AMENDMENT NUMBER SIX AND
WAIVER
TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT
This AMENDMENT NUMBER SIX AND WAIVER TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “
Amendment ”) is entered into as of January 11,
2007, by WELLS FARGO FOOTHILL, INC. , a California
corporation (“ Lender ”), and IMAGE
ENTERTAINMENT, INC. , a Delaware corporation, f/k/a Image
Entertainment, Inc., a California corporation, (“
Borrower ”), with reference to the
following:
WHEREAS , Borrower and Lender are parties to that
certain Amended and Restated Loan and Security Agreement, dated as
of August 10, 2005 (as amended, restated, supplemented, or
otherwise modified from time to time, the “ Loan
Agreement ”);
WHEREAS , Borrower has requested that Lender make
certain amendments to the Loan Agreement and grant a waiver of
certain Events of Default that have occurred under the Loan
Agreement; and
WHEREAS , subject to the terms and conditions set forth
herein, Lender is willing to make the amendments and grant the
consents and waiver requested by Borrower.
NOW, THEREFORE , in consideration of the foregoing and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms
used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement, as amended
hereby.
2.
Amendments to Loan Agreement .
(a) Section 1.1 of the
Loan Agreement is hereby amended by adding the following
definitions in proper alphabetical order or amending and restating
the following definitions, as the case may be:
““ Maximum Revolving Credit
Amount ” means $5,000,000.”
(b) Section 2.1(a) of
the Loan Agreement is hereby amended and restated in its entirety
as follows:
“(a) Subject to the terms and conditions
of this Agreement, Foothill agrees to make revolving advances
(“ Advances ”) to Borrower in an amount at any
one time outstanding not to exceed at any one time the lesser of
(i) the Maximum Revolving Credit Amount less the Letter of
Credit Usage, or (ii) the Borrowing Base less the Letter of
Credit Usage. For purposes of this Agreement, “ Borrowing
Base ,” as of any date of determination, shall mean an
amount equal to the lesser of:
(i) seventy percent (70%) of the amount of
Eligible Accounts less the amount, if any, of the Dilution
Reserve, and
(ii) an
amount equal to Borrowing Base Parties collections with respect to
Accounts for the immediately preceding forty-five (45) day
period.”
(c) Section 6.12 of the
Loan Agreement is hereby amended and restated in its entirety as
follows:
“6.12 [Intentionally Omitted.]
”
3. Acknowledgements and Agreements
. Borrower acknowledges and agrees that as of the date hereof,
Borrower was indebted to the Lender for obligations, advances,
loans, and other financial accommodations under the Loan Documents
in the amount of $0.00 plus accrued interest thereon, plus accrued
and unpaid fees, costs and expenses due and owing in connection
therewith under the Loan Documents. Lender and Borrower hereby
acknowledge that on January 5, 2006, Borrower delivered a
Notice of Termination of Amended and Restated Loan and Security
Agreement to Lender pursuant to Section 3.5 of the Loan
Agreement. As a result of such termination notice, Lender and
Borrower hereby acknowledge that the Obligations shall be paid in
full and the commitment of Lender to make any advances under the
Loan Agreement shall be irrevocably terminated on or before
May 5, 2007. Notwithstanding anything to the contrary in
Section 3.5 of the Loan Agreement, Borrower
acknowledges and agrees that Lender is entitled to an Early
Termination Premium of $250,000, which Early Termination Premium is
fully-earned as of January 5, 2006 and shall be due and
payable by Borrower in immediately available funds to Lender
concurrently with the payment in full of the Obligations;
provided , however , the foregoing notwithstanding,
the Early Termination Premium shall be (a) reduced to $125,000
if Lender receives evidence satisfactory in its sole and absolute
determination that (i) on or before February 28, 2007,
Borrower shall have received from institutional lenders, investment
funds, prospective buyers, or other sources of capital one or more
letters of intent and/or term sheets involving funding sufficient
to repay in full in cash all of the Obligations (such letters of
intent and/or term sheets, the “ Termination Proposal
Letters ”) and (ii) on or before March 31,
2007, Borrower shall have received from institutional lenders,
investment funds, prospective buyers, or other sources of capital
one or more signed commitment letters involving funding sufficient
to repay in full in cash all of the Obligations (such signed
commitment letters, the “ Termination Commitment
Letters ”) and (b) waived in its entirety if Lender
receives evidence satisfactory in its sole and absolute
determination that (i) on or before February 15, 2007,
Borrower shall have received the Termination Proposal Letters and
(ii) on or before March 15, 2007, Borrower shall have
received the Termination Commitment Letters.
4. Waiver . Lender hereby waives
(i) the Events of Default that have occurred as a result of
the failure by Borrower to comply with Section 6.12 of
the Loan Agreement with respect to the months ending
October 31, 2006, November 30, 2006, and
December 31, 2006 and (ii) the Event of Default that has
occurred as a result of failure by Borrower to comply with the
covenant contained in Section 4 of that certain Limited
Consent and Waiver, dated as of August 30, 2006, between Lender and
Borrower.
2
5. Conditions Precedent to
Amendment. The satisfaction of each of the following shall
constitute conditions precedent to the effectiveness of this
Amendment and each and every provision hereof:
(a) Lender shall have received this
Amendment, duly executed by the parties hereto, and the same shall
be in full force and effect.
(b) Lender shall have received a
reaffirmation and consent substantially in the form attached hereto
as Exhibit A , duly executed and delivered by each
Guarantor.
(c) Each condition set forth in
Section 3 to that certain Amendment Number Five to
Amended and Restated Loan Agreement between Lender and Borrower
shall have been satisfied in Lender’s sole and absolute
determination.
(d) The representations and
warranties herein and in the Loan Agreement and the other Loan
Documents shall be true and correct in all materia
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