Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.1

April 1, 2008

Mr. David Borshell

c/o Image Entertainment, Inc.

20525 Nordhoff Street, Suite 200

Chatsworth, CA 91311

Re: Employment Letter Agreement

Dear David:

We are pleased to confirm your employment with Image Entertainment, Inc. (“Image” or the
“Company”) via this Employment Letter Agreement (the “Agreement”). The particulars of your
employment are as follows:

	 	 	 
	Position:

	 	President
	Base Salary:

	 	$425,000 annualized (Year One)
	Reporting To:

	 	Board of Directors
	Term:

	 	April 1, 2008 through and including March 31, 2009

Your employment with Image is for an exempt, full-time position. This employment relationship
cannot be changed, except by a written document signed by Image’s Board of Directors.

Your Base Salary is payable in equal bi-weekly installments subject to all applicable
withholding and deductions.

You shall perform such duties as Image’s Board of Directors may reasonably require. In
rendering services to Image, you shall use your best efforts and ability to maintain, further and
promote the interests and welfare of Image. You hereby acknowledge and agree that your engagement
by Image under this Agreement is exclusive and that during the Term you shall not, directly or
indirectly, whether for compensation or otherwise, engage in any business that is competitive with
the business of Image, or render any services of a business, commercial or professional nature to
any other person or organization that is a competitor of Image or in a business similar to that of
Image, without the prior written consent of Image. Without limiting the generality of the
foregoing, the home entertainment licensing and distribution business shall constitute a business
that is competitive with the business of Image and an entity engaged in the home entertainment
licensing and distribution business shall be deemed a competitor of Image.

We offer a variety of employment benefits to you as President, including 100% company paid PPO
(or equivalent) premium coverage for health and dental insurance for you, your spouse and dependent
minor children, life and accidental death/dismemberment insurance, short and long-term disability
insurance, an annual car allowance of $12,600 gross, paid bi-weekly, four weeks of vacation per
year (up to the maximum accrual described in the Employee Handbook, which you hereby acknowledge
receipt of, and you also agree that you will be bound by the
terms of the Employee Handbook (including its conduct requirements) as may be in effect from time
to time, and any and all other Image polices and procedures currently in force, sick leaves, 401(k)
participation, and all other benefits provided to Image’s Executive Officers.

 

 

 

Bonus Compensation: You are entitled to participate in a corporate bonus plan tied to
corporate profitability in an amount and form of payment to be presented by you and approved
annually by the Compensation Committee of Image’s Board of Directors. Nothing herein contained
shall be construed to obligate the Company to adopt a Corporate Bonus Plan.

Options and Other Stock-Based Awards: The Parties acknowledge that the Compensation Committee
of Image’s Board of Directors will be presented with an Executive Stock Plan by you, which, if and
when approved, will be intended to provide you with enhanced stock option or award opportunities.
Nothing herein contained shall be construed to obligate the Company to adopt a Corporate Options
and Other Stock Based Awards Plan.

In the event that Image eliminates your position or your employment is terminated “without
cause” (in either case, the “Separation Date”), Image agrees to pay you as severance the Base
Salary you would have earned from the Separation Date through the end of the Term plus 6 months
Base Salary (without vacation accrual), any bonus compensation not previously paid for any prior
period and full medical and dental insurance continuation for a period of 6 months following the
end of the Term, with COBRA entitlement commencing thereafter, if permissible; otherwise, 6 months
medical and dental insurance continuation under COBRA, payable by Image for the first 6 months
following the end of the Term. You will be required to execute a standard waiver and release
agreement to be entitled to the severance benefits described in this paragraph.

In the event of “Cause” (as defined below), Image may terminate your employment at any time,
effective upon delivery of written notice by Image to you. In any such event, all of Image’s
obligations hereunder will immediately terminate without further liability to Image. “Cause” shall
be defined as your (a) fraud, dishonesty or felonious conduct or breach of fiduciary duty; (b)
willful misconduct or gross negligence in the performance of your duties hereunder; (c) knowing
and/or willful violation (including conduct in respect of your supervisory responsibilities) of any
law, rule or regulation or other wrongful act that causes or is likely to cause harm, loss or
disrepute to the Company; (d) conviction of a felony or misdemeanor (other than minor traffic
violations, a first time driving under the influence of alcohol conviction, or an offense that does
not affect the business or reputation of the Company); or (e) breach of any material provision of
this Agreement or any other material agreement between Image and you, whenever executed, provided,
however, that bona fide disagreements or disputes as to expense reimbursement shall not be deemed
fraud or felonious conduct or your breach of any material provision of this Agreement.

