Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of April 15, 2015, between RLJ Entertainment, Inc., a Nevada corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1           Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.4.

“Action” shall have the meaning ascribed to such term in Section 3.1(f).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Board of Directors” means the board of directors of the Company.

“Bridge Preferred Stock” means up to 15,500 shares of the Company’s Bridge Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Certificate of Designation” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of Nevada, in the form of Exhibit A attached hereto.

“Closing” means a closing on the purchase and sale of the Securities pursuant to Section 2.1.

“Closing Date” means any Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Delivery Date” shall have the meaning set forth in Section 5.3.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exchange Date” shall have the meaning set forth in Section 5.3.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“Initial Closing” shall have the meaning set forth in Section 2.1(b)

“Issue Date” means the date that shares of Bridge Preferred Stock are first issued by the Company.

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Maximum Rate” shall have the meaning ascribed to such term in Section 6.16.

 

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“Permanent Preferred Stock” means preferred stock, $0.001 par value per share, of the Company convertible into the Company’s common stock.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Securities” means the Bridge Preferred Stock.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Shareholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“Stated Value” means $1,000 per share of Bridge Preferred Stock.

“Subscription Amount” shall mean, as to each Purchaser, the aggregate amount to be paid for the Bridge Preferred Stock purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

“Subsequent Closing” shall have the meaning set forth in Section 2.1(b)

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

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“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

“Transaction Documents” means this Agreement, and the Certificate of Designation, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

ARTICLE II.

PURCHASE AND SALE

2.1           Closing.

(a)           The issuance of the Bridge Preferred Stock shall take place at one or more closings (each of which is referred to in this Agreement as a “Closing”). The Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, an aggregate of up to 15,500 shares of Bridge Preferred Stock with an aggregate Stated Value for each Purchaser equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser. Each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to its Subscription Amount and the Company shall deliver to each Purchaser its respective shares of Bridge Preferred Stock, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of the Company or such other location as the parties shall mutually agree.

(b)           The initial Closing (the “Initial Closing”) shall take place on April 15, 2015, and upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, an aggregate of at least 15,000 shares of Bridge Preferred Stock pursuant to the terms set forth in Section 2.1(a) of this Agreement. If less than all of the shares of Bridge Preferred Stock are sold and issued at the Initial Closing, then, subject to the terms and conditions of this Agreement, the Company may sell and issue at one or more subsequent closings (each, a “Subsequent Closing”), within five (5) Business Days after the Initial Closing, up to the balance of the unissued Bridge Preferred Stock to such persons or entities as may be approved by the Company. Any such sale and issuance in a Subsequent Closing shall be on the same terms and conditions as those set forth in Section 2.1(a) of this Agreement.

 

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2.2           Deliveries.

(a)           On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser, as to the Securities, the following:

(i)           this Agreement duly executed by the Company; and

(ii)          a certificate evidencing a number of shares of Bridge Preferred Stock equal to such Purchaser’s Subscription Amount divided by the Stated Value, registered in the name of such Purchaser and evidence of the filing and acceptance of the Certificate of Designation from the Secretary of State of Nevada; and

(b)           On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

(i)           this Agreement duly executed by such Purchaser; and

(ii)          such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company.

2.3           Closing Conditions.

(a)           The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i)           the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

(ii)          all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii)         the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b)           The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

(i)           the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

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(ii)          all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

(iii)         the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

(iv)         there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

(v)          the holders of the Company’s senior debt shall have entered into forbearance agreements with the Company whereby such holders agree not to accelerate any of the obligations thereunder in respect of the Company’s failure to meet any debt to EBITDA ratios, total debt outstanding obligations or senior debt to EBITDA ratios.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1           Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser:

(a)           Organization and Qualification. The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(b)           Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

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(c)           No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(d)           Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than the filings required pursuant to Section 4.6 of this Agreement.

(e)           Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.

 

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(f)           Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.

3.2           Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

(a)           Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)           Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

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(c)           Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act.

(d)           Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e)           General Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f)           Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and all reports, schedules, forms, statement and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material), and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1           Transfer Restrictions.

(a)           The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.

(b)           The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

 

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4.2           Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

4.3           Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

4.4           Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

4.5           Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for (a) the payment of $10 million of senior debt and associated fees and costs and (b) the balance for working capital purposes. The Company shall not use such proceeds: (x) for the redemption of any Common Stock or Common Stock Equivalents, (y) for the settlement of any outstanding litigation or (z) in violation of FCPA or OFAC regulations.

4.6           Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 

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ARTICLE V.

MANDATORY EXCHANGE OF BRIDGE PREFERRED STOCK

5.1           Permanent Preferred Stock Issued to Third Party. If Permanent Preferred Stock is issued by the Company to a third party within sixty (60) days after the Issue Date, concurrently with the closing on the sale of Permanent Preferred Stock to such third party, each holder of Bridge Preferred Stock shall exchange all of its shares of Bridge Preferred Stock for the number of shares of Permanent Preferred Stock that is equal in liquidation value to the purchase price paid by such holder for Bridge Preferred Stock. Concurrent with such exchange, the Company shall (a) issue to such holder warrants on the same terms and at the same rate as those issued to the third party investor and (b) enter into with such holder such other agreements, such as a registration rights agreement or stockholders agreement, on the same terms are entered with such third party investor.

