Document:

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: 

	 

 

5Filed by Bowne Pure Compliance

EXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (“Agreement”) dated as of September 25, 2002, between
Image Entertainment, Inc., a California corporation (“Company”), and Standard Broadcasting
Corporation Limited, a Canadian corporation (“Investor”).

WHEREAS, pursuant to a Stock Purchase Agreement dated the same date as this Agreement
(“Stock Purchase Agreement”), Company is issuing and selling shares of its common stock, no par
value (“Common Stock”) to Investor;

WHEREAS, Company is issuing a Warrant dated the same date as this Agreement
(“Warrant”) to Investor to purchase additional shares of its Common Stock; and

WHEREAS, the shares of Common Stock to be sold and issued to Investor pursuant to the
Stock Purchase Agreement and in connection with the exercise of the Warrant (collectively, the
"Shares”), are being issued in a private placement without registration under the Securities Act of
1933, as amended (the “Act”), in reliance on one or more exemptions from the registration
requirements under the Act;

NOW THEREFORE, in consideration of the foregoing recitals and the respective covenants
and agreements contained herein, the parties hereto, intending to be legally bound, agree as
follows:

1. Piggyback Registration

(a) Unless a registration statement has already been filed and remains
effective with respect to the Shares, each time Company determines to file a registration
statement under the Act (other than on Form S-1 solely covering an employee benefit plan,
S-4 or S-8) in connection with the proposed offer and sale for money of any of its
securities, either for its own account or on behalf of any other security Investor, Company
will give written notice of its determination to Investor. Upon the written request of
Investor within thirty (30) days after the receipt of the written notice, Company will
cause all Shares of Investor to be included in the registration statement, to the extent
necessary to permit the legally permissible sale or other disposition by Investor to be so
registered.

(b) If the registration is for a public offering involving an underwriting,
Company will so advise Investor as a part of its written notice. In such event, the right
of Investor to registration pursuant to this Section 1 is conditioned upon Investor’s
participation in the underwriting and the inclusion of Investor’s Shares in the
underwriting to the extent provided herein. Investor will enter into (together with Company
and the other shareholders distributing their securities through the underwriting) an
underwriting agreement with the underwriter or underwriters selected by Company for the
underwriting, provided that the underwriting agreement is in customary form and is
reasonably acceptable to Investor.

(c) Notwithstanding any other provision of this Section 1, if the managing
underwriter of an underwritten distribution advises Company and Investor in writing that in
its good faith judgment the number of Shares and the other securities requested to be
registered exceeds the number of Shares and other securities which can be sold in the
offering, then (i) the number of Shares and other securities so requested to be included in
the offering will be reduced to that number of shares which in the good faith judgment of
the managing underwriter can be sold in the offering (except for shares to be issued by
Company in an offering initiated by Company, which will have priority over the Shares), and
(ii) the reduced number of shares will be allocated among all participating holders of
Common Stock and investor in proportion, as nearly as practicable, to the respective
number of Shares and other securities held by Investor and other holders at the time of
filing the registration statement in relation to the total number of shares of Common Stock
outstanding on a fully diluted basis. All Shares and other securities which are excluded
from the underwriting by reason of the underwriter’s marketing limitation and all other
Shares not originally requested to be so included will not be included in the registration
and will be withheld from the
market by Investor for a period, not to exceed one hundred eighty (180) days, which the
managing underwriter reasonably determines is necessary to effect the underwritten public
offering.

 

 

 

2. Demand Registration

(a) If, at any time more than one (1) year after the date of this Agreement,
Company receives written notice from Investor requesting that Company file a registration
statement under the Act covering the registration of at least fifty percent (50%) of the
Shares then owned by Investor, Company will use its best efforts to effect the registration
under the Act of all Shares which investor requests to be registered, to the extent
necessary to permit the legally permissible sale or other disposition by Investor to be so
registered.

(b) If Investor intends to distribute the Shares covered by its request by
means of an underwriting, it will so advise Company as a part of the request made pursuant
to this Section 2. The underwriter selected by Investor shall be reasonably acceptable to
Company. In such event, the right of Investor to include its Shares in the registration
shall be conditioned upon Investor’s participation in such underwriting and the inclusion
of the Shares in the underwriting. Company will enter into (together with Investor and the
other shareholders distributing their securities through the underwriting) an underwriting
agreement with the underwriter or underwriters selected by Investor for the underwriting,
provided that the underwriting agreement is in customary form and is reasonably acceptable
to Company.