During the Term, you shall have the right to terminate your employment for “Good Reason.”
“Good Reason” shall mean any of the following events which occurs without your express written
consent within a 12-month period following a Change in Control (as defined in Exhibit “A” hereto):
(i) the assignment of any duties materially inconsistent with your status as an Executive Officer
or a substantial reduction in the nature or status of your responsibilities from those in effect immediately prior to a Change in Control; (ii) the relocation of the
principal executive offices to a location more than 35 miles from the current locale unless closer
to home or requiring you to be based anywhere other than the principal executive offices except for
required travel on business; (iii) the failure to continue in effect without material change or
substantially similar substitution of any compensation or benefit plan in which you are entitled to
participate, or the failure to continue your participation therein, or the taking of any action
which would directly or indirectly materially reduce any of the benefits of such plans enjoyed by
you immediately prior to the Change in Control; (iv) the failure to obtain a successor’s assumption
and agreement to perform the company’s obligations hereunder, unless the assumption occurs by
operation of law; and (v) a breach by Image or the successor company of any material term
hereunder.

 

 

 

If you terminate your employment for “Good Reason,” you shall be entitled to the same
severance pay and benefits as if the termination had been “without cause.”

In the event of your death or permanent disability, this Agreement will terminate on the last
day of the calendar month of your death or permanent disability. Your personal representative,
heirs or beneficiaries, as applicable, entitled by will or the laws of descent and distribution
shall be entitled to receive (a) all accrued but unpaid wages, bonus payments and vacation, (b)
Base Salary continuation for a period of 6 months or through the expiration of the Term, whichever
occurs first, (c) any bonus compensation payable and (d) dependent medical and dental insurance
continuation for a period of 6 months or through the expiration of the Term, whichever comes first.

Please note that should your Term be extended you are eligible for an increase to Base Salary
on April 1, 2009, and on April 1 of each subsequent year of your employment. The amounts of such
increases, if any, are at the sole discretion of the Compensation Committee of Image’s Board of
Directors.

Should Image wish to extend the Term for an additional period, such notification will be
communicated to you in writing by no later than three months prior to the expiration of the
previous Term. Any such extension is at the sole discretion of the Compensation Committee of
Image’s Board of Directors. If you do not wish to accept extension of the Term, you may reject such
extension in writing, and in any such case, the previous Term shall expire as scheduled. In either
event, upon expiration of the Term, Image agrees to pay you 6 months Base Salary (without vacation
accrual), any bonus compensation not previously paid for any prior period up through the expiration
date and full medical and dental insurance continuation for a period of 6 months following the
expiration date, with COBRA entitlement commencing thereafter, if permissible; otherwise, 6 months
medical and dental insurance continuation under COBRA, payable by Image for the first 6 months
following the expiration date.

Indemnification: Image will, to the maximum extent permitted by law, indemnify and hold you
harmless against expenses, including reasonable attorney’s fees, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with any proceeding arising by reason
of your employment by Image. Image shall advance to you any expenses incurred in any proceeding to
the maximum extent permitted by law. You will be entitled to utilize defense legal counsel of his choice, subject to the approval of Image,
which approval will not be unreasonably withheld. Image will at all times maintain directors’ and
officers’ liability insurance (“D&O Insurance”), or have sufficient funds to self-insure,
in amounts and on terms at least as favorable as the D&O Insurance policy in effect on the date
hereof.

