EXHIBIT 10.1


 


AMENDMENT NUMBER TEN TO

LOAN AND SECURITY AGREEMENT


 


THIS AMENDMENT NUMBER TEN TO LOAN AND
SECURITY AGREEMENT (this “Amendment”), is effective as of
December 31, 2003, between WELLS FARGO FOOTHILL,
INC., a California corporation (“Foothill”), formerly known as
Foothill Capital Corporation, with a place of business located at 2450 Colorado
Avenue, Suite 3000 West, Santa Monica, California 90404, and IMAGE
ENTERTAINMENT, INC., a California corporation (“Borrower”), with its
chief executive office located at 9333 Oso Avenue, Chatsworth, California
91311, with reference to the following facts:


 


WHEREAS, Borrower
has requested that Foothill amend that certain Loan and Security Agreement
dated as of December 28, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”), between Foothill and
Borrower as set forth herein;


 


WHEREAS,
Borrower has informed Foothill that Borrower has failed to
comply with (a) the Tangible Net Worth financial covenant set forth in Section 6.12(a)
of the Agreement measured as of December 31, 2003 and (b) the EBITDA
financial covenant set forth in Section 6.12(b) of the Agreement
with respect to the fiscal period ending on December 31, 2003
(collectively, the “Designated Events of Default”);


 


WHEREAS,
Borrower has requested that Foothill (a) waive the Designated
Events of Default, and (b) consent to the amendment of the Agreement as set
forth herein; and


 


WHEREAS, subject to
the satisfaction of the conditions set forth herein, Foothill is willing to so
waive the Designated Events of Default and to so amend the Agreement in
accordance with the terms and conditions hereof.


 


NOW, THEREFORE, in
consideration of the above recitals and the mutual promises contained herein,
Foothill and Borrower hereby agree as follows:


 


SECTION 1.         DEFINED TERMS.


 


Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to
them in the Agreement.


 


SECTION 2.         AMENDMENTS TO
THE AGREEMENT.


 


(a)           Section 1
of the Agreement is hereby amended by adding the following definition in
alphabetical order:


 


“Tenth Amendment Fee”
has the meaning set forth in Section 2.10(i).


 


(b)           Section 2.10
of the Agreement is hereby amended by deleting the word “and” at the end of
clause (g), by deleting the period at the end of clause (h) and replacing it
with “, and”, and by adding the following new clause (i):


 

















 


“(i)          Tenth
Amendment Fee.  An amendment
fee in the amount of $17,000 (the “Tenth Amendment Fee”), which
amendment fee shall be fully earned and non-refundable as of the date hereof,
and shall be charged to Borrower’s Loan Account on such date.”


 


(c)           Section 6.12
of the Agreement is hereby amended and restated in its entirety as follows:


 


“6.12       Financial
Covenants.


 


(a)           Tangible
Net Worth.  Borrower shall maintain
Tangible Net Worth, measured on a fiscal quarter-end basis, of (i) not less
than the amount indicated below with respect to the fiscal quarter-end dates
indicated below plus (ii) seventy percent (70%), on an aggregate
cumulative basis, of the net offering proceeds received by Borrower from the
primary issuance of its equity securities or from the issuance of rights,
options, warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Borrower’s equity securities:


 


	
  03/31/04

  	
   

  	
  $

  	
  19,262,000

  	
   

  
	
  06/30/04

  	
   

  	
  $

  	
  18,668,000

  	
   

  
	
  09/30/04

  	
   

  	
  $

  	
  17,826,000

  	
   

  
	
  12/31/04

  	
   

  	
  $

  	
  18,585,000

  	
   

  
	
  03/31/05

  	
   

  	
  $

  	
  18,590,000

  	
   

  
	
  06/30/05

  	
   

  	
  $

  	
  18,243,000

  	
   

  
	
  09/30/05

  	
   

  	
  $

  	
  17,502,000

  	
   

  



 


(b)           EBITDA.  Borrower shall maintain EBITDA, for each
fiscal period set forth below, of not less than the amount indicated below
opposite such fiscal period:


 


	
  for the immediately preceding three-month period ending 03/31/04

  	
   

  	
  $

  	
  1,105,000

  	
   

  
	
  for the immediately preceding three-month period ending 06/30/04

  	
   

  	
  $

  	
  219,000

  	
   

  
	
  for the immediately
  preceding three-month period ending 09/30/04

  	
   

  	
  $

  	
  858,000

  	
   

  
	
  for the immediately
  preceding three-month period ending 12/31/04

  	
   

  	
  $

  	
  1,370,000

  	
   

  
	
  for the immediately
  preceding three-month period ending 03/31/05

  	
   

  	
  $

  	
  1,587,000

  	
   

  
	
  for the immediately
  preceding three-month period ending 06/30/05

  	
   

  	
  $

  	
  403,000

  	
   

  
	
  for the immediately
  preceding three-month period ending 09/30/05

  	
   

  	
  $

  	
  911,000

  	
   

  



 

















 


SECTION 3.         WAIVER.