(c) Notwithstanding the foregoing, if Company furnishes to Investor a
certificate signed by the President of Company stating that in the good faith judgment of
the Board of Directors of Company, it would be detrimental to Company and its shareholders
for the registration statement to be filed and it is therefore essential to defer the
filing of the registration statement, Company will have the right to defer the filing for a
period of not more than ninety (90) days after receipt of the request of investor;
provided, however, that Company may not utilize this right more than once in any
twelve-month period.

(d) Company will not be obligated to prepare, file or to take any action to
effect any registration pursuant to this Section 2:

(i) Within one year from the date hereof;

(ii) After Company has effected a prior registration pursuant to this
Agreement and such registration has been declared or ordered effective; or

(iii) During the period starting with the date ninety (90) days prior
to Company’s good faith estimate of the date of filing of, and ending on a date one
hundred eighty (180) days after the effective date of, a registration subject to
Sections 1 or 2 hereof; provided that Company is using reasonable efforts to cause
such registration statement to become effective.

3. Registration Procedures. If and whenever Company is required by the provisions
of Section 1 or 2 hereof to effect the registration of Shares under the Act, Company, at its
expense, will:

(a) In accordance with the Act and all applicable rules and regulations,
prepare and file with the Securities and Exchange Commission (“SEC”) a registration
statement with respect to the Shares and use its commercially reasonable efforts to cause
the registration statement to become and remain effective until the Shares covered by such
registration statement have been sold, and prepare and file with the SEC such amendments
and supplements to the registration statement and the prospectus contained therein as may
be necessary to keep the registration statement effective and the registration statement
and prospectus accurate and complete until the Shares covered by such registration
statement have been sold;

 

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(b) If the offering is to be underwritten in whole or in part, enter into a
customary written underwriting agreement in form and substance reasonably satisfactory to
the managing underwriter of the public offering, Investor and Company;

(c) Furnish to Investor and the underwriters of the Shares being registered
such number of copies of the registration statement and each amendment and supplement
thereto, preliminary prospectus, final prospectus and such other documents as the
underwriters and Investor may reasonably request in order to facilitate the public offering
of the securities;

(d) Use its commercially reasonable efforts to register or qualify the
securities covered by the registration statement under such state securities or blue sky
laws of such jurisdictions as Investor and the underwriters may reasonably request within
ten (10) days prior to the original filing of the registration statement, except that
Company will not for any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any jurisdiction where it
is not so qualified;

(e) Notify Investor, promptly after it receives notice thereof, of the date
and time when the registration statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such registration
statement has been filed;

(f) Notify Investor of any request by the SEC for the amending or
supplementing of the registration statement or prospectus or for additional information;

(g) Prepare and file with the SEC, upon the request of Investor, any
amendments or supplements to the registration statement or prospectus which, in the
reasonable opinion of counsel for Investor, is required under the Act or the rules and
regulations of the SEC thereunder in connection with Investor’s distribution of the Shares;

(h) Prepare and file with the SEC, and notify Investor of the filing of, such
amendments or supplements to the registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time when a prospectus relating to the
securities is required to be delivered under the Act, any event has occurred as the result
of which the prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;

(i) In case Investor or any underwriter for Investor is required to deliver
a prospectus at a time when the prospectus then in circulation is not in compliance with
the Act or the rules and regulations of the SEC, prepare upon request such amendments or
supplements to such registration statement and such prospectus as may be necessary in order
for the prospectus to comply with the requirements of the Act and such rules and
regulations;

(j) Advise Investor, after it receives notice or obtains knowledge thereof,
of the issuance of any stop order by the SEC suspending the effectiveness of the
registration statement or the initiation or threatening of any proceeding for that purpose
and promptly use its commercially reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal if a stop order should be issued;

