England and Wales with registered number 07932440.

 

“Act” as defined in Section 4.25.

 

“Adjusted LIBOR Rate” means, for any Interest Rate Determination Date with respect to an Interest Period for a Term Loan, the greater of (i) 0.25% and (ii) the rate per annum equal to the rate determined by Administrative Agent as the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for Dollars) for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by Administrative Agent in its reasonable discretion; in each case the “LIBOR Screen Rate”) at approximately 11:00 a.m., London time, on such Interest Rate Determination Date; provided that, if the LIBOR Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”), then the Adjusted LIBOR Rate for the purposes of clause (ii) shall be the Interpolated Rate, (and if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement).  The Adjusted LIBOR Rate shall be adjusted by dividing the Adjusted LIBOR Rate determined by the immediate preceding definition by an amount equal to (a) one, minus (b) the Applicable Reserve Requirement (if any) for such Term Loan for such Interest Period.

 

“Administrative Agent” as defined in the preamble hereto.

 

“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Parent Borrower or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Parent Borrower or any of its Subsidiaries, threatened against or affecting Parent Borrower or any of its Subsidiaries or any property of Parent Borrower or any of its Subsidiaries.

 

 “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling (including any member of the senior management group of such Person), controlled by, or under common control with, that Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person, or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

 

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“Agent” means each of Administrative Agent and Collateral Agent.

 

“Aggregate Amounts Due” as defined in Section 2.14.

 

“Aggregate Payments” as defined in Section 7.2.

 

“Agreement” means this Credit and Guaranty Agreement, dated as of September 11, 2014, as it may be amended, supplemented or otherwise modified from time to time.

 

“Agreement Among Lenders” means that certain Agreement Among Lenders, dated on or about the date hereof, by and between McLarty Capital Partners SBIC, L.P. and each other Lender party thereto and acknowledged by Parent Borrower, as amended, modified, restated, supplemented and extended from time to time.

 

“Applicable Prepayment Premium” means, whether before or after an Event of Default or acceleration, a prepayment premium equal to: (a) 5% of the amount repaid or prepaid if such repayment or prepayment occurs on or prior to the first anniversary of the Closing Date, (b) 3% of the amount repaid or prepaid if such repayment or prepayment occurs after the first anniversary and on or prior to the second anniversary of the Closing Date, (c) 1.5% of the amount repaid or prepaid if such repayment or prepayment occurs after the second anniversary and on or prior to the third anniversary of the Closing Date, and (d) 0% of the amount repaid or prepaid if such repayment or prepayment occurs after the third anniversary of the Closing Date provided that, notwithstanding any other term of this Agreement, no prepayment premium shall be payable pursuant to the foregoing in connection with any repayment or prepayment until such time as the unpaid principal amount of the Term Loans is $65,000,000 or less (but a prepayment premium shall be payable on that portion of any repayment or prepayment that, as a result of such repayment or prepayment, reduces the unpaid principal amount of the Term Loans to less than $65,000,000).

 

“Applicable Reserve Requirement” means, at any time, for any Term Loan, the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors of the Federal Reserve System or other applicable banking regulator.  Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted LIBOR Rate or any other interest rate of a Term Loan is to be determined, or (ii) any category of extensions of credit or other assets which include Term Loans.  A Term Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender.  The rate of interest on the Term Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

 

“Arranger” as defined in the preamble hereto.

 

“Asset Sale” means any sale, lease, sublease (as a lessor or sublessor), assignment, conveyance, transfer, license (as a licensor or sublicensor), any exchange of property or other disposition (including by way of merger or consolidation and including any sale and leaseback transaction) of any businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed including, without limitation, the Capital Stock or intellectual property of any of Parent Borrower or any of its Subsidiaries.

 

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“Asset Sale Reinvestment Amounts” has the meaning given to such term in Section 2.11(a).

 

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit D, with such amendments or modifications as may be approved by Administrative Agent.

 

“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer) or Responsible Financial Officer, president or one of its vice presidents (or the equivalent thereof), chief financial officer or any other officer having substantially the same authority and responsibility as any of the foregoing.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

 

 “Beneficiary” means each Agent, Lender and Lender Counterparty.

 

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York, Commonwealth of Massachusetts or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close, and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted LIBOR Rate or any Term Loans, the term “Business Day” shall mean any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

 

“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person (i) as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person or (ii) as lessee which is a transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income tax purposes).

 

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

 

“Cash” means money, currency or a credit balance in any demand or Deposit Account.

 

“Cash Equivalents” means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government, or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), and (b) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000; and (v) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s.

 

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“Certificate Regarding Non-Bank Status” means a certificate substantially in the form of Exhibit E.

 

“CFC” means a controlled foreign corporation (as that term is defined in the Internal Revenue Code).

 

“Change of Control” means, at any time, any event, transaction, or occurrence as a result of which (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30%, or more, of the Capital Stock of Parent Borrower having the right to vote (with equivalent economic interests) for the election of members of the board of directors of Parent Borrower, or (b) as of any date a majority of the board of directors of Parent Borrower consists (other than vacant seats) of individuals who were not either (1) directors of Parent Borrower as of the Closing Date, (2) selected or nominated to become directors by either the Permitted Holders or the board of directors of Parent Borrower of which a majority consisted of individuals described in clause (1), or (3) selected or nominated to become directors by the board of directors of Parent Borrower of which a majority consisted of individuals described in clause (1) and individuals described in clause (2), or (c) Permitted Holders shall at any time fail to own, in the aggregate, directly or indirectly, beneficially and of record, at least 17.5% on a fully diluted basis of the economic and voting interests in the Capital Stock of Parent Borrower, or (d) Parent Borrower shall cease to directly own and control, free and clear of all Liens (other than Liens in favor of Administrative Agent created under the Collateral Documents) 100% of the outstanding Capital Stock of RLJ Acquisition and all voting rights and economic interests with respect thereto, or (e) Parent Borrower shall cease to directly own and control, free and clear of all Liens (other than Liens in favor of Administrative Agent created under the Collateral Documents) 100% of the outstanding Capital Stock of Image and all voting rights and economic interests with respect thereto, or (f) RLJ Acquisition shall cease to directly own and control, free and clear of all Liens (other than Liens in favor of Administrative Agent created under the Collateral Documents) 100% of the outstanding Capital Stock of Acorn and all voting rights and economic interests with respect thereto, or (g) except as permitted by Section 6.8(a), Acorn shall cease to directly or indirectly own and control, free and clear of all Liens (other than Liens in favor of Administrative Agent created under the Collateral Documents), 100% (or, with respect to ACL, no less than the percentage of Capital Stock owned directly or indirectly by Acorn on the Closing Date) of the outstanding Capital Stock of each of its Subsidiaries and all voting rights and economic interests with respect thereto, or (except with respect to ACL) shall cease to have the power to appoint directly or indirectly all directors or similar Persons of such Subsidiaries, or (h) except as permitted by Section 6.8(a), Image shall cease to directly or indirectly own and control, free and clear of all Liens (other than Liens in favor of Administrative Agent created under the Collateral Document) 100% of the outstanding Capital Stock of Image/Madacy Home Entertainment LLC and all voting rights and economic interest with respect thereto, or shall cease to have the power to appoint directly or indirectly all directors or similar Person of such Subsidiaries, or (i) the occurrence of any “change of control” under any Material Debt; provided that, notwithstanding anything to the contrary, no transaction permitted by Section 6.8(a) shall constitute a Change of Control.