 


Effective as of the date
hereof, Foothill hereby waives the Designated Events of Default.  


 


SECTION 4.         REPRESENTATIONS
AND WARRANTIES.  


 


Borrower hereby
represents and warrants to Foothill that (a) the execution, delivery, and
performance of this Amendment and of the Agreement, as amended by this
Amendment, are within its corporate powers, have been duly authorized by all
necessary corporate action, and are not in contravention of any law, rule, or
regulation, or any order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of its charter or
bylaws, or of any contract or undertaking to which it is a party or by which
any of its properties may be bound or affected, and (b) this Amendment and the
Agreement, as amended by this Amendment, constitute Borrower’s legal, valid,
and binding obligation, enforceable against Borrower in accordance with its
terms.


 


SECTION 5.         CONDITIONS
PRECEDENT TO AMENDMENT.  


 


The satisfaction of each
of the following, unless waived or deferred by Foothill in its sole discretion,
shall constitute conditions precedent to the effectiveness of this Amendment:


 


(a)           The representations and
warranties in this Amendment, the Agreement as amended by this Amendment, and
the other Loan Documents shall be true and


 

















 


correct in all respects on and as of the date hereof,
as though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date);


 


(b)           No Event of Default or
event which with the giving of notice or passage of time would constitute an
Event of Default shall have occurred and be continuing on the date hereof, nor
shall result from the consummation of the transactions contemplated herein; 


 


(c)           No injunction, writ,
restraining order, or other order of any nature prohibiting, directly or
indirectly, the consummation of the transactions contemplated herein shall have
been issued and remain in force by any governmental authority against Borrower
or Foothill; 


 


(d)           All other documents,
agreements, instruments, and legal matters in connection with the transactions
contemplated by this Amendment shall have been delivered or executed or
recorded and shall be in form and substance satisfactory to Foothill and its
counsel; and


 


(e)           Foothill shall have
received the Tenth Amendment Fee in full in immediately available funds, which
Tenth Amendment Fee shall be paid by Borrower to Foothill by being charged to
Borrower’s Loan Account as of the date hereof.


 


SECTION 6.         FURTHER
ASSURANCES.  


 


Borrower shall execute
and deliver all agreements, documents, and instruments, in form and substance
satisfactory to Foothill, and take all actions as Foothill may reasonably
request from time to time fully to consummate the transactions contemplated
under this Amendment and the Agreement, as amended by this Amendment.


 


SECTION 7.         MISCELLANEOUS.


 


(a)           Upon the effectiveness
of this Amendment, each reference in the Agreement to “this Agreement”,
“hereunder”, “herein”, “hereof” or words of like import referring to the
Agreement shall mean and refer to the Agreement as amended by this Amendment.


 


(b)           Upon the effectiveness
of this Amendment, each reference in the Loan Documents to the “Loan
Agreement”, “thereunder”, “therein”, “thereof” or words of like import
referring to the Agreement shall mean and refer to the Agreement as amended by
this Amendment.


 


(c)           This Amendment shall be
governed by and construed in accordance with the laws of the State of
California.


 


(d)           This Amendment can only
be amended by a writing signed by both Foothill and Borrower.


 

















 


(e)           This Amendment may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one
and the same Amendment.  Delivery of an
executed counterpart of this Amendment by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this
Amendment.  Any party delivering an
executed counterpart of this Amendment by telefacsimile also shall deliver an
original executed counterpart of this Amendment but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Amendment.


 


(f)            This Amendment
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.


 

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed as of the date
first written above.


 


 


	
   

  	
  IMAGE ENTERTAINMENT, INC.,

  a California corporation  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Jeff M. Framer 

  	
   

  
	
   

  	
  Title:

  	
   Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  a California corporation, formerly known as Foothill

  Capital Corporation  

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Trent Smart 

  	
   

  
	
   

  	
  Title:

  	
   Vice President