Document:

ex10_1.htm

EXHIBIT 10.1

 

FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (this “Amendment”), dated as of July 13, 2011, is entered into by and among, IMAGE ENTERTAINMENT, INC., a Delaware corporation (“Image”), IMAGE/MADACY HOME ENTERTAINMENT, LLC, a California limited liability company (“IMHE”) (Image and IMHE, each a “Borrower”, and collectively
“Borrowers”), the Lenders signatory hereto and PNC BANK, NATIONAL ASSOCIATION (“PNC”), in its capacity as administrative and collateral agent on behalf and for the benefit of itself and the Lenders (PNC, in such capacity, the “Agent”).  Terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement defined below.

 

RECITALS

 

A.           The Lenders, Agent and Borrowers have previously entered into that Revolving Credit and Security Agreement dated as of June 23, 2011 (as amended, modified and supplemented from time to time, the “Credit Agreement”), pursuant to which the Lenders have made certain loans and financial accommodations available to Borrowers.

 

B.            The Lenders, Agent and Borrowers now wish to amend the Credit Agreement on the terms and conditions set forth herein.

 

C.            Borrowers are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Credit Agreement or any Other Document is being waived or modified by the terms of this Amendment.

 

AGREEMENT

 

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.           Amendments to Credit Agreement.

 

(a)           Section 1.2 of the Credit Agreement is hereby amended as follows:

 

(i)             The definition of the term “Maximum Sponsor SBLC Amount” is hereby amended and restated to read in its entirety as follows:

 

“Maximum Sponsor SBLC Amount” means, with respect to any and all outstanding Sponsor Standby Letters of Credit, the aggregate amount of such standby letters of credit that is then available to be drawn; provided that as to any outstanding Sponsor Standby Letter of Credit, from and after the 45th day prior to the expiration date of such Sponsor Standby Letter of Credit (as any such expiration date may be extended subject to the prior written consent of Agent), the amount of such Sponsor Standby Letter of Credit for purposes of this definition shall be $-0-.

 

  

  

  

 

(ii)            The following new definition of “First Amendment” is inserted in proper alphabetical order into Section 1.2 of the Credit Agreement:

 

“First Amendment” means that First Amendment to Revolving Credit and Security Agreement dated as of July 13, 2011, amending this Agreement, among Borrowers, the Lenders and Agent.

 

(iii)           The following new definition of “Sponsor Transaction Costs” is inserted in proper alphabetical order into Section 1.2 of the Credit Agreement:

 

“Sponsor Transaction Costs” means the out-of-pocket costs and expenses (including attorneys’ fees and other costs and expenses payable to Latham & Watkins LLP, as special counsel to Sponsor and its Affiliates, and letter of credit issuance fees payable to the issuing bank), in each case to the extent incurred by Sponsor and its Affiliates, including the Sponsor Guarantors and Sponsor GP, in connection with (a) the negotiation and execution of the Sponsor Guaranty and any related supporting documentation delivered on or concurrent with the Closing Date and (b) the negotiation and issuance of the Sponsor Standby Letter of Credit
pursuant to the condition subsequent of Section 8.3(b) of the Credit Agreement.

 

(iv)           The following new definition of “Sponsor Transaction Fees” is inserted in proper alphabetical order into Section 1.2 of the Credit Agreement:

 

“Sponsor Transaction Fees” means any fees (other than Sponsor Transaction Costs) payable by Borrower to Sponsor or any of its Affiliates, including the Sponsor Guarantors and Sponsor GP, in connection with (a) the negotiation and execution of the Sponsor Guaranty and any related supporting documentation delivered on or concurrent with the Closing Date and/or (b) the negotiation and issuance of the Sponsor Standby Letter of Credit pursuant to the condition subsequent of Section 8.3(b) of the Credit Agreement.