 

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“Charge over Intellectual Property” means that certain Charge over Intellectual Property governed by the laws of the United Kingdom among Acorn and Administrative Agent dated on or about the date hereof, which shall be in form and substance reasonably acceptable to Administrative Agent.

 

“Closing Date” means September 11, 2014.

 

“Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit F-1.

 

“Collateral” means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.

 

“Collateral Agent” as defined in the preamble hereto.

 

“Collateral Documents” means the Pledge and Security Agreement, the Control Agreements, the Mortgages (if any), the Intellectual Property Security Agreements, the Intercompany Note, the Landlord Personal Property Collateral Access Agreements, if any, Non-U.S. Security Documents, the Sony Intercreditor Arrangements, the Sony Subordination Agreement, the Sony Set-off Letter Agreements, the Sony Master Bailee Agreement, each Existing Seller Notes Subordination Agreement, any intercreditor agreement entered into pursuant to this agreement and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations.

 

“Collateral Questionnaire” means a certificate in the form attached hereto as Exhibit J or reasonably satisfactory to Collateral Agent that provides information with respect to the personal or mixed property of each Credit Party.

 

“Commodity Account” as defined in the Pledge and Security Agreement.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Communications” as defined in Section 10.1(b)(ii).

 

“Competitor” means any direct competitor of any Credit Party identified by name on Schedule 1.1(a) in effect as of the Closing Date.

 

“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C.

 

“Consolidated Adjusted EBITDA” means, for any period, an amount determined for the Credit Parties on a consolidated basis equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income (excluding for such purposes the net income for such period of any Person that is not a wholly-owned Subsidiary or that is accounted for by the equity method of accounting), plus (b) Consolidated Interest Expense, plus (c) provisions for taxes based on income, plus (d) total depreciation expense, plus (e) total amortization expense, plus (f) other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period), (but, in each case of the foregoing clauses (a) through (f), excluding with respect to periods prior to a UK Production Entity Inclusion Date, any of the foregoing with respect to such UK Production Entity Group), plus (i) with respect to any Person that is not a wholly-owned Subsidiary or that is accounted for by the equity method of accounting the lesser of (x) the amount of dividends or distributions or other payments that are actually paid in cash by such Person to a Credit Party in respect of such period and (y) an amount equal to the proportion of those items described in clause (x), above relating to such person corresponding to a Credit Party’s proportionate share of such Person’s Consolidated Net Income for such period, to the extent not included in calculating Consolidated Net Income; minus (ii) the sum, without duplication of the amounts for such period of (a) other non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period), plus (b) other income, plus (c) investment in content actually paid in cash during such period (but, in any case, excluding with respect to periods prior to a UK Production Entity Inclusion Date, any of the foregoing with respect to such UK Production Entity Group to the extent financed by a third party provided that, such third party financing shall be non-recourse to the Credit Parties and their Subsidiaries).

 

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“Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of the Credit Parties during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment or which should otherwise be capitalized” or similar items reflected in the consolidated statement of cash flows of Parent Borrower and its Subsidiaries.

 

“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense paid in cash for such period based upon GAAP, excluding any paid-in-kind interest, amortization of deferred financing costs.

 

“Consolidated Current Assets” means, as at any date of determination, the total assets of the Credit Parties on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents.

 

“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of the Credit Parties on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.

 

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) determined for the Credit Parties on a consolidated basis equal to:  (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA, plus (b) other income (excluding any gains or losses attributable to Asset Sales), plus (c) the Consolidated Working Capital Adjustment, minus (ii) the sum, without duplication, of the amounts for such period of (a) scheduled principal repayments of the Term Loan made in such period paid with Internally Generated Cash (excluding, for the avoidance of doubt, prepayments of Term Loans pursuant to Section 2.10 or Section 2.11), plus (b) cash payments in respect of Consolidated Capital Expenditures paid with Internally Generated Cash (net of any proceeds of (x) Net Asset Sale Proceeds to the extent reinvested in accordance with Section 2.11(a), (y) Net Insurance/Condemnation Proceeds to the extent reinvested in accordance with Section 2.11(b), and (z) any proceeds of related debt or equity financings or issuances with respect to such expenditures), plus (c) Consolidated Cash Interest Expense, plus (d) provisions for current taxes based on income of Credit Parties and payable in cash with respect to such period.

 

“Consolidated Fixed Charges” means, for any period, the sum, without duplication, of the amounts determined for Credit Parties on a consolidated basis equal to (i) Consolidated Cash Interest Expense, (ii) scheduled payments of principal on Consolidated Total Debt, and (iii) provisions for current taxes based on income of Credit Parties and payable in cash with respect to such period.

 

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“Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Credit Parties on a consolidated basis with respect to all outstanding Consolidated Total Debt (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances and net costs under Swap Agreements, to the extent paid or required to be paid in cash for such period, to the extent such net costs are allocable to such period in accordance with GAAP), but excluding, however, any amounts not payable in Cash and any amounts referred to in Section 2.8(b) or (c) payable on or before the Closing Date.

 

“Consolidated Net Income” means, for any period, (i) the net income (or loss) of Credit Parties on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) the sum of (a) the income (or loss) of any Person (other than a Subsidiary of Parent Borrower) in which any other Person (other than Parent Borrower or any of its Subsidiaries) has a joint interest (except to the extent distributed in cash to a Credit Party), plus (b) the income (or loss) of any Person accrued prior to the date it becomes a Credit Parties or is merged into or consolidated with any Credit Parties or that Person’s assets are acquired by a Credit Parties, plus (c) the income of any Subsidiary of Parent Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, plus (d) any after tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, subject to the approval of the Administrative Agent, plus (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses, subject to the approval of the Administrative Agent and the Requisite Lenders.

 

“Consolidated Senior Debt to Valuation Ratio” means, with respect to any date of determination, the ratio of (i) Consolidated Total Debt secured by a First Priority Lien on the Collateral as of such date of determination to (ii) the sum of (a) the Fair Value of the Media Library, and (b) the Fair Value of Parent Borrower’s (direct or indirect) Capital Stock ownership of ACL and its Subsidiaries, in each case, as detailed in the most recent Valuation Report delivered pursuant to Section 5.1(l).

 

“Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of the Credit Parties (or, if higher, the par value or stated face amount of all such Indebtedness (other than zero coupon Indebtedness)) determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Working Capital” means, as at any date of determination, the excess or deficiency of Consolidated Current Assets over Consolidated Current Liabilities.

 

“Consolidated Working Capital Adjustment” means, for any period of determination on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.  In calculating the Consolidated Working Capital Adjustment there shall be excluded the effect of reclassification during such period of current assets to long term assets and current liabilities to long term liabilities and the effect of any Permitted Acquisition during such period; provided that, there shall be included with respect to any Permitted Acquisition during such period an amount (which may be a negative number) by which the Consolidated Working Capital acquired in such Permitted Acquisition as at the time of such acquisition exceeds (or is less than) Consolidated Working Capital at the end of such period.