 

 

 

This Agreement constitutes the entire understanding and agreement between the parties with
respect to the subject matter hereof, and supersedes: (i) any and all prior and preliminary
discussions; and (ii) any and all prior written or oral and any and all contemporaneous written or
oral agreements, understandings and negotiations between the parties, including but not limited to
prior written or oral employment agreements and severance agreements, and, there are no warranties,
representations or other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. This Agreement shall not be modified, amended or
altered except by an instrument in writing executed by the parties hereto. In case one or more of
the provisions contained in this Agreement (or any portion of any such provision) shall for any
reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement (or any portion of any such
provision), but this Agreement shall be construed as if such invalid, illegal or unenforceable
provision (or portion thereof) had never been contained herein. The failure by Image, at any time,
to require performance by Employee of any of the provisions hereof, shall not be deemed a waiver of
any kind nor shall it in any way affect Image’s rights thereafter to enforce the same. This
Agreement and all rights, obligations and liabilities arising hereunder shall be construed and
enforced in accordance with the laws of the State of California. The parties represent and warrant
that in executing this Agreement, they have each had the opportunity to obtain independent
financial, legal, tax and other appropriate advice, and are not relying upon the other party (or
the attorneys or other agents of such other party) for any such advice, and that accordingly, any
ambiguities present in this Agreement shall not be construed against either party.

If you accept employment with Image on the terms and conditions described in this Agreement,
please so indicate by signing below.

Sincerely,

/s/ ROBERT MCCLOSKEY

Robert McCloskey

Director and Chairman of the

Compensation Committee of

the Board of Directors

THE ABOVE IS ACCEPTED AND AGREED.

	 	 	 	 	 
	/s/ DAVID BORSHELL

	 	4/7/08
	 	 
	 

	 	 	 	 
	DAVID BORSHELL

	 	DATE	 	 

 

 

 

EXHIBIT A

For purposes of this letter agreement, a “Change in Control” shall mean: the occurrence of any
of the following events:

(a) Any transaction, whether effected directly or indirectly, resulting in any “person”
or “group” (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the Exchange
Act and the rules thereunder) having “beneficial ownership” (as determined pursuant to Rule
13d-3 under the Exchange Act) of securities entitled to vote generally in the election of
directors (“voting securities”) of Image that represent greater than 35% of the combined
voting power of Image’s then outstanding voting securities, other than

(i) any transaction or event resulting in the beneficial ownership of voting securities
by a trustee or other fiduciary holding securities under any employee benefit plan (or
related trust) sponsored or maintained by Image or any person controlled by Image or by any
employee benefit plan (or related trust) sponsored or maintained by Image or any person
controlled by Image, or

(ii) any transaction or event resulting in the beneficial ownership of voting
securities by Image or a corporation owned, directly or indirectly, by the stockholders of
Image in substantially the same proportions as their ownership of the stock of Image, or

(iii) any transaction or event resulting in the beneficial ownership of voting
securities pursuant to a transaction described in clause (c) below that would not be a
Change in Control under clause (c);

(b) Individuals who, as of the date this letter agreement is signed by Image,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent
to the date hereof whose election by Image’s stockholders, or nomination for election by the
Board, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on behalf of a person other
than the Board;

(c) The consummation by Image (whether directly involving Image or indirectly involving
Image through one or more intermediaries) of (x) a merger, consolidation, reorganization, or
business combination or (y) a sale or other disposition of all or substantially all of
Image’s assets or (z) the acquisition of assets or stock of another entity, in each case,
other than a transaction

 

 

 

(i) which results in Image’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of Image or the person that, as a result of the transaction,
controls, directly or indirectly, Image or owns, directly or indirectly, all or
substantially all of Image’s assets or otherwise succeeds to the business of Image (Image or
such person, the “Successor Entity”)) directly or indirectly, greater than 50% of the
combined voting power of the Successor Entity’s outstanding voting securities immediately
after the transaction, and

(ii) after which no person or group beneficially owns voting securities representing
greater than 50% of the combined voting power of the Successor Entity; provided, however,
that no person or group shall be treated for purposes of this clause as beneficially owning
greater than 50% of combined voting power of the Successor Entity solely as a result of the
voting power held in Image prior to the consummation of the transaction; or

(d) the approval by Image’s shareholders of a liquidation or dissolution of Image.

For purposes of clause (a)(i) above, the calculation of voting power shall be made as if the
date of the acquisition were a record date for a vote of Image’s shareholders, and for purposes of
clause (a)(iii) above, the calculation of voting power shall be made as if the date of the
consummation of the transaction were a record date for a vote of Image’s shareholders.Filed by Bowne Pure Compliance

 

Exhibit 10.2

April 1, 2008

Mr. Jeff M. Framer

c/o Image Entertainment, Inc.