 

(b)           Section 7.7 of the Credit Agreement is hereby amended by deleting the parenthetical in the second and third lines thereof and replacing it with the following:

 

(other than dividends or distributions payable in its stock or split-ups or reclassifications of its stock, but otherwise including any Sponsor Transfer Fees paid in the form of the issuance of shares of Equity Interest in Image to the extent approved by Agent in its sole discretion prior to  issuance pursuant to clause (c) of Section 7.10 hereof)

 

(c)           Section 7.10 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

7.10          Transactions with Affiliates.  Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except transactions disclosed to the Agent, which are in the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate; except, so long as after giving effect to any such payments there shall not exist any Event of Default or
Default, (a) Borrowers may pay to  Sponsor a management fee of $300,000, payable in a single installment due on December 31, 2011, (b) Borrowers may reimburse Sponsor and its Affiliates, including the Sponsor Guarantors and Sponsor GP, in cash for all reasonable Sponsor Transaction Costs, to the extent approved by Agent in its reasonable discretion prior to being charged to Borrowers, and (c) Borrowers may pay Sponsor Transaction Fees to the extent, in the form and manner and at the times approved by Agent in its sole discretion prior to being charged to Borrowers.

 

  

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(d)           Section 8.3(b) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

 

(b)           on or prior to July 15, 2011, Borrowers shall have delivered to Agent the Sponsor Standby Letter of Credit with a face amount equal to at least $3,000,000.

 

2.           Effectiveness of this Amendment.  This Amendment shall become effective upon the satisfaction of each of the following conditions:

 

(a)           Amendment.  Receipt by Agent of this Amendment, fully executed in a sufficient number of counterparts for distribution to all parties.

 

(b)           Accommodation Fee.  Receipt by Agent, for the account of PNC as the sole Lender, of an accommodation Fee equal to $10,000.

 

(c)           Representations and Warranties.  The representations and warranties set forth in Section 3 hereof shall be true and correct.

 

(d)           Other Required Documentation.  All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded, as required by Agent.

 

3.           Representations and Warranties.  Borrower represents and warrants as follows:

 

(a)           Authority.  Each Borrower has the full power, authority and legal right to enter into this Amendment and the Other Documents (as amended or modified hereby) and to perform all of its respective obligations hereunder and thereunder.  The execution, delivery and performance of this Amendment by each Borrower:  (i) have been duly authorized by all necessary corporate or limited liability company action, as applicable; (ii) are not in contravention of law or the terms of such Borrower’s by-laws, certificate of incorporation, operating agreement,
articles of organization or other applicable documents relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound; (iii) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body; and (iv) will not require the Consent of any Governmental Body or any other Person.

 

(b)           Enforceability.  This Amendment has been duly executed and delivered by each Borrower and no other corporate or limited liability company proceedings are necessary to consummate such transactions.  This Amendment (as amended or modified hereby) and each Other Document is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms, and is in full force and effect, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’
rights generally.

 

  

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(c)           Representations and Warranties.  The representations and warranties made by any Borrower in or pursuant to this Amendment, each Other Document and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Amendment, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date, unless made specifically as of an earlier
date, in which case they shall be true and correct in all material respects as of such earlier date.

 

(d)           No Default.  No event has occurred and is continuing that constitutes a Default or an Event of Default.

 

4.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York, without regard to principals of conflicts of law other than New York General Obligations Law 5-1401 and 5-1402.

 

5.           Counterparts; Facsimile Signatures.  This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by facsimile or other similar form of electronic transmission shall be deemed to be an original signature hereto.

 

6.           Reference to and Effect on the Other Documents.

 

(a)           Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Other Documents to “the Credit Agreement”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.

 

(b)           Except as specifically amended above, the Credit Agreement and all Other Documents, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Borrower to Agent and the Lenders.

 

(c)           The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Agent and/or the Lenders under any of the Other Documents, nor constitute a waiver of any provision of any of the Other Documents.

 

(d)           To the extent that any terms and conditions in any of the Other Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.