 

“Contested Collateral Lien Conditions” means, with respect to any Permitted Lien of the type described in clauses (b), (c), (d), (o) and (p) of Section 6.2, the following conditions

 

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“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

 

“Contributing Guarantors” as defined in Section 7.2.

 

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to Administrative Agent and Collateral Agent, executed and delivered by one or more Credit Parties, Collateral Agent, and the applicable securities intermediary (with respect to a Securities Account), commodities intermediary (with respect to a Commodity Account) or bank (with respect to a Deposit Account).

 

“Controlled Account” means a Deposit Account, Commodity Account or a Securities Account of a Credit Party which is subject to a Control Agreement, in accordance with the terms of the Pledge and Security Agreement.

 

“Controlled Investment Affiliate” means any fund or investment vehicle that indirectly or directly controls, or is controlled by, or under common control of Robert L. Johnson.  For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a Person by equity ownership or general partner relationship and not by contract.

 

“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit G delivered by a Credit Party pursuant to Section 5.10.

 

“Credit Document” means any of this Agreement, the Term Loan Notes, if any, the Collateral Documents, the Fee Letter and all other documents, certificates, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent or any Lender in connection herewith (including, without limitation, each promissory note and intercompany subordination agreement required under Section 6.1(b)).

 

“Credit Party” means Parent Borrower and each Guarantor from time to time party to a Credit Document.  Following are Credit Parties on the Closing Date:  Parent Borrower, RLJ Acquisition, Image, Acorn, Image/Madacy Home Entertainment LLC, RLJ Entertainment Holdings Ltd., RLJ Entertainment Ltd., RLJE International Limited, Foyle’s War 8 Productions Limited and RLJ Australia.

 

“Crystal” means Crystal Financial LLC and its affiliates.

 

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 “Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

 

“Default Rate” as defined in Section 2.7.

 

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

 

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Capital Stock that is not Disqualified Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change in control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Obligations), (b) is redeemable at the option of the holder thereof (other than solely for Capital Stock that is not Disqualified Stock) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Obligations), in whole or in part, (c) provides for the scheduled payment of dividends in cash, (d) is or becomes convertible into or exchangeable for (i) Indebtedness or (ii) any other Capital Stock that would constitute Disqualified Stock, in each case, prior to the date that is one hundred and eighty (180) days after the latest maturity date of the Obligations, or (e) has the benefit of any covenants or agreements that restrict the payment of any of the obligations in respect of the Obligations or that are Consolidated Adjusted EBITDA or debt-multiple based (i.e. financial covenants); provided that, if such Capital Stock is issued pursuant to a plan for the benefit of employees of Parent Borrower or its subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by Parent Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.

 

“Documentation Agent” as defined in the preamble hereto.

 

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

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

 

“ECF Percentage” as defined in Section 2.11(d).

 

“Eligible Assignee” means any Person that is (i) a Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, financial institution, finance company, investment or mutual fund or other Person which extends credit or buys loans as one of its businesses; provided that, anything to the contrary contained in the foregoing notwithstanding, (w) so long as no Default or Event of Default has occurred and is continuing, without the prior written consent of Parent Borrower, which consent shall not be unreasonably withheld, no Competitor shall be an Eligible Assignee, (x) no Credit Party (or any Affiliate of any Credit Party, including any of the Permitted Holders) and (y) no natural Person, shall, in any event, be an Eligible Assignee.

 

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates.

 

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“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

 

“Environmental Laws” means any and all current or future foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to Parent Borrower or any of its Subsidiaries or any Facility.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

 

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member.  Any former ERISA Affiliate of Parent Borrower or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Parent Borrower or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Parent Borrower or such Subsidiary and with respect to liabilities arising after such period for which Parent Borrower or such Subsidiary could be liable under the Internal Revenue Code or ERISA

 

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for thirty day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Parent Borrower, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA with respect to any Pension Plan or Multiemployer Plan (as applicable); (vii) the withdrawal of Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential withdrawal liability therefor, or the receipt by Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of written notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could reasonably be expected to give rise to the imposition on Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of material fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Parent Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of (1) the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or (2) the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA or a violation of Section 436 of the Internal Revenue Code, in each case, with respect to any Pension Plan.

 

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“Event of Default” means each of the conditions or events set forth in Section 8.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

“Excluded Account” means (a) deposit accounts specially and exclusively used for withholding taxes, payroll, payroll taxes and other employee wage and benefit payments to or for the Credit Parties’ or their Subsidiaries’ employees, (b) a deposit account specially and exclusively used for the purpose of providing cash collateral with respect to letters of credit issued on behalf of a Credit Party and outstanding as of the Closing Date in an aggregate amount not to exceed $55,000, (c) other deposit accounts so long as the aggregate amount of Cash and Cash Equivalents or other amounts credited to such deposit accounts at any one time, is not in excess $250,000 in the aggregate and (d) any 401(k) or similar accounts.

 

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes illegal.

 

“Excluded Taxes” means (a) Taxes imposed on or measured by the Lender's net income, franchise Taxes, and branch profits Taxes, in each case imposed by the jurisdiction (or political subdivision thereof) under the laws of which such Lender is organized or in which its principal lending office is located; (b) in the case of a Non-U.S. Lender, any United States federal withholding Taxes imposed on amounts payable pursuant to the law in effect on the date on which such Lender became a party to this Agreement or changes its lending office except (i) any amounts in respect of Taxes that were payable to the Lender’s assignor immediately before the Lender became a party hereto or (ii) to such Lender immediately before it changed its lending office; (c) Taxes attributable to a Lender’s failure to comply with Section 2.17(f); and (d) any United States withholding Taxes imposed under FATCA.

 

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“Existing Indebtedness” means Indebtedness and other obligations outstanding under that certain Credit Agreement, dated as of October 3, 2012 (as amended, restated, supplemented or otherwise modified) among Parent Borrower, certain of its Subsidiaries, SunTrust Bank, as administrative agent, and the lenders and other financial institutions party thereto.

 

“Existing Seller Notes” means the unsecured Indebtedness of Parent Borrower under each of the Unsecured Subordinated Promissory Notes that are listed on Schedule 1.1(b) hereof, in each case, owing to Persons that were holders (or permitted assignees thereof) of the Capital Stock of Image immediately prior to the acquisition of Image by Parent Borrower on October 3, 2013 and subject to the Existing Seller Notes Subordination Agreement.  The aggregate principal amount of Existing Seller Notes on the Closing Date is $16,034,224.79.

 

“Existing Seller Notes Subordination Agreement” means the Amended and Restated Debt Subordination Agreements, dated as of the Closing Date, by and among Administrative Agent, each holder of an Existing Seller Note and each Credit Party party thereto.

 

“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Parent Borrower or any of its Subsidiaries or any of their respective predecessors or Affiliates.