5.2           Permanent Preferred Stock Not Issued to Third Party. If Permanent Preferred Stock is not issued by the Company to a third party within sixty (60) days after the Issue Date, promptly following such date each holder of Bridge Preferred Stock shall exchange all of its shares of Bridge Preferred Stock for the number of shares of Permanent Preferred Stock that is equal in liquidation value to the purchase price paid by such holder for Bridge Preferred Stock pursuant to the terms of the last Permanent Preferred Stock term sheet offered by the Company to a third party. Concurrent with such exchange, the Company shall (a) issue to such holder warrants on the same terms and at the same rate as set forth in such term sheet and (b) enter into with such holder such other agreements, such as a registration rights agreement or stockholders agreement, on the same terms as are specified in such term sheet. The parties shall negotiate in good faith to resolve any terms of such agreements as are not specified in such term sheet.

5.3           Mechanics of Exchange. If the Bridge Preferred Stock is required to be exchanged pursuant to Sections 5.1 or 5.2 of this Agreement, upon such exchange (the “Exchange Date”), the holder of a certificate or certificates evidencing shares of Bridge Preferred Stock shall (i) surrender such certificate or certificates, duly endorsed, at the principal office of the Company and (ii) notify the Company in writing of the name or names in which such holder wishes the certificate or certificates of Permanent Preferred Stock to be issued. In the case of lost or destroyed certificates formerly evidencing ownership of shares of Bridge Preferred Stock to be surrendered, the holder shall submit such proof of loss or destruction and, if requested by the Company, an appropriate indemnity, reasonably required by the Company. The date on which the holder satisfies the foregoing requirements is referred to as the “Delivery Date.” As soon as practicable after the Delivery Date, the Company shall deliver a certificate for the number of full shares of Permanent Preferred Stock issuable upon such exchange. Notwithstanding the foregoing, regardless of whether a holder shall have surrendered such holder’s certificates evidencing shares of Bridge Preferred Stock and/or received in respect thereof certificates evidencing shares of Permanent Preferred Stock, such holder shall from and after the Exchange Date be treated as a record holder of the number of shares of Permanent Preferred Stock into which such holder's shares of Bridge Preferred Stock shall have been exchanged and the certificate held by such holder formerly representing ownership of shares of Bridge Preferred Stock shall, until surrendered in exchange for new certificates evidencing shares of Permanent Preferred Stock as contemplated above, be deemed to evidence the shares of Permanent Preferred Stock issuable upon exchange of the shares of Bridge Preferred Stock formerly held by such holder until such time as record ownership is transferred. All shares of Permanent Preferred Stock issuable upon exchange of the Bridge Preferred Stock shall be fully paid and nonassessable.

 

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ARTICLE VI.

MISCELLANEOUS

6.1           Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before April 22, 2015; provided, however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

6.2           Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

6.3           Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

6.4           Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 51% in interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought; provided, that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 6.4 shall be binding upon each Purchase and holder of Securities and the Company.

 

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6.5           Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

6.6           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

6.7           No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.9 and this Section 6.7.

6.8           Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party hereto shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.

 

14

6.9           Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

6.10         Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

6.11         Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

6.12         Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

6.13         Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

15

6.14         Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.

6.15         Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

6.16         Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any Action or Proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.

 

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6.17         Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

6.18         Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

6.19         Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

6.20         Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

6.21         WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

17

(Signature Pages Follow)

 

18

[COMPANY SIGNATURE PAGE TO RLJE SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	
RLJ ENTERTAINMENT, INC.

 	 	
Address for Notice:

	 	 	 	
8515 Georgia Avenue

	 	 	 	
Suite 650

	
By:

	
/s/ Miguel Penella           

	 	
Silver Spring, Maryland 20910

	
Name: Miguel Penella

	 	 
	
Title: CEO

	 	 
	 	 	 	
Email:

	
With a copy to (which shall not constitute notice):

	 	
mpenella@rljentertainment.com

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGE TO RLJE SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: RLJ SPAC Acquisition, LLC, a Delaware limited liability company

Signature of Authorized Signatory of Purchaser: /s/ H. Van Sinclair                                  

Name of Authorized Signatory: H. Van Sinclair

Title of Authorized Signatory: President

Email Address of Authorized Signatory: van@rljcompanies.com

Facsimile Number of Authorized Signatory: _________________________________________

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount: $15,000,000.00

Shares of Preferred Stock: 15,000

EIN/SSN: _______________________

 

 

20Exhibit 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:

 

(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

	 

 

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

	 

 

	 	
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 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

	 

 

	 	
CRYSTAL FINANCIAL LLC, as Documentation Agent

	 	 	 	 
	 	
By:

	
/s/ Matthew J. Governali

	 
	 	
Name: Matthew J. Governali

	 
	 	
Title: Managing Director

	 

 

	 	
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

	 

 

	 	
TEVEURA LIMITED, as a Requisite Lender

	 	 	 	 
	 	
By:

	
/s/ Anton Lotzer

	 
	 	
Name: Anton Lotzer

	 
	 	
Title: Director

	 

 

	 	
MAIN STREET CAPITAL CORPORATION,

	 	
as a Requisite Lender

	 
	 	 	 	 
	 	
By:

	
/s/ Nick Meserve

	 
	 	
Name: Nick Meserve

	 
	 	
Title: Managing Director

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00243-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00243-of-00352.parquet"}]]