 

  

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7.           Integration.  This Amendment, together with the Other Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

8.           Severability.  If any part of this Amendment is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

 

[signature pages follow]

 

  

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

 

	 	IMAGE ENTERTAINMENT, INC.,	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ John Avagliano	 

	 	Name:	John Avagliano	 
	 	Title:	COO/CFO	 

 

	 	
IMAGE/MADACY HOME ENTERTAINMENT, LLC,

	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ John Avagliano	 

	 	Name:	John Avagliano	 
	 	Title:	COO/CFO	 

 

 

(First Amendment)

 

  

  

  

 

	 	
PNC BANK, NATIONAL ASSOCIATION,

	 
	 	as Agent and as a Lender	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Steve C. Roberts	 

	 	Name:	Steve C. Roberts	 
	 	Title:	Vice President

 

(First Amendment)ex10_1.htm

Exhibit 10.1

 

FORM OF PERFORMANCE

AWARD AGREEMENT

THIS PERFORMANCE AWARD AGREEMENT (this "Agreement") is entered into effective as of ________, 2011 (the "Grant Date"), by CRAFT BREWERS ALLIANCE, INC., a Washington corporation (the "Company"), and _____________________________ (the "Participant").

 

RECITALS

 

A.           The Company has adopted the 2010 Stock Incentive Plan (the "Plan").  Capitalized terms that are used but not defined in this Agreement will have the meanings given those terms in the Plan.

 

B.           The Administrator has designated the Participant to receive a Performance Award under the Plan.

 

NOW THEREFORE, the Company and the Participant agree as follows:

 

1.           Performance Award.  The Company grants to the Participant a Performance Award (the "Award") of up to ______ shares of Common Stock (the "Performance Shares") for the period beginning on the Grant Date and ending on March 31, 2014 (the "Performance Period").  The actual number of Performance Shares that will be issued to the Participant pursuant to the Award will be determined as described below, based on the actual results of the Company for the three fiscal years ending December 31, 2013 (the "Measurement
Period").  The Award is subject to all of the provisions of the Plan and the terms and conditions specified in this Agreement.

 

2.           Performance Goals. As long as the Participant remains employed by the Company, the Performance Shares earned under this section will vest on the last day of the Performance Period specified above (the "Vesting Date"), subject to the written certification by the Administrator of the achievement of the performance goals set forth on Exhibit A (the "Performance Goals").  The number of Performance Shares, if any, that may be earned based on the Performance Goals will be as set forth in Schedule 1, subject to the Cutback set forth in
Schedule 2.

 

Schedule 1.            Award Earned Relative to Performance Goals.

 

	
Performance Goal

	
% of Award Earned

	
3-Year Adjusted EBITDA

	
50%

	
3-Year Net Sales

	
50%

  

  

  

 

Schedule 2.            Cutback.  For each 1% shortfall as to achievement of a given Performance Goal up to 20%, the number of Performance Shares earned is reduced by 3.5% (the "Cutback").  No Performance Shares will be earned with respect to a given Performance Goal as to which achievement is below 80 percent.

 

	
Minimum Achievement 

Threshold

	
Performance Shares Earned

	
100%

	
100%

	
99%

	
96.5%

	
98%

	
93%

	
97%

	
89.5%

	
96%

	
86%

	
95%

	
82.5%

	
94%

	
79%

	
93%

	
75.5%

	
92%

	
72%

	
91%

	
68.5%

	
90%

	
65%

	
89%

	
61.5%

	
88%

	
58%

	
87%

	
54.5%

	
86%

	
51%

	
85%

	
47.5%

	
84%

	
44%

	
83%

	
40.5%

	
82%

	
37%

	
81%

	
33.5%

	
80%

	
30%

	
Below 80%

	
0

3.           Settlement of Award.  The Award will be settled on a settlement date selected by the Administrator as soon as practicable after the end of the Performance Period, and in no case later than 30 days following the Vesting Date, by the delivery to the Participant of an unrestricted certificate for all the Performance Shares vested under this Agreement.