 

“Fair Value” means (i) the “concluded value with taxes” of the Media Library as detailed in the “Valuation FTI Library Analysis Memorandum” dated April 18, 2014 (the “FTI Valuation”) (such “concluded value with taxes” of the Media Library being $62,150,000 as the date thereof), (ii) the “net present value indication” of Parent Borrower’s interest in ACL as detailed in the “Agatha Christie Limited net present value indication” dated June 3, 2014 prepared by FTI Consulting (the “ACL Valuation”) (such value being $27,900,000 as at December 31, 2013, on the basis of a dollar to sterling exchange rate of 1.680723 (such foregoing exchange rate shall be the applicable dollar to sterling exchange rate for all such calculations during the term of this Agreement)), and (iii) such other “concluded value with taxes” of the Media Library or such other “net present value indication” of Parent Borrower’s interest in ACL as may be reflected in Valuation Reports delivered by Parent Borrower from time to time pursuant to Section 5.1(l) provided that, such future Valuation Reports shall determine “concluded value with taxes” of the Media Library and “net present value indication” of Parent Borrower’s interest in ACL by using the same methodology as that applied in the FTI Valuation and the ACL Valuation.

 

“Fair Share” as defined in Section 7.2.

 

“Fair Share Contribution Amount” as defined in Section 7.2.

 

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.

 

“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States 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 that is a Business Day, the average of the quotations for the day for such transactions received by Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

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“Fee Letter” means the confidential Fee Letter, dated on or about the date hereof, between Parent Borrower and the Administrative Agent.

 

“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of a Responsible Financial Officer of Parent Borrower that such financial statements have been prepared in conformity with GAAP and fairly present, in all material respects, the financial condition of Parent Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit, absence of footnotes and normal year-end adjustments.

 

“Financial Plan” as defined in Section 5.1(i).

 

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any non-consensual Permitted Lien, any purchase money lien which is a Permitted Lien, liens of insurers in insurance proceeds and the interests of lessors under Capital Leases with priority over Liens created pursuant to the Collateral Documents.

 

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

 

“Fiscal Year” means the fiscal year of Parent Borrower and its Subsidiaries ending on December 31 of each calendar year.

 

“Fixed Charge Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (a) Consolidated Adjusted EBITDA for the four consecutive Fiscal Quarter period then ending, minus unfinanced Capital Expenditures for the four consecutive Fiscal Quarter period then ending, to (b) Consolidated Fixed Charges for such four Fiscal Quarter period.

 

“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of the Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

“Funding Guarantor” as defined in Section 7.2.

 

“Funding Notice” means a notice substantially in the form of Exhibit A-1.

 

“GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.

 

“Governmental Authority” means any federal, state, provincial, municipal, national, supranational, or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity, or officer or examiner exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government, or a supranational authority, including, without limitation, the European Union.

 

“Governmental Authorization” means any permit, license, authorization, certification, registration, approval, clearance, marking, plan, directive, consent order or consent decree of or from any Governmental Authority.

 

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“Grantor” as defined in the Pledge and Security Agreement.

 

“Guaranteed Obligations” as defined in Section 7.1.

 

“Guarantor” means each wholly-owned Subsidiary of Parent Borrower, but, excluding with respect to periods prior to a UK Production Entity’s UK Production Entity Inclusion Date, any of such UK Production Entity Group.  The following are Guarantors on the Closing Date:  Image, Image/Madacy Home Entertainment LLC, RLJ Entertainment Holdings Ltd., RLJ Entertainment Ltd., RLJE International Limited, RLJ Acquisition, Acorn, Foyle’s War 8 Productions Limited and RLJ Australia.

 

“Guarantor Subsidiary” means each Guarantor.

 

“Guaranty” means the guaranty of each Guarantor set forth in Section 7.

 

“Hazardous Materials” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.

 

“Hazardous Materials Activity” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

 

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.

 

“Historical Financial Statements” means as of the Closing Date, (i) the audited financial statements of Parent Borrower and its Subsidiaries, for the 2013 Fiscal Year of Parent Borrower, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Year, and (ii) for the interim period from the date of the financial statements referred to in the foregoing clause (i) to the Closing Date, internally prepared, unaudited financial statements of Parent Borrower and its Subsidiaries, consisting of a balance sheet and the related consolidated statements of income, certified by a Responsible Financial Officer of Parent Borrower that they fairly present, in all material respects, the financial condition of Parent Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject, if applicable, to changes resulting from audit and normal year end adjustments.

 

“Image” means Image Entertainment, Inc., a Delaware corporation.

 

“Impacted Interest Period” as defined in the definition of Adjusted LIBOR Rate.

 

“Increased-Cost Lender” as defined in Section 2.19.

 

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“Indebtedness,” as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any earn-out or any obligation owed for all or any part of the deferred purchase price of property or services; (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; (x) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, whether entered into for hedging or speculative purposes; (xi) Disqualified Stock; and (xii) trade payables more than 90 days past due (other than solely to the extent existing on the Closing Date); provided that, amounts payable to Permitted Holders shall not be included in the calculation of trade payables more than 90 days past due (but, notwithstanding the foregoing, for the purposes of Section 6.4, all trade payables and other amounts owed to Permitted Holders shall constitute Indebtedness).

 

“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect, special or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including, but not limited to, securities and commercial federal, state or foreign laws, statutes, rules or regulations; Environmental Laws; OFAC and money laundering laws; and state and federal money transmission statutes, rules or regulations), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in connection with or as a result of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including Lenders’ agreement to make Term Loans, the syndication of the credit facilities provided for herein or the use or intended use of the proceeds thereof, any amendments, waivers or consents with respect to any provision of this Agreement or any of the other Credit Documents, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the Fee Letter; or (iii) any Environmental Claim or any Hazardous Materials Activity in connection with or as a result of, directly or indirectly, any past or present activity, operation, land ownership, or practice of Parent Borrower or any of its Subsidiaries.

 

“Indemnified Taxes” means any Taxes or Other Taxes other than Excluded Taxes.

 

“Indemnitee” as defined in Section 10.3(a).

 

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“Indemnitee Agent Party” as defined in Section 9.7.

 

“Installment” as defined in Section 2.9.

 

“Installment Date” as defined in Section 2.9.

 

“Intellectual Property” as defined in the Pledge and Security Agreement.

 

“Intellectual Property Asset” means, at the time of determination, any interest (fee, license or otherwise) then owned by any Credit Party or any of its Subsidiaries.

 

“Intellectual Property Security Agreements” as defined in the Pledge and Security Agreement.

 

“Intercompany Note” means a promissory note substantially in the form of Exhibit K evidencing Indebtedness owed among Credit Parties and their Subsidiaries.

 

“Interest Payment Date” means (a) the last day of each calendar quarter commencing on the first such date to occur after the Closing Date and (b) the final maturity date.

 

“Interest Period” means, with respect to any Term Loan, an interest period of three (3) months: provided that, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) of this definition, end on the last Business Day of a calendar month; and (c) no Interest Period with respect to any portion of the Term Loans shall extend beyond the Term Loan Maturity Date.

 

“Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute.

 

“Internally Generated Cash” means, with respect to any period, any cash of Parent Borrower or any Subsidiary generated during such period, excluding Net Asset Sale Proceeds, Net Insurance/Condemnation Proceeds and any cash that is generated from an incurrence of Indebtedness, an issuance of Capital Stock or a capital contribution.

