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Exhibit 10.2
 
Execution Copy

FIRST AMENDMENT TO
CREDIT AND GUARANTY AGREEMENT

THIS FIRST AMENDMENT TO THE CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is
entered into as of April 15, 2015, by and among RLJ Entertainment, Inc., a
Nevada corporation (“Parent Borrower”), certain subsidiaries of RLJ
Entertainment, Inc. as Guarantors (“Guarantors”), Various Lenders (“Lenders”),
MCP Opportunities LLC (as successor to McLarty Capital Partners SBIC, L.P.) as
Administrative Agent and Collateral Agent (“MCP” or the “Administrative Agent”
and/or “Collateral Agent”)), McLarty Capital Partners SBIC, L.P., as Arranger,
Bookmanager and Syndication Agent (“McLarty SBIC” and, together with MCP,
“McLarty”) and Crystal Financial LLC, as Documentation Agent (“Crystal”).

RECITALS

A.          Parent Borrower, Guarantors, Lenders, McLarty and Crystal are
parties to that certain Credit and Guaranty Agreement dated as of September 11,
2014 (the “Credit and Guaranty Agreement”); capitalized terms used herein and
not otherwise defined herein shall have the respective meanings given to them in
the Credit and Guaranty Agreement.

B.          Parent Borrower intends to offer for sale at least $15,000,000 of
convertible preferred stock in Parent Borrower (which shall not constitute
Disqualified Equity) (the “Equity Transaction”), and to use the proceeds from
the Equity Transaction (i) to pay down certain amounts outstanding under Credit
and Guaranty Agreement (including any prepayment penalty fee), (ii) to acquire
additional content and for general working capital, and (iii) to pay transaction
expenses incurred in connection with the Equity Transaction.

C.          Parent Borrower and Guarantors have requested that certain
provisions of the Credit and Guaranty Agreement be amended as provided herein.

AGREEMENT

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

1.           Waivers. The Requisite Lenders, McLarty and Crystal, acknowledge
that (i) Parent Borrower has not complied with Section 6.7(d) for the period
between March 31, 2015 and April 15, 2015 (“Section 6.7(d) Noncompliance”) and
(ii) the 2014 Annual Financial Statements of Parent Borrower and its
Subsidiaries may include a going concern qualification principally relating to
Parent Borrower's ability to meet its financial covenants in Section 6.7 of the
Credit and Guaranty Agreement (“Section 5.1 Noncompliance,” and together with
the Section 6.7(d) Noncompliance, the “Existing Defaults”). The Requisite
Lenders, McLarty and Crystal hereby waive any Defaults and Events of Default
solely to the extent arising as a result of the Existing Defaults; provided,
however, that such waiver shall in no way constitute a waiver of any other
Defaults or Events of Default which may have occurred but which are not
specifically referenced as the “Existing Defaults” nor shall this waiver
obligate the Requisite Lenders, Crystal or McLarty to provide any further waiver
of any other Default or Event of Default (whether similar or dissimilar,
including any further Default or Event of Default) resulting from a failure to
comply with the terms of the Credit and Guaranty Agreement. Other than in
respect of the Existing Defaults, this waiver shall not preclude the future
exercise of any right, power, or privilege available to the Requisite Lenders,
McLarty or Crystal whether under the Credit and Guaranty Agreement, the other
Credit Documents, or otherwise.

2.           Amendment to Credit and Guaranty Agreement. Subject to the
conditions to effectiveness set forth in Section 6 below, the Credit and
Guaranty Agreement is hereby amended as follows:
 

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(a)         Interest Rate. Section 2.5(a) of the Credit and Guaranty Agreement
is hereby deleted in its entirety and replaced with the following:

“(a)           Except as otherwise set forth herein, Term Loans shall bear
interest on the unpaid outstanding principal amount thereof from the Closing
Date through repayment (whether by acceleration or otherwise) thereof as at the
Adjusted LIBOR Rate plus 10.64% per annum.”

(b)         Compliance Certificates.

(i)          Section 5.1(a) of the Credit and Guaranty Agreement is hereby
amended by deleting the language “(but excluding the fourth Fiscal Quarter)” in
the second line thereof; and

(ii)         Section 5.1(d)(i) of the Credit and Guaranty Agreement is hereby
amended by deleting the language “(and 5.1(b))” in the third line thereof.

