EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of August 30, 2006, by
and among Image Entertainment, Inc., a Delaware corporation, with headquarters
located at 20525 Nordhoff Street, Suite 200, Chatsworth, California 91311 (the
"Company"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A.
THE COMPANY AND EACH BUYER IS EXECUTING AND DELIVERING THIS
AGREEMENT IN RELIANCE UPON THE EXEMPTION FROM SECURITIES REGISTRATION AFFORDED
BY SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND
RULE 506 OF REGULATION D ("REGULATION D") AS PROMULGATED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE 1933 ACT.
B.
THE COMPANY HAS AUTHORIZED A NEW SERIES OF SENIOR CONVERTIBLE
NOTES OF THE COMPANY, IN THE FORM ATTACHED HERETO AS EXHIBIT A (THE "NOTES"),
WHICH NOTES SHALL BE CONVERTIBLE INTO THE COMPANY'S COMMON STOCK, PAR VALUE
$0.0001 PER SHARE (THE "COMMON STOCK") (AS CONVERTED, THE "CONVERSION SHARES"),
IN ACCORDANCE WITH THE TERMS OF THE NOTES.
C.
EACH BUYER WISHES TO PURCHASE, AND THE COMPANY WISHES TO SELL,
UPON THE TERMS AND CONDITIONS STATED IN THIS AGREEMENT, (I) THAT AGGREGATE
PRINCIPAL AMOUNT OF THE NOTES SET FORTH OPPOSITE SUCH BUYER'S NAME IN COLUMN (3)
ON THE SCHEDULE OF BUYERS ATTACHED HERETO (WHICH AGGREGATE AMOUNT FOR ALL BUYERS
SHALL BE $17,000,000) AND (II) WARRANTS, IN SUBSTANTIALLY THE FORM ATTACHED
HERETO AS EXHIBIT B (THE "WARRANTS"), TO ACQUIRE UP TO THAT NUMBER OF ADDITIONAL
SHARES OF COMMON STOCK SET FORTH OPPOSITE SUCH BUYER'S NAME IN COLUMN (4) OF THE
SCHEDULE OF BUYERS (AS EXERCISED, COLLECTIVELY, THE " WARRANT SHARES").
D.
THE NOTES BEAR INTEREST, WHICH AT THE OPTION OF THE COMPANY,
SUBJECT TO CERTAIN CONDITIONS, MAY BE PAID IN SHARES OF COMMON STOCK (THE
"INTEREST SHARES").
E.
CONTEMPORANEOUSLY WITH THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE PARTIES HERETO ARE EXECUTING AND DELIVERING A REGISTRATION RIGHTS
AGREEMENT, SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS EXHIBIT C (THE
"REGISTRATION RIGHTS AGREEMENT"), PURSUANT TO WHICH THE COMPANY WILL AGREE TO
PROVIDE CERTAIN REGISTRATION RIGHTS WITH RESPECT TO THE REGISTRABLE SECURITIES
(AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) UNDER THE 1933 ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER, AND APPLICABLE STATE SECURITIES
LAWS.
F.
THE NOTES, THE CONVERSION SHARES, THE INTEREST SHARES, THE
WARRANTS AND THE WARRANT SHARES COLLECTIVELY ARE REFERRED TO HEREIN AS THE
"SECURITIES".
NOW, THEREFORE, THE COMPANY AND EACH BUYER HEREBY AGREE AS FOLLOWS:
1.
PURCHASE AND SALE OF NOTES AND WARRANTS.
(A)
PURCHASE OF NOTES AND WARRANTS.
(I)
NOTES AND WARRANTS.
SUBJECT TO THE SATISFACTION (OR WAIVER) OF
THE CONDITIONS SET FORTH IN SECTIONS 6 AND 7 BELOW, THE COMPANY SHALL ISSUE AND
SELL TO EACH BUYER, AND EACH BUYER SEVERALLY, BUT NOT JOINTLY, AGREES TO
PURCHASE FROM THE COMPANY ON THE CLOSING DATE (AS DEFINED BELOW), (X) A
PRINCIPAL AMOUNT OF NOTES AS IS SET FORTH OPPOSITE SUCH BUYER'S NAME IN COLUMN
(3) ON THE SCHEDULE OF BUYERS AND (Y) WARRANTS