 

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBOR Screen Rate) determined by Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period for which the LIBOR Screen Rate is available) that is shorter than the Impacted Interest Period; and (b) the LIBOR Screen Rate for the shortest period (for which that LIBOR Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.

 

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“Investment” means (i) any direct or indirect purchase or other acquisition by Parent Borrower or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than a Credit Party) or of all or substantially all of the assets of (or any division or business line of) any other Person (other than a Credit Party); (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Parent Borrower from any Person (other than a Credit Party), of any Capital Stock of such Person; (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by Parent Borrower or any of its Subsidiaries to any other Person (other than a Credit Party), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business; and (iv) all investments consisting of any exchange traded or over the counter derivative transaction, including any Swap Agreement, whether entered into for hedging or speculative purposes or otherwise.  The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, all in accordance with GAAP.

 

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided that, in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

 

“Judgment Currency” as defined in Section 10.24.

 

“Landlord Personal Property Collateral Access Agreement” means a Landlord Personal Property Collateral Access Agreement substantially in the form of Exhibit I with such amendments or modifications as may be approved by Collateral Agent.

 

 “Lender” means each Person listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement, including in each case, any SBA Lender, or SBLF Lender so listed or that so becomes, a party hereto.

 

 

“LIBOR Screen Rate” as defined in the term “Adjusted LIBOR Rate”.

 

“Licenses” means any all Copyright Licenses, Patent Licenses, Trademark Licenses, and Trade Secret Licenses (in each case, as defined in the Pledge and Security Agreement).

 

“Lien” means (i) any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease or license in the nature thereof), debenture, fixed or floating charge and any option, trust or other preferential arrangement having the practical effect of any of the foregoing, and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities.

 

“Liquidity Test Date” as defined in Section 6.7(d).

 

“Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

 

“Master Debenture” means that certain debenture governed by the laws of England and Wales dated on or about the date hereof, among, inter alios, Administrative Agent, Acorn, RLJ Entertainment Holdings Ltd., RLJ Entertainment Ltd., RLJE International Ltd., Foyle’s War 8 Productions Limited, and after a UK Production Entity Inclusion Date, such UK Production Entity, which shall be in form and substance reasonably acceptable to Administrative Agent.

 

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“Material Adverse Effect” means a material adverse effect on and/or material adverse developments with respect to (i) the business operations, properties, assets or financial condition of Parent Borrower and its Subsidiaries taken as a whole; (ii) the ability of any Credit Party to fully and timely perform its Obligations; (iii) the legality, validity, binding effect, or enforceability against a Credit Party of a Credit Document to which it is a party; or (v) the rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any Secured Party under any Credit Document.

 

“Material Contract” means (i) any contract, license or other arrangement to which Parent Borrower or any of its Subsidiaries is a party (other than the Credit Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect, (ii) any contract, license, agreement or arrangement, individually or in the aggregate, to which Parent Borrower or any of its Subsidiary is a party (including, without limitation, any agreement or instrument evidencing or governing Indebtedness) involving aggregate consideration payable (A) to Parent Borrower or such Subsidiary in connection with a revenue-generating contract, license or agreement of $5,000,000 or more per Fiscal Year or (B) by Parent Borrower or such Subsidiary in connection with a distributor, licensor, vendor or supplier contract, license or agreement of $5,000,000 or more per Fiscal Year (in the case of this clause (ii), other than contracts that by their terms may be terminated by such Person or Parent Borrower or any of its Subsidiaries in the ordinary course of its business upon less than 60 days’ notice without penalty or premium),(iii) all contracts and arrangements listed on Schedule 4.16 (any extensions or renewals thereof), (iv) any contract, license or other arrangement (individually or in the aggregate) to which Parent Borrower or any of its Subsidiaries is a party which a Credit Party reasonably expects that it would, pursuant to the terms thereof, likely suffer damages or losses in excess of $5,000,000 per Fiscal Year by reason of the breach or termination thereof; and (v) any other any contract, license or other arrangement that is material to the conduct of business of the Credit Parties.

 

“Material Debt” as defined in Section 8.1(b).

 

“Material Real Estate Asset” means any fee-owned Real Estate Asset having a fair market value in excess of $500,000 (or with a fair market value that, when combined with the fair market value of all other fee-owned Real Estate Assets that are not subject to a Mortgage, is in excess of $1,000,000) as of the date of the acquisition thereof.

 

“MCP” as defined in the preamble hereto.

 

“Media Library” means, as of any date of determination, the set or collection of Media Rights used in connection with the businesses of the Credit Parties and their Subsidiaries.

 

“Media Rights” means, with respect to each Credit Party and its Subsidiaries, all licensing rights (as licensor and licensee), manufacturing rights, production rights, and distribution rights, and all right, title, and interest of such Persons in registered patents, trademarks, service marks, copyrights, and other Intellectual Property rights, in each case, with respect to the film and television production and entertainment programming business of such Persons.

 

“Minimum Cash Balance” means, for any date of determination and as calculated on a consolidated basis,  the Credit Parties’ Cash-on-hand.

 

“MNPI” as defined in Section 10.1(d)(ii).

 

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

 

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“Mortgage” means a mortgage, deed of trust, assignment or leases and rents or other security document granting to Agents a Lien on any Real Estate Asset to secure the Obligations in form and substance reasonably satisfactory to Agents and Parent Borrower.

 

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) or 4001(a)(3) of ERISA.

 

“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

 

“Net Asset Sale Proceeds” means, with respect to any Asset Sale (other than Asset Sales under clauses (a), (b), (d), (f) – (i) and (k) of Section 6.8), an amount equal to:  (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Parent Borrower or any of its Subsidiaries from such Asset Sale, minus (ii) any reasonable costs and expenses incurred in connection with such Asset Sale to the extent paid or payable to non-Affiliates, including, without limitation (a) sales, transfer and other similar taxes paid or payable by Parent Borrower or such Subsidiary, (b) income or gains taxes paid by the seller as a result of any gain recognized in connection with such Asset Sale during the tax period the sale occurs, (c) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Term Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, and (d) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Parent Borrower or any of its Subsidiaries in connection with such Asset Sale; provided that, upon release of any such reserve, the amount released shall be considered Net Asset Sale Proceeds.

 

“Net Insurance/Condemnation Proceeds” means an amount equal to:  (i) any Cash payments or proceeds received by Parent Borrower or any of its Subsidiaries (a) under any casualty or business interruption insurance policies in respect of any covered loss thereunder, or (b) as a result of the taking of any assets of Parent Borrower or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any actual and reasonable costs incurred by Parent Borrower or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Parent Borrower or such Subsidiary in respect thereof, and (b) any bona fide direct costs incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition to the extent paid or payable to non-Affiliates, including, without limitation, sales, transfer and other similar taxes paid or payable, income taxes or gains taxes payable as a result of any gain or other similar taxes recognized in connection therewith.

 

“Non-Consenting Lender” as defined in Section 2.19.

 

“Non-U.S. Lender” means any Lender that is not a United States person within the meaning of Section 7701(a)(30) of the Internal Revenue Code.

