NOTES PAYABLE

Notes payable consisted of the following:



	As of March 31, 2018						As of March 31, 2017
(In thousands)	Current Portion			Long Term Portion			Current Portion		Long Term Portion
Prospect Loan	$	—		$	39,710		$	—	$	54,656
KBC Facilities	154			—			5,744		2,890
P2 Vendor Note	336			—			227		181
P2 Exhibitor Notes	22			—			85		22
Total non-recourse notes payable	512			39,710			6,056		57,749
Less: Unamortized debt issuance costs and debt discounts	—			(2,140		)	—		(2,701		)
Total non-recourse notes payable, net of unamortized debt issuance costs and debt discounts	$	512		$	37,570		$	6,056	$	55,048

Bison note payable	$	—		$	10,000		$	—	$	—
5.5% Convertible Notes Due 2035	—			—			—		50,571
Second Secured Lien Notes	—			10,560			—		9,165
Cinedigm Revolving Loans	—			—			19,599		—
Credit Facility	—			8,227			—		—
2013 Notes	5,000			—			—		5,000
Total recourse notes payable	$	5,000		$	28,787		$	19,599	$	64,736
Less: Unamortized debt issuance costs and debt discounts	(225		)	(3,352		)	—		(5,340		)
Total recourse notes payable, net of unamortized debt issuance costs and debt discounts	$	4,775		$	25,435		$	19,599	$	59,396
Total notes payable, net of unamortized debt issuance costs	$	5,287		$	63,005		$	25,655	$	114,444

Non-recourse debt is generally defined as debt whereby the lenders’ sole recourse with respect to defaults, is limited to the value of the asset, which is collateral for the debt. Certain of our subsidiaries are liable with respect to, and their assets serve as collateral for, certain indebtedness for which our assets and the assets of our other subsidiaries that are not parties to the transaction are generally not liable. We have referred to this indebtedness as "non-recourse debt" because the recourse of the lenders is limited to the assets of specific subsidiaries. Such indebtedness includes the Prospect Loan, the KBC Facilities, the 2013 Term Loans, the P2 Vendor Note and the P2 Exhibitor Notes.

Prospect Loan

In February 2013, our DC Holdings, AccessDM and Phase 2 DC subsidiaries entered into a term loan agreement (the “Prospect Loan”) with Prospect Capital Corporation (“Prospect”), pursuant to which DC Holdings borrowed $70.0 million. The Prospect Loan bears interest at LIBOR plus 9.0% (with a 2.0% LIBOR floor), which is payable in cash, and at an additional 2.50% to be accrued as an increase to the aggregate principal amount of the Prospect Loan until the 2013 Credit Agreement is paid off, at which time all accrued interest will be payable in cash.

Collections of DC Holdings accounts receivable are deposited into accounts designated to pay certain operating expenses, principal, interest, fees, costs and expenses relating to the Prospect Loan. On a quarterly basis, if funds remain after the payment of all such amounts, they are applied to prepay the Prospect Loan. Amounts designated for these purposes, included in cash and cash equivalents on the consolidated balance sheets, totaled and as of March 31, 2018 and 2017, respectively. We also maintain a debt service fund under the Prospect Loan for future principal and interest payments. As of March 31, 2018 and 2017, the debt service fund had a balance of $1.0 million, which is classified as restricted cash on the consolidated balance sheets.

The Prospect Loan matures on March 31, 2021 and may be accelerated upon a change in control (as defined in the agreement) or other events of default as set forth therein and would be subject to mandatory acceleration upon insolvency of DC Holdings. The Bison transaction did not accelerate the maturity date. We are permitted to pay the full outstanding balance of the Prospect Loan at any time after the second anniversary of the initial borrowing, subject to the following prepayment penalties:


•	5.0% of the principal amount prepaid between the second and third anniversaries of issuance;


•	4.0% of the principal amount prepaid between the third and fourth anniversaries of issuance;


•	3.0% of the principal amount prepaid between the fourth and fifth anniversaries of issuance;


•	2.0% of the principal amount prepaid between the fifth and sixth anniversary of issuance;


•	1.0% of the principal amount prepaid between the sixth and seventh anniversaries of issuance; and


•	No penalty if the balance of the Prospect Loan, including accrued interest, is prepaid thereafter.

The Prospect Loan is secured by, among other things, a first priority pledge of the stock of CDF2 Holdings, our wholly owned unconsolidated subsidiary, the stock of AccessDM, owned by DC Holdings, and the stock of our Phase 2 DC subsidiary, and is also guaranteed by AccessDM and Phase 2 DC. We provide limited financial support to the Prospect Loan not to exceed $1.5 million per year in the event financial performance does not meet certain defined benchmarks.

The Prospect Loan contains customary representations, warranties, affirmative covenants, negative covenants and events of default.

The following table summarizes the activity related to the Prospect Loan:



	As of March 31,
(In thousands)	2018			2017
Prospect Loan, at issuance	$	70,000		$	70,000
PIK Interest	4,778			4,778
Payments to date	(35,068		)	(20,122		)
Prospect Loan, net	$	39,710		$	54,656
Less current portion	—			—
Total long term portion	$	39,710		$	54,656

KBC Facilities

In December 2008, we began entering into multiple credit facilities to fund the purchase of Systems to be installed in movie theatres as part of our Phase II Deployment. There were no draws on the KBC Facilities during the fiscal year ended March 31, 2018. The following table presents a summary of the KBC Facilities (dollar amounts in thousands):



						Outstanding Principal Balance
Facility¹	Credit Facility		Interest Rate²		Maturity Date	March 31, 2018		March 31, 2017
1	22,336		3.75	%	September 2018	$	—	$	3,758
3	11,425		3.75	%	March 2019	154		3,264
4	6,450		3.75	%	December 2018	—		1,612
	$	40,211				$	154	$	8,634


^1.	For each facility, principal is to be repaid in twenty-eight quarterly installments.