(k) Not file any registration statement or prospectus or any amendment or
supplement to a registration statement or prospectus to which Investor has, at least five
(5) business days prior to filing, reasonably objected on the grounds that the registration
statement or prospectus or amendment or supplement thereto does not comply in all material
respects with the requirements of the Act or the rules and regulations thereunder. The
failure of Investor or its counsel to review or object to any registration statement or
prospectus or any amendment or supplement to a registration statement or prospectus will
not affect the indemnification rights of Investor or its
respective officers, directors, partners, legal counsel, accountants or controlling persons
or any underwriter or any controlling person of such underwriter under Section 5 hereof;

 

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(l) Make available for inspection upon request by Investor, a managing
underwriter of a distribution to be effected pursuant to a registration statement under
this Agreement, and any attorney, accountant or other agent retained by Investor or its
underwriter, all pertinent corporate, financial and other documents and records of Company,
and cause Company’s officers, directors and employees to supply all information reasonably
requested by Investor, underwriter, attorney, accountant or agent in connection with the
registration statement; and

(m) At the request of Investor, furnish to Investor on the effective date of
the registration statement or, if the registration includes an underwritten public
offering, at the closing provided for in the underwriting agreement, (i) an opinion dated
such date of the counsel representing Company for the purposes of the registration,
addressed to the underwriters, if any, and to investor, covering such matters with respect
to the registration statement, the prospectus and each amendment or supplement thereto,
proceedings under state and federal securities laws, other matters relating to Company, the
securities being registered and the offer and sale of such securities as are customarily
the subject of opinions of issuer’s counsel provided to underwriters in underwritten public
offerings, and such opinion of counsel will additionally cover such legal and factual
matters with respect to the registration as Investor may reasonably request, and
(ii) letters dated each of such effective date and such closing date, from the independent
certified public accountants of Company, addressed to the underwriters, if any, and to
Investor, stating that they are independent certified public accountants within the meaning
of the Act and dealing with such matters as the underwriters may request, or, if the
offering is not underwritten, that in the opinion of such accountants the financial
statements and other financial data of Company included in the registration statement or
the prospectus or any amendment or supplement thereto comply in all material respects with
the applicable accounting requirements of the Act, and additionally covering such other
accounting and financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter with respect
to the registration statement and prospectus, as Investor may reasonably request.

4. Expenses

(a) With respect to each inclusion of Shares in a registration statement
pursuant to Section 1 hereof, and the registration effected pursuant to Section 2 hereof,
Company will bear all fees, costs and expenses of and incidental to the registration and
the public offering in connection therewith; provided, however, that Investor will bear its
pro rata share of the underwriting discount and commissions.

(b) The fees, costs and expenses of registration to be borne as provided in
Section 4(a), include, without limitation, all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for Company, fees and
disbursements of counsel for the underwriter or underwriters of such securities (if Company
and/or selling security shareholders are otherwise required to bear such fees and
disbursements), reasonable fees and disbursements of counsel for Investor, and all legal
fees and disbursements (up to $50,000) and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be offered are
to be registered or qualified.

 

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5. Indemnification

(a) Company will indemnify and hold harmless pursuant to the provisions of this Agreement
Investor and each of Investor’s officers, directors, partners, legal counsel and
accountants, and each person who controls Investor within the meaning of the Act and any
underwriter (as defined in the Act) for Investor, and any person who controls such
underwriter within the
meaning of the Act, from and against, and to reimburse Investor, its officers,
directors, partners, legal counsel, accountants and controlling persons and each
underwriter and controlling person of such underwriter with respect to, any and all
claims, actions (actual or threatened), demands, losses, damages, liabilities,
costs and expenses to which Investor, its officers, directors, partners, legal
counsel, accountants or controlling persons or any such underwriter or controlling
person of such underwriter may become subject under the Act or otherwise, insofar
as such claims, actions, demands, losses, damages, liabilities, costs or expenses
arise out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances in which they were made; provided,
however, that Company will not be liable in any such case to the extent that any
claim, action, demand, loss, damage, liability, cost or expense is caused by an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with written information furnished by Investor, such underwriter
or such controlling person specifically for use in the preparation thereof.