20525 Nordhoff Street, Suite 200

Chatsworth, CA 91311

Re: Employment Letter Agreement

Dear Jeff:

We are pleased to confirm your employment with Image Entertainment, Inc. (“Image” or the
“Company”) via this Employment Letter Agreement (the “Agreement”). The particulars of your
employment are as follows:

	 	 	 
	Position:

	 	Chief Financial Officer
	Base Salary:

	 	$350,000 annualized (Year One)
	Reporting To:

	 	David Borshell, President
	Term:

	 	April 1, 2008 through and including March 31, 2009

Your employment with Image is for an exempt, full-time position. This employment relationship
cannot be changed, except by a written document signed by the President of Image and Image’s Board
of Directors.

Your Base Salary is payable in equal bi-weekly installments subject to all applicable
withholding and deductions.

You shall perform such duties as the President of Image and Image’s Board of Directors may
reasonably require. In rendering services to Image, you shall use your best efforts and ability to
maintain, further and promote the interests and welfare of Image. You hereby acknowledge and agree
that your engagement by Image under this Agreement is exclusive and that during the Term you shall
not, directly or indirectly, whether for compensation or otherwise, engage in any business that is
competitive with the business of Image, or render any services of a business, commercial or
professional nature to any other person or organization that is a competitor of Image or in a
business similar to that of Image, without the prior written consent of Image. Without limiting the
generality of the foregoing, the home entertainment licensing and distribution business shall
constitute a business that is competitive with the business of Image and an entity engaged in the
home entertainment licensing and distribution business shall be deemed a competitor of Image.

We offer a variety of employment benefits to you as Chief Financial Officer, including 100%
company paid PPO (or equivalent) premium coverage for health and dental insurance for you, your
spouse and dependent minor children, life and accidental death/dismemberment insurance, short and
long-term disability insurance, an annual car allowance of $12,600 gross, paid bi-weekly, four
weeks of vacation per year (up to the maximum accrual described in the Employee Handbook, which you
hereby acknowledge receipt of, and you also agree that you will
be bound by the terms of the Employee Handbook (including its conduct requirements) as may be in
effect from time to time, and any and all other Image polices and procedures currently in force,
sick leaves, 401(k) participation, and all other benefits provided to Image’s Executive Officers.

 

 

 

Bonus Compensation: You are entitled to participate in a corporate bonus plan tied to
corporate profitability in an amount and form of payment to be presented to you and approved
annually by the President of Image and the Compensation Committee of Image’s Board of Directors.
Nothing herein contained shall be construed to obligate the Company to adopt a Corporate Bonus
Plan.

Options and Other Stock-Based Awards: The Parties acknowledge that the Compensation Committee
of Image’s Board of Directors will be presented with an Executive Stock Plan by the President of
Image, which, if and when approved, will be intended to provide you with enhanced stock option or
award opportunities. Nothing herein contained shall be construed to obligate the Company to adopt a
Corporate Options and Other Stock Based Awards Plan.

In the event that Image eliminates your position or your employment is terminated “without
cause” (in either case, the “Separation Date”), Image agrees to pay you as severance the Base
Salary you would have earned from the Separation Date through the end of the Term plus 6 months
Base Salary (without vacation accrual), any bonus compensation not previously paid for any prior
period and full medical and dental insurance continuation for a period of 6 months following the
end of the Term, with COBRA entitlement commencing thereafter, if permissible; otherwise, 6 months
medical and dental insurance continuation under COBRA, payable by Image for the first 6 months
following the end of the Term. You will be required to execute a standard waiver and release
agreement to be entitled to the severance benefits described in this paragraph.

In the event of “Cause” (as defined below), Image may terminate your employment at any time,
effective upon delivery of written notice by Image to you. In any such event, all of Image’s
obligations hereunder will immediately terminate without further liability to Image. “Cause” shall
be defined as your (a) fraud, dishonesty or felonious conduct or breach of fiduciary duty; (b)
willful misconduct or gross negligence in the performance of your duties hereunder; (c) knowing
and/or willful violation (including conduct in respect of your supervisory responsibilities) of any
law, rule or regulation or other wrongful act that causes or is likely to cause harm, loss or
disrepute to the Company; (d) conviction of a felony or misdemeanor (other than minor traffic
violations, a first time driving under the influence of alcohol conviction, or an offense that does
not affect the business or reputation of the Company); or (e) breach of any material provision of
this Agreement or any other material agreement between Image and you, whenever executed, provided,
however, that bona fide disagreements or disputes as to expense reimbursement shall not be deemed
fraud or felonious conduct or your breach of any material provision of this Agreement.

