Borrowings

2014 Credit Agreement

On June 26, 2014, RealD entered into the Amended and Restated Credit Agreement, or the 2014 Credit Agreement, by and among the Company, as borrower, City National Bank, or City National, as administrative agent and letter of credit issuer, the other agents from time to time party thereto and the lenders from time to time party thereto, or the Lenders. The 2014 Credit Agreement amended and restated in its entirety that certain Credit Agreement, dated as of April 19, 2012, by and among the Company, City National and the agents and lenders from time to time party thereto, which had been most recently amended on October 16, 2013, or the 2012 Credit Agreement.

Pursuant to the 2014 Credit Agreement, the Lenders thereunder will make available to RealD:

•

a revolving credit facility (including a letter of credit sub-facility) in a maximum amount not to exceed $50 million, or the Revolving Facility, which matures on June 26, 2017. In addition, RealD may request up to an additional $25 million of commitments under the Revolving Facility (such that the maximum amount of all commitments under the Revolving Facility may not exceed $75 million), subject to the satisfaction of certain financial and other conditions and subject to obtaining such commitments; and


•	a delayed draw term loan facility in a maximum amount not to exceed $50 million, or the Term Loan Facility, which matures on June 26, 2018. During the first quarter of fiscal year 2015 and fiscal year 2016, the Company borrowed $37.3 million and the remaining $12.7 million, respectively, under the Term Loan Facility.

Debt issuance costs related to the completion of the 2014 Credit Agreement totaled $0.9 million and were added to the $0.3 million deferred charge remaining on the 2012 Credit Agreement. All these issuance costs are being amortized over the contractual life of the Revolving Facility and recorded as interest expense.

The obligations under the 2014 Credit Agreement are fully and unconditionally guaranteed by the Company's subsidiaries, ColorLink Inc., a Delaware corporation, or ColorLink, Stereographics Corporation, a California corporation, or Stereographics, and RealD DDMG Acquisition, LLC, a Delaware limited liability company, or RealD DDMG, and together with the Company, ColorLink and Stereographics, collectively referred to as the Loan Parties. The obligations under the 2014 Credit Agreement are secured by a first priority security interest in substantially all of the Loan Parties' tangible and intangible assets.

As of December 31, 2015, $50 million was available under the Revolving Facility and none was available under the Term Loan Facility after taking into account our borrowings under the Term Loan Facility during the first quarter of fiscal year 2015 and 2016 in the amount of $37.3 million and $12.7 million, respectively. As a result, as of December 31, 2015, the Company had $50 million of availability under the 2014 Credit Agreement.

As of December 31, 2015, there was no balance outstanding under the Revolving Facility. The outstanding balance of $35.4 million at December 31, 2015 under the Term Loan Facility is to be repaid in 9 quarterly installments of $2.7 million through March 31, 2018 and the remaining $11.4 million principal on June 26, 2018. The current and non-current portions of the 2014 Credit Agreement due as of December 31, 2015 and March 31, 2015 were as follows:



	December 31, 2015		March 31, 2015
(in thousands)
Current portion of Credit Agreement	$	10,635	$	7,460
Credit Agreement, net of current portion	24,723		22,380
Total Credit Agreement	$	35,358	$	29,840

At December 31, 2015, the Company's future minimum 2014 Credit Agreement obligations were as follows:



Fiscal year 2016	$	2,659
Fiscal year 2017	10,635
Fiscal year 2018	10,635
Fiscal year 2019	11,429
Total	$	35,358

Under the 2014 Credit Agreement, RealD's business is subject to certain limitations, including limitations on the Company's ability to incur additional debt, make certain investments or acquisitions, enter into certain merger and consolidation transactions, or sell its assets other than in the ordinary course of business. The Company is also required to maintain compliance with certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. As of December 31, 2015, RealD was in compliance with all financial covenants in the 2014 Credit Agreement. If the Company fails to comply with any of the covenants or if any other event of default should occur, the Lenders could elect to prevent the Company from borrowing and declare the indebtedness to be immediately due and payable.

The 2014 Credit Agreement contains customary events of default applicable to the Company and/or its subsidiaries, including, among other things the occurrence of any change of control. If one or more events of default occurs and continues beyond any applicable cure period, City National may, with the consent of the Lenders holding a majority of the loans and commitments under the facilities, or will, at the request of such Lenders, terminate the commitments of the Lenders to make further loans and declare all of the obligations of the Loan Parties under the 2014 Credit Agreement to be immediately due and payable.

Loans outstanding under the 2014 Credit Agreement bear interest at the Company's option at either the euro currency rate plus a margin ranging from 2.25% to 2.75% per year or the base rate (the highest of (i) the federal funds rate plus 0.50%, (ii) City National's prime rate or (iii) the euro currency rate for a one month interest period on such day plus 1.00%) plus a margin ranging from 1.25% to 1.75% per year. The applicable margin for loans varies depending on the Company's leverage ratio. Under the 2014 Credit Agreement, the Company is charged a commitment fee on the unused portions of the Revolving Facility and Term Loan Facility. The fee for the unused Revolving Facility varies between 0.250% and 0.375% per year depending on the percentage of the Revolving Facility in use. The fee for the unused Term Loan Facility was 0.375% of the unused commitment. Additionally, the Company is charged a letter of credit fee between 2.25% to 2.75%, depending on the Company's leverage ratio, per year, with respect to the amount of each performance letter of credit issued under the 2014 Credit Agreement. The Company also pays customary fronting fees and other fees and expenses in connection with the issuance of letters of credit under the 2014 Credit Agreement. There were no letters of credit outstanding at December 31, 2015 or March 31, 2015.

As of December 31, 2015, there were $35.4 million in borrowings outstanding under the 2014 Credit Agreement which bore 2.75% weighted average interest. As of March 31, 2015, there were $29.8 million in borrowings outstanding under the 2014 Credit Agreement, which bore 2.44% weighted average interest. Interest expense related to the Company's borrowings was $0.4 million for both the three months ended December 31, 2015 and the three months ended December 31, 2014. Interest expense related to the Company's borrowings was $1.2 million and $1.3 million for the nine months ended December 31, 2015 and the nine months ended December 31, 2014, respectively.

If the Merger is completed, the Company will use part of the proceeds contemplated by the Merger Agreement to repay the outstanding principal balance and any accrued and unpaid interest under the 2014 Credit Agreement upon the closing of the Merger, to comply with requirements of certain Purchaser debt financing commitments obtained for the transactions contemplated by the Merger Agreement.