 

“Non-U.S. Security Documents” means, collectively, (x) any security document (other than the Pledge and Security Agreement or any other security or pledge agreement or mortgage governed by the laws of the United States, any state thereof, or the District of Columbia) entered into by a Credit Party as of the Closing Date and (y) any other security document entered into by a Credit Party, or governed by a law other than the laws of the United States, any state thereof, or the District of Columbia.  On the Closing Date, Non-U.S. Security Documents shall include, (i) the Master Debenture, (ii) the Security over Shares Agreement and (iii) the Charge over Intellectual Property.

 

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“Obligations” means all obligations of every nature of each Credit Party from time to time owed to the Agents (including former Agents), Lenders or any of them and the Lender Counterparties, under any Credit Document or Swap Agreement, whether for principal, interest, fees, prepayment premium, early termination fees, expenses (including attorneys’ fees), indemnification or otherwise (including amounts which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such amounts in the related bankruptcy proceeding) and payments for early termination of Swap Agreements, excluding, with respect to any Guarantor, Excluded Swap Obligations with respect to such Guarantor.

 

“Obligee Guarantor” as defined in Section 7.7.

 

“OFAC” means the Office of Foreign Assets Control of the United States Department of Treasury.

 

“Organizational Documents” means (i) with respect to any corporation or company, its certificate, memorandum or articles of incorporation, association or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended.  In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

 

“Other Taxes” means all present and future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to any Credit Documents under this Agreement.

 

“Parent Borrower” as defined in the preamble hereto.

 

“Participant Register” as defined in Section 10.6(h).

 

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

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

 

“Permitted Acquisition” means any acquisition, directly or indirectly, by Parent Borrower or any of its wholly-owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Capital Stock of, or a business line or unit or a division of, any Person; provided that,

 

 

 

 

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“Permitted Holders” means Robert L. Johnson and his Controlled Investment Affiliates.

 

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.

 

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“Permitted Service Agreement” means one or more agreements between Acorn Productions and any ACL Group member pursuant to which Acorn Productions provides services to such ACL Group member so long as (a) Parent Borrower shall have delivered to Administrative Agent copy of each such agreement prior to the effectiveness thereof and (b) any such agreement is not prohibited by Section 6.11.

 

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

 

“Platform” as defined in Section 10.1(c).

 

“Pledge and Security Agreement” means the Pledge and Security Agreement to be executed by Parent Borrower and each Guarantor (other than any UK Credit Party) substantially in the form of Exhibit H, as it may be amended, supplemented or otherwise modified from time to time.

 

“Principal Office” means, for Administrative Agent, such Person’s “Principal Office” as set forth on Appendix B, or such other office as such Person may from time to time designate in writing to Parent Borrower and each Lender.

 

“Private Side Communications” as defined in Section 10.1(d)(i).

 

“Private Siders” as defined in Section 10.1(d)(ii).

 

“Pro Rata Share” means with respect to all payments, computations and other matters relating to the Term Loan of any Lender, the percentage obtained by dividing (a) the Term Loan Exposure of that Lender, by (b) the aggregate Term Loan Exposure of all Lenders.  For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an amount equal to the sum of the Term Loan Exposure of that Lender by (B) an amount equal to the sum of the aggregate Term Loan Exposure of all Lenders.

 

“Projections” as defined in Section 4.8.

 

“Public Siders” as defined in Section 10.1(d)(ii).

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Credit Party that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property.

 

“Register” as defined in Section 2.4(b).

 

“Regulation” as defined in Section 4.29.

 

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

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“Regulation FD” means Regulation FD as promulgated by the SEC under the Securities Act and Exchange Act as in effect from time to time.

 

“Regulation T” means Regulation T of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” means Regulation U of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” means Regulation X of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

 

“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“Related Parties” means, with respect to any person, such person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such person and of such person’s Affiliates.

 

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

 

“Replacement Lender” as defined in Section 2.19.

 

“Requisite Lenders” means one or more Lenders having or holding Term Loan Exposure and representing more than 50% of the aggregate Term Loan Exposure of all Lenders; provided that, at any time there shall be three or fewer Lenders (other than if there is only one Lender), “Requisite Lenders” shall mean “at least two unaffiliated Lenders having or holding Term Loan Exposure and representing more than 50% of the aggregate Term Loan Exposure of all Lenders”.

 

“Requirements of Law” shall mean, collectively, any and all applicable requirements of any Governmental Authority including any and all laws, judgments, orders, executive orders, decrees, ordinances, rules, regulations, statutes or case law.

 

“Responsible Financial Officer” means, with respect to any Person, such Person’s chief financial officer, chief accounting officer, vice president of finance, treasurer or other officer with substantially the same authority and responsibility.

 

“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of Parent Borrower or any of its Subsidiaries now or hereafter outstanding, except a dividend or distribution payable solely in shares of Capital Stock to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of Parent Borrower or any of its Subsidiaries now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of Parent Borrower or any of its Subsidiaries now or hereafter outstanding; (iv) management or similar fees payable to Permitted Holders or any of their Affiliates; (v) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in substance or legal defeasance), sinking fund or similar payment with respect to, any Subordinated Indebtedness, (vi) payments with respect to any earn-out obligation or deferred purchase price in connection with any acquisition agreement (other than working capital adjustments); and (vii) payments in respect of the Existing Seller Notes.

 

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“RLJ Acquisition” means RLJ Acquisition, Inc., a Nevada corporation.

 

“RLJ Australia” means RLJ Entertainment Australia Pty Ltd., an Australian proprietary company limited by shares.

 

“RLJEL” means RLJ Entertainment Ltd, a private limited company organized under the laws of England and Wales with registration number 03889535.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.

 

“Sanctioned Person” means Person who is the subject of or implicated under an OFAC sanction program.

 

“Sanctions” as defined in Section 4.25.

 

“SBA” shall mean the U.S. Small Business Administration or any successor agency.

 

“SBA Act” means the Small Business Investment Act of 1958, as amended, and the regulations promulgated thereunder.

 

“SBA Lender” shall mean any Lender to the extent such Lender is licensed as a permissible lender under the SBA.

 

“SBA Loans” shall mean Term Loans made by an SBA Lender.

 

“SBIC” shall mean a small business investment company licensed under the SBA Act.

 

“SBIC Documents” means those documents required pursuant to SBIC regulations including Small Business Administration Forms 480, 652, 1031 (Parts A and B), the Economic Impact Assessment and such other documents as may be required by Requirements of Law or as may reasonably be required by any SBA Lender.

 

“SBLF” shall mean the Small Business Lending Fund established by the Small Business Jobs Act of 2010.

 

“SBLF Documents” means those documents required pursuant to SBLF regulations and such other documents as may be required by Requirements of Law or as may reasonably be required by the SBLF Lender.

 

“SBLF Lender” shall mean a Lender that is qualified to participate in SBLF.

 

“SBLF Loans” shall mean Term Loans made by a SBLF Lender.

 

“SEC” as defined in Section 10.1(d)(i).

 

“Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.