(c)         Monthly Reports. Section 5.1(c) of the Credit and Guaranty Agreement
is hereby deleted in its entirety and replaced with the following:

“(c) Monthly Reports. As soon as available, and in any event within 30 days
after the end of each month ending after the Closing Date, commencing with the
month in which the Closing Date occurs (i) the consolidated balance sheet of
Parent Borrower and its Subsidiaries as at the end of such month and the related
consolidated (and with respect to statements of income, consolidating)
statements of income and cash flows of Parent Borrower and its Subsidiaries for
such month and for the period from the beginning of the then current Fiscal Year
to the end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year,
commencing with the first month for which such corresponding figures are
available, and the corresponding figures from the Financial Plan for the current
Fiscal Year, to the extent prepared on a monthly basis, all in reasonable
detail, together with a Financial Officer Certification with respect thereto,
(ii) a schedule (and, if requested by the Administrative Agent, other supporting
documentation) demonstrating compliance with the requirements of Section 6.7(d);
and (iii) commencing on the month ended April 30, 2015, Parent Borrower will
additionally provide within 30 days after the end of such month and each month
ending thereafter: (A) a schedule setting forth the aging of accounts payable of
the Parent Borrower’s US operations, and (B) a pro forma statement setting forth
the projected cash flows for the Parent Borrower and its Subsidiaries for at
least 13 weeks following the date of such statement.”

(d)         Lender Meetings. Section 5.7 of the Credit and Guaranty Agreement is
hereby amended and restated in its entirety as follows:

“5.7 Lenders Meetings.

(i)          Parent Borrower will, upon the reasonable request of Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Parent Borrower’s corporate
offices or at such other location as may be agreed to by Parent Borrower and
Administrative Agent at such time as may be agreed to by Parent Borrower and
Administrative Agent (each such meeting to be at Parent Borrower’s sole cost and
expense).
 
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(ii)         Parent Borrower will hold a meeting among Administrative Agent and
Lenders at least once each Fiscal Quarter by telephone on the first Business Day
of each Fiscal Quarter at 10:00 AM (New York time) or such other time and date
otherwise agreed to by Parent Borrower, Administrative Agent, and Lenders, and
the Parent Borrower shall make its chief executive officer and chief financial
officer available to participate in such telephone conference calls with the
Lenders.

(iii)        If so requested by the Requisite Lenders or by the Administrative
Agent, upon reasonable notice and at a time selected by the Requisite Lenders or
Administrative Agent (as the case may be) and reasonably acceptable to the
Parent Borrower but, so long as no Event of Default or Default shall have
occurred and be continuing, no more than once each month, and otherwise as
frequently as required by the Requisite Lenders or the Administrative Agent, the
Parent Borrower shall make its chief financial officer available to participate
in a telephone conference call with the Lenders.”

(e)         Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio
thresholds for the Fiscal Quarters ending on March 31, 2015 and June 30, 2015
set forth in Section 6.7(a) of the Credit and Guaranty Agreement are hereby
amended and replaced with the following:

Fiscal Quarter Ending
Fixed Charge Coverage Ratio
March 31, 2015
0.73:1.00
June 30, 2015
0.63:1.00

(f)          Senior Leverage Ratio. The Senior Leverage Ratio limits for the
Fiscal Quarters ending on March 31, 2015 and June 30, 2015 set forth in Section
6.7(b) of the Credit and Guaranty Agreement are hereby amended and replaced with
the following:

Fiscal Quarter Ending
Senior Leverage Ratio
March 31, 2015
7.50:1.00
June 30, 2015
6.92:1.00

(g)         Total Leverage Ratio. The Total Leverage Ratio limits for the Fiscal
Quarters ending on March 31, 2015 and June 30, 2015 set forth in Section 6.7(c)
of the Credit and Guaranty Agreement are hereby amended and replaced with the
following:

Fiscal Quarter Ending
Total Leverage Ratio
March 31, 2015
9.00:1.00
June 30, 2015
8.95:1.00

(h)         Minimum Cash Balance. Section 6.7(d) of the Credit and Guaranty
Agreement is hereby deleted in its entirety and replaced with the following:

“(d) Minimum Cash Balance. The Parent Borrower shall not permit the Minimum Cash
Balance to be less than $1,000,000 at any time.”
 
