Tenth Amendment to Loan and Security Agreement, dated as of March 31, 2011, between Wells Fargo Capital Finance, LLC, as successor by merger to Wachovia Capital Finance Corporation (Western), Image Entertainment, Inc. and Image/Madacy Home Entertainment, LLC

THIS TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of March 31, 2011, is entered into between WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as successor by merger to Wachovia Capital Finance Corporation (Western), as Agent and Lender (in such capacities, “Lender”), IMAGE ENTERTAINMENT, INC., a Delaware corporation ("Image"), and IMAGE/MADACY HOME ENTERTAINMENT, LLC, a California limited liability company  ("Image/Madacy" and collectively with Image, the “Borrowers” and each a "Borrower").

 

 

A.             Image, Egami Media, Inc., a Delaware corporation (which has since been merged with and into Image), Image Entertainment (UK), Inc., a Delaware corporation (which has since been merged with and into Image), Home Vision Entertainment, Inc., a Delaware corporation (which has since been merged with and into Image), and Lender have previously entered into that certain Loan and Security Agreement dated May 4, 2007, as amended by that certain First Amendment to Loan and Security Agreement dated as of April 28 2008, as amended by that certain Second Amendment to Loan and Security Agreement dated as of June 23, 2009, as amended by that certain Third Amendment to Loan and Security Agreement dated as of July 30, 2009, as amended by that certain Fourth Amendment to Loan and Security Agreement dated as of January 8, 2010, as amended by that certain Fifth Amendment to Loan and Security Agreement dated as of April 15, 2010, as amended by that certain Sixth Amendment to Loan and Security Agreement dated as of May 3, 2010, as amended by that certain Seventh Amendment to Loan and Security Agreement dated as of July 29, 2010 (the "Seventh Amendment"), as amended by that certain Eighth Amendment to Loan and Security Agreement dated as of August 13, 2010, and as amended by that certain Ninth Amendment to Loan and Security Agreement dated as of November 3, 2010 (as amended, the “Loan Agreement”), pursuant to which Lender has made certain loans and financial accommodations available to Image.  Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

 

B.             Borrowers have requested that Lender amend the Loan Agreement in certain respects, and Lender is willing to accommodate such request 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 Lender’s rights or remedies as set forth in the Loan Agreement is being waived or modified by the terms of this Amendment.

 

 

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:

 

“(d) Borrowers shall pay to Agent monthly, for Agent’s own account, a servicing fee in respect of Agent's services for each month (or part thereof, but excluding the months of April 2011 and May 2011) while this Agreement remains in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be fully earned as of and payable in advance on the first day of each month (other than April 1, 2011 and May 1, 2011) and shall be in an amount equal to: (i) Five Thousand Dollars ($5,000) on May 1, 2010, June 1, 2010, and July 1, 2010; (ii) Seven Thousand Five Hundred Dollars ($7,500) on August 1, 2010; (iii) Twelve Thousand Five Hundred Dollars ($12,500) on September 1, 2010; and (iv) Fifteen Thousand Dollars on October 1, 2010, and on the first day of each month thereafter (other than April 1, 2011 and May 1, 2011).”

 

2.             Section 2(a) of the Seventh Amendment is hereby amended and restated to read in its entirety as follows:

 

"(a)           Borrower shall pay to Lender an amendment fee in the amount of Five Hundred Thousand Dollars ($500,000) (the "Amendment Fee").  $100,000 of the Amendment Fee shall be non-refundable, fully earned, and due and payable by Borrower on the date of this Amendment.  The remaining portion of the Amendment Fee shall be non-refundable, fully earned, and due and payable by Borrower as follows: (a) $50,000 on September 30, 2010, (b) $50,000 on October 25, 2010, (c) $100,000 on December 31, 2010, (d) $100,000 on March 31, 2011, (e) $33,333.34 on April 30, 2011, (f) $33,333.33 on May 31, 2011, and (g) $33,333.33 on June 30, 2011.  Notwithstanding the foregoing, if the Loan Agreement is terminated and all Obligations are fully repaid prior to the date a portion of the Amendment Fee is fully earned and due and payable in accordance with the preceding sentence, Lender shall waive payment of such portion of the Amendment Fee."

 

3.             Effectiveness of this Amendment.  The effectiveness of this Amendment is subject to the following conditions precedent:

 

(a)           Lender shall have received this Amendment, fully executed in a sufficient number of counterparts for distribution to all parties.

 

(b)           The representations and warranties set forth herein and in the Loan Agreement shall be true and correct.

 

(c)           All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Lender.

 

 

4.             Representations and Warranties.  Each Borrower represents and warrants as follows:

 

(a)           Authority.  Each Borrower has the requisite corporate power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Financing Agreements (as amended or modified hereby) to which it is a party.  The execution, delivery and performance by each Borrower of this Amendment have been duly approved by all necessary corporate action and no other corporate proceedings are necessary to consummate such transactions.

 

(b)           Enforceability.  This Amendment has been duly executed and delivered by each Borrower.  This Amendment and each Financing Agreement (as amended or modified hereby) is the legal, valid and binding obligation of each Borrower, enforceable against it in accordance with its terms, and is in full force and effect.

 

(c)           Representations and Warranties.  The representations and warranties contained in each Financing Agreement (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are correct on and as of the date hereof as though made on and as of the date hereof.

 

(d)           Due Execution.  The execution, delivery and performance of this Amendment are within the power of each Borrower, have been duly authorized by all necessary corporate action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on any Borrower.

 

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

 

5.             Choice of Law.  The validity of this Amendment, its construction, interpretation and enforcement, the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the internal laws of the State of California governing contracts only to be performed in that State.

 

6.             Counterparts.  This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

 

7.             Reference to and Effect on the Financing Agreements.

 

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

 

 

(b)           Except as specifically amended above, the Loan Agreement and all other Financing Agreements, 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 Borrowers to Lender.

 

(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 Lender under any of the Financing Agreements, nor constitute a waiver of any provision of any of the Financing Agreements.

 

(d)           To the extent that any terms and conditions in any of the Financing Agreements shall contradict or be in conflict with any terms or conditions of the Loan 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 Loan Agreement as modified or amended hereby.

 

8.             Estoppel.  To induce Lender to enter into this Amendment and to continue to make advances to Borrowers under the Loan Agreement, each Borrower hereby acknowledges and agrees that, as of the date hereof, there exists no right of offset, defense, counterclaim or objection in favor of any Borrower as against Lender with respect to the Obligations.

 

9.             Integration.  This Amendment, together with the other Financing Agreements, 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.

 

10.           Severability.  In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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