 

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“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

 

“Securities Account” as defined in the Pledge and Security Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

 

“Security over Shares Agreement” means that certain Security over Shares Agreement governed by the laws of England and Wales among Acorn and Administrative Agent dated on or about the date hereof, which shall be in form and substance reasonably acceptable to Administrative Agent.

 

“Senior Leverage Ratio” means, the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Total Debt secured by a First Priority Lien on the Collateral as of such date, to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ending on such date.

 

“Shareholders’ Agreement” means the shareholders’ agreement relating to Agatha Christie Limited dated 25 August 1994 and made between, amongst others, Rosalind Margaret Clarissa Hicks, Matthew Caradoc Thomas Prichard, Booker PLC and ACL.

 

“Solvency Certificate” means a Solvency Certificate of a Responsible Financial Officer of Parent Borrower substantially in the form of Exhibit F-2.

 

“Solvent” means, with respect to any Credit Party, that as of the date of determination, both (i) (a) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party’s present assets taken as a going concern; (b) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on the Closing Date and reflected in the Projections or with respect to any transaction contemplated or undertaken after the Closing Date; and (c) such Person has not incurred and does not intend to incur debts beyond its ability to pay such debts as they become due in the ordinary course (whether at maturity or otherwise); and (ii) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances.  For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

“Sony Intercreditor Agreement” means the Intercreditor Agreement, dated as of the Closing Date, by and among Administrative Agent and Sony Pictures Home Entertainment Inc. or any of their applicable Affiliates and acknowledged by the Credit Parties.

 

“Sony Intercreditor Arrangements” means the Sony Intercreditor Agreement, the Sony Master Bailee Agreement and any other document of agreement reasonably requested by Administrative Agent from Sony Pictures Home Entertainment Inc. or any of their applicable Affiliates.

 

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“Sony Master Bailee Agreement” means the Master Bailee Agreement, dated as of the Closing Date, by and among Administrative Agent, Sony Pictures Home Entertainment Inc. and each Credit Party party thereto.

 

“Sony Set-off Letter Agreements” means each letter agreement pursuant to which Sony Pictures Home Entertainment Inc. or any of their applicable Affiliates agrees to subordinate any invoiced amounts owing to it by a Credit Party, dated as of the Closing Date and among Sony Pictures Home Entertainment Inc., Administrative Agent and the applicable Credit Party.

 

“Sony Subordination Agreement” means the letter agreement, dated as of the Closing Date, by Sony Pictures Home Entertainment Inc. or any of their applicable Affiliates and acknowledged by Acorn and Administrative Agent.

 

“Specified Divestiture” means any of (i) a Change of Control (it being understood that a Change of Control shall constitute an Event of Default under Section 8.1(k)), (ii) a sale of all or substantially all of the assets of Parent Borrower or any of its Subsidiaries and (iii) a sale of any material portion of the assets of Parent Borrower or any of its Subsidiaries to the extent constituting an entire (or a substantial part of) a division or a line of business.

 

“Subject Transaction” as defined in Section 6.7(e).

 

“Subordinated Indebtedness” means any unsecured Indebtedness of Parent Borrower or its Subsidiaries incurred from time to time, including each Existing Seller Note, that is subordinated in right of payment to the Obligations and (a) that is only guaranteed by the Guarantors, (b) that is not subject to scheduled amortization, redemption, sinking fund or similar payment and does not have a final maturity, in each case, on or before the date that is six months after the Term Loan Maturity Date, (c) that does not include any financial covenants or any covenant or agreement that is more restrictive or onerous on any Credit Party in any material respect than any comparable covenant in this Agreement and is otherwise on terms and conditions reasonably acceptable to Administrative Agent and Collateral Agent, (d) shall be limited to cross-payment default and cross-acceleration to designated “senior debt” (including the Obligations), and (e) the terms and conditions of the subordination are reasonably acceptable to Administrative Agent, Collateral Agent and the Requisite Lenders.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided that, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding.

 

“Swap Agreement” means any agreement entered into with any Lender Counterparty with respect to any swap, forward, spot, future, credit default or derivative transaction or any 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 Parent Borrower or its Subsidiaries shall be a Swap Agreement.

 

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“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Tax” or “Taxes” means any present or future tax, levy impost, duty, assessment, charge, deduction or withholding in the nature of a tax imposed, levied, collected, withheld or assessed by any Governmental Authority, including any interest or penalties.

 

“Term Loan” means a Term Loan (including an SBA Loan or an SBLF Loan) made by a Lender to Parent Borrower pursuant to Section 2.1(a).

 

“Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Term Loan and “Term Loan Commitments” means such commitments of all Lenders in the aggregate.  The amount of each Lender’s Term Loan Commitment, if any, is set forth on Appendix A or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Term Loan Commitments as of the Closing Date is $70,000,000.

 

“Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Term Loans of such Lender; provided that, at any time prior to the making of the Term Loans, the Term Loan Exposure of any Lender shall be equal to such Lender’s Term Loan Commitment.

 

“Term Loan Maturity Date” means the earliest of (i) September 11, 2019; and (ii) the date that all Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

 

“Term Loan Note” means a promissory note in the form of Exhibit B, as it may be amended, supplemented or otherwise modified from time to time.

 

“Terminated Lender” as defined in Section 2.19.

 

“Title Policy” as defined in Section 5.11(c).

 

“Total Leverage Ratio” means, the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Total Debt as of such date, to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ending on such date.

 

“Trade Announcement” as defined in Section 10.17.

 

“Transaction Costs” means the fees, costs and expenses payable by Parent Borrower or any of its Subsidiaries on or before the Closing Date in connection with the transactions contemplated by the Credit Documents (including the repayment in full of the Existing Indebtedness).

 

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

 

“UK Credit Party” means each Credit Party incorporated in the United Kingdom, under the laws of England and Wales.

 

“UK Production Entity” means any direct or indirect Subsidiary of Parent Borrower formed primarily for the purpose of the production of motion picture and television programming content or the mastering and offering of packaged media masters, including the creation of added content, artwork and other one-time value-added materials to prepare finished masters suitable for offer and sale to the public, in each case in the United Kingdom.

 

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“UK Production Debt” means, with respect to any UK Production Entity, any Indebtedness of such UK Production Entity which is nonrecourse to the Credit Parties.  The aggregate unpaid principal amount of UK Production Debt on the Closing Date is £10,000,000.

 

“UK Production Entity Group” means, with respect to any UK Production Entity, such UK Production Entity and any of its current and/or future Subsidiaries (excluding any direct Subsidiary of a Credit Party).

 

“UK Production Entity Inclusion Date” means, with respect to any UK Production Entity, the date on which each of the following has occurred, as determined by Administrative Agent in its reasonable discretion, (a) the UK Production Entity Debt with respect to such UK Production Entity and all obligations in connection therewith have been repaid in full, (b) all documents governing such UK Production Entity Debt shall have been terminated, (c) all Liens securing such UK Production Entity Debt shall have been released or otherwise terminated, and (d) each member of the UK Production Entity Group shall have become a Guarantor hereunder to the extent required in accordance with Section 5.10 hereof and the Credit Parties shall have otherwise complied with Section 5.10 with respect to the UK Production Entity Group.

