Filed by Bowne Pure Compliance





EXHIBIT 4.1



THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE 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 U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER
THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT, AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.




IMAGE ENTERTAINMENT, INC.




WARRANT




THIS WARRANT (“Warrant”) certifies that, pursuant to the Stock Purchase Agreement
dated September 10, 2002, between Image Entertainment, Inc., a California corporation (“Company”)
and Standard Broadcasting Corporation Limited, a Canadian corporation (“Holder”), incorporated
herein by reference, Holder is entitled, upon the terms and subject to the conditions set forth
herein, to subscribe for and purchase up to Two Hundred Seventy Thousand One Hundred Ninety Eight
(270,198) shares of common stock, no par value (“Common Stock”) of Company, at a price per share
(“Exercise Price”) of One Dollar and Twenty-Two and One Hundred Thirty-Three Thousands Cents
(US$1.22133).



1. Exercise of Warrant.





(a) Exercise. This Warrant is exercisable, in whole or in part, beginning on
September 25, 2003 (“Commencement Date”) and ending at 5:00 p.m. Pacific Standard Time on
September 25, 2007 (“Expiration Date”). Exercise shall be effectuated by submitting to
Company at its principal executive offices the original of this Warrant and a completed and
duly executed Notice of Exercise substantially in the form attached hereto as Exhibit 1
(“Notice”). The date the Warrant and Notice are received by the Company shall be the
“Exercise Date.” The Notice shall be duly executed by Holder and shall indicate the number
of shares then being purchased pursuant to such exercise.




(b) Issuance of Shares. Upon surrender of this Warrant, together with
appropriate payment of the Exercise Price for the shares of Common Stock purchased, Holder
shall be entitled to receive a certificate or certificates for the shares so purchased,
together with a replacement Warrant for the number of shares not yet exercised.
Certificates for shares purchased hereunder shall be delivered to Holder within a
reasonable time after the date on which this Warrant shall have been exercised as
aforesaid. Company covenants that all shares which may be issued upon the exercise of
rights represented by this Warrant will, upon exercise of the rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue).


 


 









 






(c) Payment. At the option of the Holder, the Exercise Price shall be payable
(i) in United States currency, by cashiers’ check or wire transfer of immediately available
funds to an account designated by Company or (ii) by exchange of this Warrant as follows:
in exchange for the portion of this Warrant that is being exercised at such time, the
Holder shall receive the number of shares of Common Stock determined by multiplying (A) the
number of shares of Common Stock for which this Warrant is being exercised at such time by
(B) a fraction, (1) the numerator of which shall be the difference between (x) Current
Market Price (as defined herein) per share of Common Stock at such time and (y) the
Exercise Price per share of Common Stock, and (2) the
denominator of which shall be the Current Market Price per share of Common Stock at such
time. “Current Market Price” shall mean, as to any security, the average of the closing
prices of such security’s sales on all domestic securities exchanges on which such security
may at the time be listed, or, if there have been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at the end of
such day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York
City time, on such day; or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the domestic over the
counter market as reported by the National Quotation Bureau, Incorporated, or any similar
or successor organization (and in each such case (i) averaged over a period of 21 days
consisting of the day immediately preceding the day as of which “Current Market Price” is
being determined and the 20 consecutive business days prior to such immediately preceding
day and (ii) excluding any trades that are not bona fide, arm’s length transactions). If at
any time such security is not listed on any domestic securities exchange or quoted in the
NASDAQ System or the domestic over the counter market, the “Current Market Price” of such
security shall be the fair market value thereof as mutually agreed to by the Company and
the Holder.


2. Authorized Shares. Company hereby agrees that at all times during the term of this Warrant it
shall maintain sufficient authorized shares of Common Stock as shall be required for issuance upon
exercise of this Warrant.



3. Charges, Taxes and Expenses. Except for any foreign taxes, duties, levies or similar
expenses, issuance of certificates for shares upon the exercise of this Warrant shall be made
without charge to Holder for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses shall be paid by Company, and
such certificates shall be issued in the name of Holder.



4. No Shareholder Rights. This Warrant does not entitle Holder to any voting rights or other
rights as a shareholder of Company prior to the exercise hereof.



5. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in
case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and
upon reimbursement to Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant, if mutilated, Company will make and deliver a new Warrant of like
tenor and dated as of such cancellation, in lieu of this Warrant.



6. Adjustments. The Exercise Price and the number of shares purchasable hereunder are subject to
adjustment from time to time as follows:





(a) Reclassification. If Company, at any time while this Warrant, or any
portion hereof, remains outstanding and unexpired, by reclassification of securities or
otherwise, shall change the Common Stock as to which purchase rights under this Warrant
exist into the same or a different number or securities or any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of securities
as would have been issuable as the result of such change with respect to the securities
that were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall be appropriately
adjusted, all subject to further adjustment as provided in this Section 6.