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(i)          Disqualified Stock. Subclause (a) and Subclause (c) of the
definition of “Disqualified Stock are hereby deleted in their entirety and
replaced with the following:

“(a) matures or is mandatorily redeemable on or prior to the date that is 180
days after the Term Loan Maturity Date (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 the subject to prior repayment in full of the Obligations)”

“(c) provides for the scheduled payment of dividends in cash, provided, however,
that Capital Stock that provides for optional payment of scheduled dividends in
cash will not be deemed Disqualified Stock so long as the Parent Borrower does
not actually make, and the Parent Borrower is not required to make under the
terms of such Capital Stock, any cash payments of dividends without the prior
written consent of the Required Lenders”

3.           Use of Proceeds. Notwithstanding anything in the Credit Documents
to the contrary (including, without limitation, Section 2.11 thereof), the
parties hereby agree that (a) $10,000,000 of the proceeds of the Equity
Transaction will be used to repay the principal amount of Term Loans outstanding
under the Credit and Guaranty Agreement as a mandatory prepayment of the Term
Loans pursuant to Section 2.11 thereof, (b) an Applicable Prepayment Premium of
5% payable on $5,000,000 of the Term Loans being repaid (totaling $250,000) will
be paid out of the proceeds of the Equity Transaction, and (c) the remainder of
the proceeds from the Equity Transaction may be used by the Parent Borrower for
working capital purposes (including reinvesting in content related assets) and
to pay expenses associated with the Equity Transaction; provided however, that
at least $3,000,000 of such proceeds from the Equity Transaction must be placed
on the balance sheet of the Parent Borrower for working capital purposes.

4.           [Reserved]

5.           Representations and Warranties. Parent Borrower and each Guarantor
hereby represents and warrants to McLarty, Crystal and the Requisite Lenders
that as of the date hereof, both before and after giving effect to this
Amendment and the transactions contemplated thereby (it being understood, for
the sake of clarity, any breach of these representations and warranties shall be
an Event of Default under the Credit and Guaranty Agreement):

(a)         The execution, delivery and performance of this Amendment has been
duly authorized by all requisite action on the part of each of Parent Borrower
and each Guarantor and constitutes the legal, valid and binding obligations of
Parent Borrower and each Guarantor, enforceable in accordance with its terms;

(b)         No approval or consent of, or filing with, any governmental agency
or authority is required to make valid and legally binding the execution,
delivery or performance by the Credit Parties of this Amendment, the Credit and
Guaranty Agreement or any other Credit Documents, as amended hereby, or the
consummation by the Credit Parties of the transactions among the parties
contemplated hereby and thereby or referred to herein;

(c)         No Default or Event of Default has occurred and is continuing or
would arise as a result of the transactions contemplated by this Amendment; and

(d)         The representations and warranties set forth in the Credit and
Guaranty Agreement, as amended hereby, and in the other Credit Documents, as
amended to date, are true and correct in all material respects as of the date
hereof, with the same effect as though made on the date hereof (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they were true and correct in all material respects as of such
earlier date).
 
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6.           Condition Precedent to Effectiveness. The effectiveness of Sections
1, 2, and 3 of this Amendment are subject to the prior or concurrent
consummation of each of the following conditions:

(a)         McLarty shall have received a copy of this Amendment executed by
Parent Borrower, each Guarantor, Crystal, McLarty and each Requisite Lender;

(b)         McLarty, on behalf of the Lenders, shall have received (i) a
non-refundable fee in an aggregate amount equal to $450,000, which Parent
Borrower and Guarantors acknowledge Lenders shall have earned in full as of the
date hereof and which shall not be subject to proration and (ii) the payments
required to be made pursuant Sections 3(a) and 3(b) hereof;

(c)         McLarty, on behalf of the Lenders, shall have received evidence in
the form of a wire confirmation or bank account statements from Parent Borrower
that the Equity Transaction has been consummated, and gross proceeds of at least
$15,000,000 in connection therewith have been received by Parent Borrower on or
prior to April 15, 2015;

(d)         McLarty shall have received a copy of the amendment to the Agreement
Among Lenders executed by the parties thereto; and

(e)         No Default or Event of Default shall have occurred and be
continuing.