During the Term, you shall have the right to terminate your employment for “Good Reason.”
“Good Reason” shall mean any of the following events which occurs without your express written
consent within a 12-month period following a Change in Control (as defined in
Exhibit “A” hereto): (i) the assignment of any duties materially inconsistent with your status
as an Executive Officer or a substantial reduction in the nature or status of your responsibilities
from those in effect immediately prior to a Change in Control; (ii) the relocation of the principal
executive offices to a location more than 35 miles from the current locale unless closer to home or
requiring you to be based anywhere other than the principal executive offices except for required
travel on business; (iii) the failure to continue in effect without material change or
substantially similar substitution of any compensation or benefit plan in which you are entitled to
participate, or the failure to continue your participation therein, or the taking of any action
which would directly or indirectly materially reduce any of the benefits of such plans enjoyed by
you immediately prior to the Change in Control; (iv) the failure to obtain a successor’s assumption
and agreement to perform the company’s obligations hereunder, unless the assumption occurs by
operation of law; and (v) a breach by Image or the successor company of any material term
hereunder.

 

 

 

If you terminate your employment for “Good Reason,” you shall be entitled to the same
severance pay and benefits as if the termination had been “without cause.”

In the event of your death or permanent disability, this Agreement will terminate on the last
day of the calendar month of your death or permanent disability. Your personal representative,
heirs or beneficiaries, as applicable, entitled by will or the laws of descent and distribution
shall be entitled to receive (a) all accrued but unpaid wages, bonus payments and vacation, (b)
Base Salary continuation for a period of 6 months or through the expiration of the Term, whichever
occurs first, (c) any bonus compensation payable and (d) dependent medical and dental insurance
continuation for a period of 6 months or through the expiration of the Term, whichever comes first.

Please note that should your Term be extended you are eligible for an increase to Base Salary
on April 1, 2009, and on April 1 of each subsequent year of your employment. The amounts of such
increases, if any, are at the sole discretion of the President of Image and the Compensation
Committee of Image’s Board of Directors.

Should Image wish to extend the Term for an additional period, such notification will be
communicated to you in writing by no later than three months prior to the expiration of the
previous Term. Any such extension is at the sole discretion of the President of Image and the
Compensation Committee of Image’s Board of Directors. If you do not wish to accept extension of the
Term, you may reject such extension in writing, and in any such case, the previous Term shall
expire as scheduled. In either event, upon expiration of the Term, Image agrees to pay you 6 months
Base Salary (without vacation accrual), any bonus compensation not previously paid for any prior
period up through the expiration date and full medical and dental insurance continuation for a
period of 6 months following the expiration date, with COBRA entitlement commencing thereafter, if
permissible; otherwise, 6 months medical and dental insurance continuation under COBRA, payable by
Image for the first 6 months following the expiration date.

Indemnification: Image will, to the maximum extent permitted by law, indemnify and hold you
harmless against expenses, including reasonable attorney’s fees, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of your employment by Image. Image shall advance to you any
expenses incurred in any proceeding to the maximum extent permitted by law. You will be entitled
to utilize defense legal counsel of his choice, subject to the approval of Image, which approval
will not be unreasonably withheld. Image will at all times maintain directors’ and officers’
liability insurance (“D&O Insurance”), or have sufficient funds to self-insure, in amounts
and on terms at least as favorable as the D&O Insurance policy in effect on the date hereof.