 

4.           Other Documents.  The Participant will be required to furnish to the Company such other documents or representations as the Company may require to assure compliance with applicable laws and regulations as a condition of the Company's obligation to issue any Performance Shares.

 

5.           Forfeiture.  Except to the extent otherwise determined by the Administrator in its sole discretion pursuant to the provisions of Section 10 of the Plan, the Participant's rights in all Performance Shares subject to this Agreement that have not vested will be forfeited, and the Award will be canceled and the Participant will not receive any Performance Shares or other payment with respect to the Award, upon termination of the Participant's employment (or business relationship) with the Company and its Affiliates for any reason
prior to the Vesting Date.

 

  

  

  

 

6.           Capitalization Adjustments.  Capitalization adjustments to the Performance Shares, if any, will be made as required by Section 10.1 of the Plan.

 

7.           Rights as Shareholder. Prior to the issuance of Performance Shares in settlement of the Award, the Participant will have no rights as a shareholder of the Company with respect to the Award or the Performance Shares.

 

8.           Tax Withholding and Reimbursement.  Participant must satisfy all federal, state and local tax withholding obligations relating to the settlement of the Award.  The Company is authorized to require the Participant to remit to the Company, or to withhold from the Participant's other compensation, any withholding and payroll taxes imposed on the Company in connection with or with respect to the settlement of the Award.  Subject to the prior written approval of the Administrator in its sole discretion, the
Participant, by written notice to the Administrator which complies with any applicable timing restrictions imposed pursuant to Rule 16b-3 under the Exchange Act, may elect to have withholding taxes satisfied by withholding Common Stock from the shares of Common Stock otherwise issuable to the Participant in settlement of the Award.

 

9.           Entire Agreement; Amendments; Binding Effect.  This Agreement, together with the Plan, constitutes the entire agreement and understanding between the Company and the Participant regarding the subject matter hereof.  Except as permitted by the Plan, no amendment of the Award or this Agreement, or waiver of any provision of this Agreement or the Plan, shall be valid unless in writing and duly executed by the Company and the Participant.  The failure of any party to enforce any of that party's rights against
the other party for breach of any of the terms of this Agreement or the Plan shall not be construed as a waiver of such rights as to any continued or subsequent breach.  This Agreement shall be binding upon the Participant and his or her heirs, successors and assigns.

 

10.           Code Section 409A. This Agreement is intended to be exempt from the requirements of Code Section 409A by reason of all payments under this Agreement being "short-term deferrals" within the meaning of Treas. Reg. § 1.409A-1(b)(4).  All provisions of this Agreement shall be interpreted in a manner consistent with preserving this exemption.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

	"Company"  	CRAFT BREWERS ALLIANCE, INC.
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	[Name]	 
	 	 	[Title]	 
	 	 	 	 
	 	 	 	 
	"Participant"  	 	 	 
	 	 	 	 

 

  

  

  

 

EXHIBIT A

 

PERFORMANCE GOALS

 

A.  3-Year Adjusted EBITDA in the cumulative amount of $*** or more during the Measurement Period.  The term Adjusted EBITDA is defined as earnings before net interest expense, taxes, depreciation and amortization and share-based compensation expense.

 

B.  3-Year Net Sales in the cumulative amount of $*** or more during the Measurement Period.  Net Sales are sales, net of excise taxes, as reported in the Company's Form 10-K as filed with the Securities and Exchange Commission.

 

The determination of the level of attainment of the above performance goals is subject to adjustment (up or down) for the effect of unanticipated or non-recurring items having a material effect on the Company's financial results, in each case to the extent the Committee approves such adjustment in its sole discretion.  The Committee will make this determination prior to the March 31 following the end of the fiscal year in which the event giving rise to the proposed adjustment occurred.

 

________________________________________

***  Confidential information has been omitted and filed with the Securities and Exchange Commission pursuant to a confidential treatment request.

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