7.           Acknowledgement. Each of Parent Borrower and each Guarantor
acknowledges that notwithstanding the terms this Amendment or otherwise, the
terms of this Amendment shall not constitute a course of dealing among the
parties hereto. Except as expressly set forth in Section 1, 2 or 3 of this
Amendment, nothing in this Amendment shall constitute a modification or
alteration of the terms, conditions or covenants of the Credit and Guaranty
Agreement or any other Credit Document, or a waiver of any terms or provisions
thereof, and the Credit and Guaranty Agreement and the other Credit Documents
shall remain unchanged and shall continue in full force and effect, in each case
as amended hereby. Except as specifically provided herein, McLarty, Crystal and
each Lender hereby reserves and preserves all of its rights and remedies against
any Credit Party under the Credit and Guaranty Agreement and the Credit
Documents.

8.           Miscellaneous.

(a)         Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment. Receipt by telecopy, facsimile or email transmission of any
executed signature page to this Amendment shall constitute effective delivery of
such signature page.

(b)         Reference to Credit and Guaranty Agreement. Each reference in the
Credit and Guaranty Agreement to “this Agreement,” “hereunder,” “hereof,”
“herein” or words of like import, and each reference to the Credit and Guaranty
Agreement in the Credit and Guaranty Agreement or in any other Credit Documents,
or other agreements, documents or other instruments executed and delivered
pursuant to the Credit and Guaranty Agreement, shall mean and be a reference to
the Credit and Guaranty Agreement as amended by this Amendment.

(c)         Costs and Expenses. Each of Parent Borrower and each Guarantor (i)
acknowledges that Section 10.2 of the Credit and Guaranty Agreement applies to
this Amendment and the transactions, agreements and documents contemplated
hereunder, and (ii) agrees to pay promptly the actual and reasonable
out-of-pocket costs and expenses incurred by the Requisite Lenders in connection
with the preparation of this Amendment and the Agreement Among Lenders being
executed in connection with this Amendment.
 
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(d)         Reviewed by Attorneys. Each of Parent Borrower and each Guarantor
represents and warrants to McLarty, Crystal and each Requisite Lender that it
(i) understands fully the terms of this Amendment and the consequences of the
execution and delivery of this Amendment, (ii) has been afforded an opportunity
to discuss this Amendment with, and have this Amendment reviewed by, such
attorneys and other Persons as each of Parent Borrower and each Guarantor may
wish, and (iii) has entered into this Amendment and executed and delivered all
documents in connection herewith of its own free will and accord and without
threat, duress or other coercion of any kind by any Person. The parties hereto
acknowledge and agree that neither this Amendment nor the other documents
executed pursuant hereto shall be construed more favorably in favor of one than
the other based upon which party drafted the same, it being acknowledged that
all parties hereto contributed substantially to the negotiation and preparation
of this Amendment and the other documents executed pursuant hereto or in
connection herewith.

(e)         Severability. The illegality or unenforceability of any provision of
this Amendment or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Amendment or any instrument or agreement required hereunder.

(f)          Governing Law. The validity of this Amendment, the construction,
interpretation, and enforcement hereof, the rights of the parties hereto with
respect to all matters arising hereunder or related hereto, and any claims,
controversies or disputes arising hereunder or related hereto shall be
determined under, governed by, construed and enforced in accordance with the
laws of the State of New York.