^2.	Each of the facilities bears interest at the three-month LIBOR rate, which was 2.32% at March 31, 2018, plus the interest rate noted above.

Credit Facility and Cinedigm Revolving Loans

On March 30, 2018, the Company entered into a Credit Facility with EWB for a maximum of $19.0 million in revolving loans outstanding at any one time and a maturity date of March 31, 2020, which may be extended for two successive one-year periods at the sole discretion of the lender, subject to certain conditions.

Interest under the Credit Facility is due monthly at a rate elected by the Company of either 0.5% plus Prime Rate or 3.25% above LIBOR Rate established by the lender.

On March 30, 2018, the Company borrowed $8.2 million on the Credit Facility. The proceeds from this credit facility were used to pay the $7.8 million outstanding principal and accrued interest of the Cinedigm Revolving Loan.

Availability under the Credit Facility as of March 31, 2018 is $9.8 million.

Bison Note Payable

As discussed in Note 1 - Nature of Operations and Liquidity, the Company entered into a Loan with Bison for $10 million and issued Warrants to purchase 1,400,000 shares of the Company's Class A Common Stock. See Note 6 - Stockholders' Deficit for further discussion of the warrants. The warrants were recorded as debt issuance costs.

The Loan was made in accordance with the Stock Purchase Agreement between the Company and Bison entered into on June 29, 2017. The Loan matures on June 28, 2021 and bears interest at 5% per annum, payable quarterly in cash. The principal is payable upon maturity.

Convertible Notes

On April 29, 2015, we issued $64.0 million aggregate principal amount of unsecured senior convertible notes payable (the "Convertible Notes") that bear interest at a rate of 5.5% per year, payable semiannually.

On July 10, 2017, we entered into exchange agreements (the “Exchange Agreements”) with holders of the remaining Convertible Notes representing approximately 99% of the outstanding principal amount, pursuant to which $50.6 million of the Convertible Notes were surrendered by such holders in exchange for $17.6 million cash, 3,536,783 shares of Class A Common Stock and $1.5 million in second lien notes under the Loan Agreement during the year ended March 31, 2018. As a result of the exchanges, we recorded debt conversion expense and loss on extinguishment of notes payable of $4.5 million for the year ended March 31, 2018. For the year ended March 31, 2017, $5.4 million of debt conversion expense and loss on extinguishment was recognized on the conversion of $13.4 million of Convertible Notes.

Second Secured Lien Notes

On July 14, 2016, we entered into a Second Lien Loan Agreement (the “Loan Agreement”), under which we may borrow up to $15.0 million, subject to certain limitations imposed on us regarding the number of shares that we may issue in connection with the loans. During the year ended March 31, 2018, we borrowed an aggregate principal amount of $1.5 million under the Loan Agreement and had an outstanding balance of $10.5 million as of March 31, 2018. The Loan Agreement matures on June 30, 2019 and bears interest at 12.75%, payable 7.5% in cash and 5.25% in cash or in kind at our option. In addition, under the terms of the Loan Agreement, we are required to issue 98,000 shares of our Class A common stock for every $1 million borrowed, subject to prorata adjustments. As of March 31, 2018, we have issued 906,450 shares of Class A common stock cumulatively under the Loan Agreement. The Loans may be prepaid without premium or penalty and contain customary covenants, representations and warranties. The obligations under the Loans are guaranteed by certain of our existing and future subsidiaries. We have pledged substantially all of our assets, except those assets related to our digital cinema deployment business, to secure payment on the Loan Agreement. The Loan Agreement was amended on August 4, 2016, October 7, 2016, and March 31, 2017 to facilitate subsequent borrowing transactions and clarify certain terms of the shares issuable in connection with the loans.

2013 Notes

In October 2013, we entered into securities purchase agreements with certain investors, pursuant to which we sold notes in the aggregate principal amount of $5.0 million (the “2013 Notes”) and warrants to purchase an aggregate of 150,000 shares of Class A Common Stock (the “2013 Warrants”) to such investors. We allocated a fair value of $1.6 million to the 2013 Warrants, which was recorded as a discount to the 2013 Notes and is being amortized through the maturity of the 2013 Notes as interest expense.

The principal amount outstanding under the 2013 Notes is due on October 21, 2018. The 2013 Notes bear interest at 9.0% per annum, payable in quarterly installments over the term of the 2013 Notes. The 2013 Notes may be redeemed at any time, subject to certain premiums.

Zvi Rhine, a member of our Board of Directors, is a holder of $0.5 million of the 2013 Notes as of March 31, 2018 and 2017.

The aggregate principal repayments on our notes payable, including anticipated PIK interest, are scheduled to be as follows (dollars in thousands):



Fiscal years ending March 31,
2019	$	5,512
2020	18,789
2021	39,704
2022	10,000
	$	74,005