 

 

 

This Agreement constitutes the entire understanding and agreement between the parties with
respect to the subject matter hereof, and supersedes: (i) any and all prior and preliminary
discussions; and (ii) any and all prior written or oral and any and all contemporaneous written or
oral agreements, understandings and negotiations between the parties, including but not limited to
prior written or oral employment agreements and severance agreements, and, there are no warranties,
representations or other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. This Agreement shall not be modified, amended or
altered except by an instrument in writing executed by the parties hereto. In case one or more of
the provisions contained in this Agreement (or any portion of any such provision) shall for any
reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement (or any portion of any such
provision), but this Agreement shall be construed as if such invalid, illegal or unenforceable
provision (or portion thereof) had never been contained herein. The failure by Image, at any time,
to require performance by Employee of any of the provisions hereof, shall not be deemed a waiver of
any kind nor shall it in any way affect Image’s rights thereafter to enforce the same. This
Agreement and all rights, obligations and liabilities arising hereunder shall be construed and
enforced in accordance with the laws of the State of California. The parties represent and warrant
that in executing this Agreement, they have each had the opportunity to obtain independent
financial, legal, tax and other appropriate advice, and are not relying upon the other party (or
the attorneys or other agents of such other party) for any such advice, and that accordingly, any
ambiguities present in this Agreement shall not be construed against either party.

If you accept employment with Image on the terms and conditions described in this Agreement,
please so indicate by signing below.

Sincerely,

/s/ ROBERT MCCLOSKEY

Robert McCloskey

Director and Chairman of the

Compensation Committee of the

Board of Directors

THE ABOVE IS ACCEPTED AND AGREED.

	 	 	 	 	 
	/s/ JEFF M. FRAMER

	 	4/7/08
	 	 
	 	 	 
	JEFF M. FRAMER

	 	DATE	 	 

 

 

 

EXHIBIT A

For purposes of this letter agreement, a “Change in Control” shall mean: the occurrence of any
of the following events:

(a) Any transaction, whether effected directly or indirectly, resulting in any “person”
or “group” (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the Exchange
Act and the rules thereunder) having “beneficial ownership” (as determined pursuant to Rule
13d-3 under the Exchange Act) of securities entitled to vote generally in the election of
directors (“voting securities”) of Image that represent greater than 35% of the combined
voting power of Image’s then outstanding voting securities, other than

(i) any transaction or event resulting in the beneficial ownership of voting securities
by a trustee or other fiduciary holding securities under any employee benefit plan (or
related trust) sponsored or maintained by Image or any person controlled by Image or by any
employee benefit plan (or related trust) sponsored or maintained by Image or any person
controlled by Image, or

(ii) any transaction or event resulting in the beneficial ownership of voting
securities by Image or a corporation owned, directly or indirectly, by the stockholders of
Image in substantially the same proportions as their ownership of the stock of Image, or

(iii) any transaction or event resulting in the beneficial ownership of voting
securities pursuant to a transaction described in clause (c) below that would not be a
Change in Control under clause (c);

(b) Individuals who, as of the date this letter agreement is signed by Image,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent
to the date hereof whose election by Image’s stockholders, or nomination for election by the
Board, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on behalf of a person other
than the Board;

(c) The consummation by Image (whether directly involving Image or indirectly involving
Image through one or more intermediaries) of (x) a merger, consolidation, reorganization, or
business combination or (y) a sale or other disposition of all or substantially all of
Image’s assets or (z) the acquisition of assets or stock of another entity, in each case,
other than a transaction

 

 

 

(i) which results in Image’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of Image or the person that, as a result of the transaction,
controls, directly or indirectly, Image or owns, directly or indirectly, all or
substantially all of Image’s assets or otherwise succeeds to the business of Image (Image or
such person, the “Successor Entity”)) directly or indirectly, greater than 50% of the
combined voting power of the Successor Entity’s outstanding voting securities immediately
after the transaction, and

(ii) after which no person or group beneficially owns voting securities representing
greater than 50% of the combined voting power of the Successor Entity; provided, however,
that no person or group shall be treated for purposes of this clause as beneficially owning
greater than 50% of combined voting power of the Successor Entity solely as a result of the
voting power held in Image prior to the consummation of the transaction; or

(d) the approval by Image’s shareholders of a liquidation or dissolution of Image.

For purposes of clause (a)(i) above, the calculation of voting power shall be made as if the
date of the acquisition were a record date for a vote of Image’s shareholders, and for purposes of
clause (a)(iii) above, the calculation of voting power shall be made as if the date of the
consummation of the transaction were a record date for a vote of Image’s shareholders.

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