(g)         Reaffirmation. Each of the Credit Parties hereby ratifies and
confirms all of its Obligations to McLarty, Crystal and the Lenders under the
Credit and Guaranty Agreement, as amended hereby, and the other Credit
Documents, including, without limitation, the Loans, and each of the Credit
Parties hereby affirms its absolute and unconditional promise to pay to the
Lenders and McLarty and Crystal, as applicable, the Term Loans, reimbursement
obligations and all other amounts due or to become due and payable to the
Lenders and McLarty and Crystal, as applicable, under the Credit and Guaranty
Agreement and the other Credit Documents, as amended hereby and it is the intent
of the parties hereto that nothing contained herein shall constitute a novation
or accord and satisfaction. Each of the Credit Parties hereby acknowledges and
confirms that the liens, hypothecs, pledges and security interests granted
pursuant to the Credit Documents are and continue to be valid, perfected and
enforceable first priority liens, hypothecs, pledges and security interests
(subject only to Permitted Liens) that secure all of the Obligations on and
after the date hereof. Except as expressly amended hereby, each of the Credit
and Guaranty Agreement and the other Credit Documents shall continue in full
force and effect. This Amendment shall constitute a Credit Document.
 
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(h)         Release. In order to induce McLarty, Crystal and the Requisite
Lenders to enter into this Amendment, each Credit Party acknowledges and agrees
that: (a) no Credit Party has any claim or cause of action against McLarty,
Crystal or any Lender (or, with respect to the Credit and Guaranty Agreement and
the other Credit Documents and the administration of the credit facilities
thereunder, any of their respective directors, officers, employees, agents or
representatives); (b) no Credit Party has any offset or compensation right,
counterclaim, right of recoupment or any defense of any kind against any Credit
Party’s obligations, indebtedness or liabilities to McLarty, Crystal or any
Lender; and (c) each of the McLarty, Crystal and the Lenders has heretofore
properly performed and satisfied in a timely manner all of its obligations to
the Borrower and, as applicable, the Guarantors. Each Credit Party wishes to
eliminate any possibility that any past conditions, acts, omissions, events,
circumstances or matters would impair or otherwise adversely affect any of
McLarty’s, Crystal’s and the Lenders’ rights, interests, contracts, collateral
security or remedies. Therefore, each Credit Party unconditionally releases,
waives and forever discharges (i) any and all liabilities, obligations, duties,
promises or indebtedness of any kind of McLarty, Crystal or any Lender to any
Credit Party, except the obligations to be performed by McLarty, Crystal or any
Lender on or after the date hereof as expressly stated in this Amendment, the
Credit and Guaranty Agreement and the other Credit Documents and (ii) all
claims, counterclaims, offsets, compensation rights, causes of action, right of
recoupment, suits or defenses of any kind whatsoever (if any), whether arising
at law or in equity, whether known or unknown, which any Credit Party might
otherwise have against McLarty, Crystal or any Lender (or, with respect to the
Credit and Guaranty Agreement and the other Credit Documents and the
administration of the credit facilities thereunder, any of their respective
directors, officers, employees or agents), in either case of clause (i) or (ii),
on account of any past or presently existing (as of the date hereof) condition,
act, omission, event, contract, liability, obligation, indebtedness, claim,
cause of action, defense, counterclaims, compensation rights, circumstance or
matter of any kind.

*Signatures on Next Page*
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.

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

 

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GUARANTORS:

 
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
 

 

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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
 

 

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MCLARTY CAPITAL PARTNERS SBIC, L.P., as a Requisite Lender
         
By:
McLarty Capital Partners SBIC, LLC,
     
its general partner
           
By:
/s/ Christopher D. Smith
   
Name: Christopher D. Smith
   
Title: Manager
           
MCP OPPORTUNITIES LLC, as Administrative Agent, Collateral Agent and a Requisite
Lender
         
By:
/s/Christopher D. Smith
   
Name: Christopher D. Smith
   
Title: Manager
 

 

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CRYSTAL FINANCIAL LLC, as Documentation Agent
         
By:
/s/ Matthew J. Governali
   
Name: Matthew J. Governali
   
Title: Managing Director
 

 

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CRYSTAL FINANCIAL SBIC LP, as a Requisite 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 Requisite Lender
         
By:
/s/ Matthew J. Governali
   
Name: Matthew J. Governali
   
Title: Managing Director
 

 

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TEVEURA LIMITED, as a Requisite Lender
         
By:
/s/ Anton Lotzer
   
Name: Anton Lotzer
   
Title: Director
 

 

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MAIN STREET CAPITAL CORPORATION,
 
as a Requisite Lender
           
By:
/s/ Nick Meserve
   
Name: Nick Meserve
   
Title: Managing Director
 

 

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