(b) Stock Splits. If Company, at any time while this Warrant, or any portion
hereof, remains outstanding and unexpired, shall split, subdivide or combine shares of the
Common Stock as to
which purchase rights under this Warrant exist into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately decreased in
the case of a split or subdivision or proportionately increased in the case of combination,
in both cases by the ratio
which the total number of such securities to be outstanding immediately after such event
bears to the total number of such securities outstanding immediately prior to such event.


 


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(c) Cash Dividends. No adjustment on account of cash dividends declared,
accrued or distributed with regard to the shares of Common Stock as to which purchase
rights under this Warrant exist will be made to the Exercise Price under this Warrant.




(d) Stock Dividends. If Company declares any non-cash dividends, entitling
shareholders of its Common Stock to receive, without payment therefor, other or additional
stock or other securities or property (other than cash) of Company, then and in each case,
this Warrant shall represent the right to acquire, in addition to the number of shares of
Common Stock receivable upon exercise of this Warrant, and without payment of any
additional consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of Company that Holder would hold had it been a
shareholder of record of the Common Stock on such date.


7. Transfer to Comply with the Securities Act. Neither this Warrant nor the shares of common
stock issuable upon exercise of this Warrant have 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 “Act”), and, accordingly, may not be
offered or sold except in accordance with the provisions of Regulation S promulgated under the act,
pursuant to an effective registration statement under the Act or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the Act, and in
accordance with all applicable state securities laws. Each certificate for the Warrant, the shares
issuable upon exercise of this Warrant and any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to
counsel for Company, setting forth the restrictions on transfer contained in this Section 7.
Company is required to refuse to register any transfer of this Warrant or the shares of Common
Stock issuable upon exercise of this Warrant not made in accordance with the provisions of
Regulation S, pursuant to registration under the Act, or pursuant to an available exemption from
registration, and shall give stop transfer orders to its transfer agent with respect to this
Warrant or the shares of Common Stock issuable upon exercise of this Warrant if necessary in order
to enforce the foregoing restrictions.



8. Miscellaneous.





(a) Governing Law. This Warrant and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto will be governed by, and construed in
accordance with, the internal law of the United States and the State of California, without
regard to conflicts of laws.




(b) Arbitration. Any controversy, dispute or claim of any nature whatsoever
arising out of, in connection with or in relation to this Warrant, including the issue of
arbitrability of any such disputes, will be resolved by final and binding arbitration in
accordance with the UNCITRAL Commercial Arbitration Rules by a retired judge at JAMS. JAMS
will be the appointing authority,
and the hearing will be held in Los Angeles, California. The prevailing party in any
dispute will be entitled to recover all attorney’s fees, costs and expenses in addition to
other allowable costs.




(c) Waivers and Amendments. No modifications or amendments to, or waivers of,
any provision of this Agreement may be made, except pursuant to a document signed by
Company and Holder.




(d) Issue Date. The provisions of this Warrant shall be construed and shall
be given effect in all respect as if it had been issued and delivered by Company on the
date first set forth above.


 


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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as of
September 25, 2002, by its officers thereunto duly authorized.



	 	 	 	 	 
	 	IMAGE ENTERTAINMENT, INC.

 	 
	 	By:  	/s/ Jeff M. Framer 	 
	 	 	Jeff M. Framer 	 
	 	 	Its Chief Financial Officer 	 



 


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EXHIBIT 1




NOTICE OF EXERCISE




To:



Image Entertainment, Inc.

9333 Oso Avenue

Chatsworth, California 91311 Attn.

Jeff M. Framer





The undersigned hereby irrevocably elects to exercise the right, represented by the
Warrant dated as of September 25, 2002 (“Warrant”), the original of which is attached hereto, to
purchase
 _____ 

shares of the Common Stock, no par value, of Image
Entertainment, Inc. (“Company”), and tenders herewith payment in accordance with the provisions of
the Warrant.



Cash Exercise:




Payment is being made by [the enclosed cashier’s check] or [concurrent wire transfer
of immediately available funds to the account designated by Company] in the amount of:



$            = (Exercise Price × Number of Shares Exercised)


Cashless Exercise:





Net number of shares of Common Stock to be issued:



	 	 	 	 	 
	                    
	 	=
	 	(Market Price × Exercised Shares)-(Exercise Price × Exercised Shares)
	 
	 	 	 	Market Price







Please deliver the stock certificate to:



In Witness Whereof, the undersigned has caused this Notice of Exercise to be executed
as of
                    , 200       , by its officer thereunto duly authorized.



	 	 	 	 	 
	 	STANDARD BROADCASTING

CORPORATION LIMITED

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 Its: 

	 




 


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