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Exhibit 10.5
 
EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated
as of August 13, 2010, 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”), and IMAGE ENTERTAINMENT, INC., a Delaware corporation (“Borrower”).
 
RECITALS
 
A.            Borrower, Egami Media, Inc., a Delaware corporation (which has
since been merged with and into Borrower), Image Entertainment (UK), Inc., a
Delaware corporation (which has since been merged with and into Borrower), Home
Vision Entertainment, Inc., a Delaware corporation (which has since been merged
with and into Borrower), 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, and as amended by that certain Seventh Amendment to
Loan and Security Agreement (the "Seventh Amendment") dated as of July 29, 2010
(as amended, the “Loan Agreement”), pursuant to which Lender has made certain
loans and financial accommodations available to Borrower.  Terms used herein
without definition shall have the meanings ascribed to them in the Loan
Agreement.
 
B.             Borrower has 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.             Borrower is 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.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
 
1.             Amendment to Loan Agreement.
 
(a)           Clause (m) of the definition of "Eligible Accounts" contained in
Section 1.29 of the Loan Agreement is hereby amended and restated to read in its
entirety as follows:
 
 
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"(m)         (i) the aggregate amount of such Accounts owing by a single account
debtor (other than Amazon.com, Anderson Merchandisers, L.P., Wal-Mart Stores,
Inc.,  Best Buy Co., Inc., Ingram Entertainment, Inc., Target Corporation, and
AEC One Stop) do not constitute more than ten (10%) percent of the aggregate
amount of all otherwise Eligible Accounts; (ii) the aggregate amount of such
Accounts owing by Target Corporation do not constitute more than twenty-five
percent (25%) of the aggregate amount of all otherwise Eligible Accounts; (iii)
the aggregate amount of such Accounts owing by Best Buy Co., Inc. and Ingram
Entertainment, Inc. do not, in the aggregate, constitute more than twenty-five
percent (25%) of the aggregate amount of all otherwise Eligible Accounts; (iv)
the aggregate amount of such Accounts owing by Amazon.com do not constitute more
than thirty-five percent (35%) of the aggregate amount of all otherwise Eligible
Accounts; (v) the aggregate amount of such Accounts owing by AEC One Stop do not
constitute more than: (A) during the period of August 13, 2010 through October
12, 2010, thirty-five percent (35%) of the aggregate amount of all otherwise
Eligible Accounts, and (B) at all other times, twenty-five percent (25%) of the
aggregate amount of all otherwise Eligible Accounts; and (vi) the aggregate
amount of such Accounts owing by Anderson Merchandisers, L.P. and Wal-Mart
Stores, Inc. do not, in the aggregate, constitute more than thirty-five percent
(35%) of the aggregate amount of all otherwise Eligible Accounts (but, in each
case, the portion of the Accounts not in excess of the applicable percentages
may be deemed Eligible Accounts);"
 
2.             Amendment to Seventh Amendment.
 
(a)           Section 2(b) of the Seventh Amendment is hereby amended and
restated to read in its entirety as follows:
 
"(b)         On or prior to August 25, 2010, Borrower shall provide Lender with
an irrevocable standby letter of credit with an original face amount of
$400,000, issued on behalf of JH Partners Evergreen Fund, LP by a financial
institution acceptable to Lender in its sole discretion, naming Lender as
beneficiary of such letter of credit, and otherwise with terms and in form and
substance satisfactory to Lender in its sole discretion (the “Amendment Fee
Related L/C”).  Failure of Borrower to provide the Amendment Fee Related L/C on
or prior to August 25, 2010, shall constitute an Event of Default.  For
clarification, the Amendment Fee Related L/C is separate and distinct from the
Permitted Holders L/C."
 
(b)           Section 2(c) of the Seventh Amendment is hereby amended and
restated to read in its entirety as follows:
 
"(c)          To the extent there is not sufficient Excess Availability to cover
any portion of the Amendment Fee then due and payable by Borrower in accordance
with clause (a) above, Lender shall be permitted to make a draw on the Amendment
Fee Related L/C to pay such portion of the Amendment Fee then due and payable by
Borrower.  Upon the termination of the Loan Agreement and repayment in full of
all Obligations (including, without limitation, any unpaid portion of the
Amendment Fee then due and payable), Lender shall return the Amendment Fee
Related L/C to Borrower.  In addition to the forgoing, to the extent Excess
Availability is less then $2,500,000 at any time prior to Borrower providing the
Amendment Fee Related L/C to Lender, Lender shall be permitted to charge the
loan account of Borrower in the amount of $400,000 and hold such amount as cash
collateral for Borrower's obligations to pay the Amendment Fee as set forth in
this Section 2.  Upon receiving the Amendment Fee Related L/C in accordance with
the terms of this Section 2, Lender shall release such cash collateral."
 
 
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3.             Effectiveness of this Amendment.  The effectiveness of this
Amendment is subject to the following conditions precedent:
 
(a)           Amendment.  Lender shall have received this Amendment, fully
executed in a sufficient number of counterparts for distribution to all parties.
 
(b)           Representations and Warranties.  The representations and
warranties set forth herein and in the Loan Agreement shall be true and correct.
 
(c)           Other Required Documentation.  All other documents and legal
matters in connection with the transactions contemplated by this Amendment shall
have been delivered or executed or recorded and shall be in form and substance
satisfactory to Lender.
 
4.             Representations and Warranties.  Borrower represents and warrants
as follows:
 
(a)           Authority.  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 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 Borrower.  This Amendment and each Financing Agreement (as amended
or modified hereby) is the legal, valid and binding obligation of 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 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
Borrower.
 
 
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(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 Borrower 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 Borrower under the Loan Agreement, Borrower hereby
acknowledges and agrees that, as of the date hereof, there exists no right of
offset, defense, counterclaim or objection in favor of 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.
 
 
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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.
 
[Remainder of Page Left Intentionally Blank]
 
 
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.
 

 
IMAGE ENTERTAINMENT, INC.,
 
a Delaware corporation
         
By:
/s/ MICHAEL BAYER
 
Name:
Michael Bayer
 
Title:
General Counsel and Vice President Business and Legal Affairs
             
WELLS FARGO CAPITAL FINANCE, LLC,
 
as Agent and Lender
         
By:
/s/ CARLOS VALLES
 
Name:
Carlos Valles
 
Title:
Vice President

 
 
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