 

“Valuation Report” as defined in Section 5.1(l)(ii).

 

“Voidable Transfer” as defined in Section 10.23.

 

 

 

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SECTION 2.

TERM LOANS

 

 

 

 

 

 

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in each case given to Administrative Agent by 11:00 a.m. (New York City time) on the date required. Promptly following receipt of any such notice, Administrative Agent shall advise Lenders of the contents thereof. Each such notice shall be irrevocable and the principal amount of the Term Loans specified in such notice shall become due and payable on the prepayment date specified therein; provided, that if such notice of prepayment indicates that such prepayment is to be funded with the proceeds of a refinancing or another specified event, or is otherwise conditioned upon the occurrence of an event, such notice of prepayment may be revoked by Parent Borrower (by notice to Administrative Agent on or prior to the specified prepayment date) if the financing is not consummated or such other specified event (as the case may be) has not occurred.  Any such voluntary prepayment shall be applied as specified in Section 2.12(a). Prepayments shall be accompanied by accrued interest to the extent required by Section 2.5.

 

 

 

 

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 first, to the payment of all fees, and all expenses specified in Section 10.2, to the full extent thereof;

 

second, ratably (except as may be separately agreed in writing among all of the Lenders and the Agents), to the payment of any unpaid interest accrued at the Default Rate, if any;

 

third, ratably (except as may be separately agreed in writing among all of the Lenders and the Agents), to the payment of any accrued but unpaid interest (other than Default Rate interest);

 

 fourth, to the payment of the fees payable under the Fee Letter, if any, in respect of any Term Loan; and

 

 fifth, ratably (except as may be separately agreed in writing among all of the Lenders and the Agents), to prepay Term Loans by being applied to the remaining scheduled Installments of principal of the Term Loans in inverse order of maturity (for the avoidance of doubt, any amount that is due and payable on the Term Loan Maturity Date shall constitute an Installment);

 

provided, that any Lender may elect, by written notice to Administrative Agent and Parent Borrower at least one (1) Business Day prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans pursuant to Section 2.11, in which case the aggregate amount of the prepayment that would have been applied to prepay such Term Loans, but was so declined shall be ratably offered to each Lender that initially accepted such prepayment and any amounts rejected by such Lenders shall be retained by Parent Borrower.

 

 

 

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SECTION 3.

CONDITIONS PRECEDENT

 

 

 

 

 

 

 

 

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Each Lender, by delivering its signature page to this Agreement and funding a Term Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date.  Any Funding Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent.

 

SECTION 4.

REPRESENTATIONS AND WARRANTIES

 

In order to induce Agents and Lenders to enter into this Agreement and to make the Term Loans, each Credit Party represents and warrants to each Agent and Lender that on the Closing Date the following statements are true and correct:

 

 

 

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Fiscal Quarter Ending	Fixed Charge Coverage Ratio
December 31, 2014	1.10:1.00
March 31, 2015	1.11:1.00
June 30, 2015	1.07:1.00
September 30, 2015	1.13:1.00
December 31, 2015	1.20:1.00
March 31, 2016	1.24:1.00
June 30, 2016	1.28:1.00
September 30, 2016	1.32:1.00
December 31, 2016 and thereafter	1.59:1.00

Fiscal Quarter	Senior Leverage Ratio
December 31, 2014	4.64:1.00
March 31, 2015	4.71:1.00
June 30, 2015	4.87:1.00
September 30, 2015	4.47:1.00
December 31, 2015	4.03:1.00
March 31, 2016	3.83:1.00
June 30, 2016	3.64:1.00
September 30, 2016	3.46:1.00
December 31, 2016 and thereafter	2.67:1.00

Fiscal Quarter	Total Leverage Ratio
December 31, 2014	5.71:1.00
March 31, 2015	5.81:1.00
June 30, 2015	6.09:1.00
September 30, 2015	5.56:1.00
December 31, 2015	5.06:1.00
March 31, 2016	4.82:1.00
June 30, 2016	4.65:1.00
September 30, 2016	4.43:1.00
December 31, 2016 and thereafter	3.44:1.00

	RLJ ENTERTAINMENT, INC., as Parent Borrower
	By:	/s/ MIGUEL PENELLA
	Name:  Miguel Penella
	Title:  Chief Executive Officer

	RLJ ACQUISITION, INC., as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Secretary & Treasurer
	IMAGE ENTERTAINMENT, INC., as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Secretary & Treasurer
	IMAGE/MADACY HOME ENTERTAINMENT LLC, as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Chief Financial Officer
	ACORN MEDIA GROUP, INC., as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Secretary & Treasurer
	RLJ ENTERTAINMENT HOLDINGS LTD, as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Director

	RLJ ENTERTAINMENT LTD, as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Director
	RLJE INTERNATIONAL LIMITED, as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Director
	FOYLE’S WAR 8 PRODUCTION LIMITED, as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Director
	RLJ ENTERTAINMENT AUSTRALIA PTY LTD, as Guarantor Subsidiary
	By:	/s/ ANDREW WILSON
	Name:  Andrew Wilson
	Title:  Director

	MCLARTY CAPITAL PARTNERS SBIC, L.P., as Arranger, Bookmanager and Syndication Agent
	By:	McLarty Capital Partners SBIC, LLC,
		its general partner
	By:	/s/ CHRISTOPHER D. SMITH
	Name:  Christopher D. Smith
	Title:  Manager
	MCLARTY CAPITAL PARTNERS SBIC, L.P., as Administrative Agent, Collateral Agent and Lender
	By:	McLarty Capital Partners SBIC, LLC,
		its general partner
	By:	/s/ CHRISTOPHER D. SMITH
	Name:  Christopher D. Smith
	Title:  Manager
	CRYSTAL FINANCIAL LLC, as Documentation Agent
	By:	/s/ CHRISTOPHER A. ARNOLD
	Name:  Christopher A. Arnold
	Title:  Senior Managing Director
	CRYSTAL FINANCIAL SBIC LP, as a Lender
	By:	Crystal SBIC GP LLC, its general partner
	By:	/s/ MATTHEW J. GOVERNALI
	Name:  Matthew J. Governali
	Title:  Managing Director
	CRYSTAL FINANCIAL SPV LLC, as a Lender
	By:	/s/ CHRISTOPHER A. ARNOLD
	Name:  Christopher A. Arnold
	Title:  Senior Managing Director

	TEVEURA LIMITED, as a Lender
	By:	/s/ AHTON LOTZER
	Name:  Ahton Lotzer
	Title:  Director
	By:	/s/ ALRIN JOHANN
	Name:  Alrin Johann
	Title:  Director
	MAIN STREET CAPITAL CORPORATION,
	as a Lender
	By:	/s/ MATTHEW J. GOVERNALI
	Name:  Nick Meserve
	Title:  Managing Director
	HMS INCOME FUND, INC., as a Lender
	By:	/s/ RYAN T. SIMS
	Name:  Ryan T. Sims
	Title:  Chief Financial Officer and Secretary
	HEARTLAND BANK, an Arkansas state bank, as a Lender
	By:	/s/ RUSSELL LASTER
	Name:  Russell Laster
	Title:  Senior Vice President