(b) Investor will indemnify and hold harmless Company, its officers,
directors, legal counsel and accountants, any underwriter and each person who controls
Company or any underwriter within the meaning of the Act, from and against, and agrees to
reimburse Company, its officers,
directors, legal counsel, accountants and controlling persons, any underwriter with respect
to, any and all claims, actions, demands, losses, damages, liabilities, costs or expenses
to which Company, its officers, directors, legal counsel, accountants, such controlling
persons, or any underwriter may become subject under the Act or otherwise, insofar as such
claims, actions, demands, losses, damages, liabilities, costs or expenses are caused by any
untrue or alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case, to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in conformity with written information
furnished by Investor specifically for use in the preparation thereof. Notwithstanding the
foregoing, Investor will not be obligated hereunder to pay more than the net proceeds
realized by it upon its sale of Shares included in such registration statement.

 

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(c) Promptly after receipt by a party indemnified pursuant to the provisions
of this Section 5(a) or (b) of notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions, the indemnified party will, if a
claim therefor is to be made against the indemnifying party pursuant to the provisions of
Section 5(a) or (b), notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any liability which
it may have to an indemnified party otherwise than under this Section 5 and will not
relieve the indemnifying party from liability under this Section 5 unless the indemnifying
party is prejudiced by such omission. In case any action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying parties similarly notified, to assume the defense thereof, with
counsel satisfactory to the indemnified party; provided, however, that if the defendants in
any action include both the indemnified party and the indemnifying party and the
indemnified party reasonably concludes that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those available
to the indemnifying party, the indemnified party or parties will have the right to select
separate counsel (in which case the
indemnifying party will not have the right to direct the defense of such action on behalf
of the indemnified party or parties). Upon the permitted assumption by the indemnifying
party of the defense of an action, and approval by the indemnified party of counsel, the
indemnifying party will not be liable to the indemnified party under Section 5(a) or (b)
for any legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof (other than reasonable costs of investigation) unless
(i) the indemnified party has employed separate counsel in connection with the assertion of
legal defenses in accordance with the proviso to the next preceding sentence, (ii) the
indemnifying party has employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time, (iii) the indemnifying party and its
counsel fail actively and vigorously to pursue the defense of the action or (iv) the
indemnifying party authorizes the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party will be liable to an indemnified
party for any settlement of any action or claim without the consent of the indemnifying
party, and no indemnifying party may unreasonably withhold its consent to any such
settlement. No indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the indemnified party of a release from all liability with respect
to the claim or litigation.

(d) If the indemnification provided for in Section 5(a) or (b) is held by a
court of competent jurisdiction to be unavailable to a party to be indemnified with respect
to any claims, actions, demands, losses, damages, liabilities, costs or expenses referred
to therein, then each indemnifying party under any such section, in lieu of indemnifying
the indemnified party thereunder, agrees to contribute to the amount paid or payable by the
indemnified party as a result of the claims, actions, demands, losses, damages,
liabilities, costs or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions which resulted in the claims, actions,
demands, losses, damages, liabilities, costs or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of the
indemnified party will be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. Notwithstanding the
foregoing, the amount Investor will be obligated to contribute pursuant to this section
will be limited to an amount equal to the per share public offering price (less any
underwriting discount and commissions) multiplied by the number of Shares sold by Investor
pursuant to the registration statement which gives rise to such obligation to contribute
(less the aggregate amount of any damages which Investor has otherwise been required to pay
in respect of such claim, action, demand, loss, damage, liability, cost or expense or any
substantially similar claim, action, demand, loss, damage, liability, cost or expense
arising from the sale of such Shares). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to contribution hereunder
from any person who was not guilty of such fraudulent misrepresentation.

(e) In addition to its other obligations under this Section 5, Company agrees
to reimburse any underwriter and Investor pursuant to this Agreement (and each of the
underwriter’s and Investor’s controlling persons, officers, directors, parties, legal
counsel, accountants and underwriters, and controlling persons of the underwriters) on a
monthly basis for all reasonable legal fees and other expenses incurred in connection with
investigating or defending any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement or
admission, described in Section 5(a), notwithstanding the possibility that such payments
might later be held to be improper. To the extent that any payment is ultimately held to be
improper, each person receiving such payment will promptly refund it.

 

6

 

6. Restrictions. Shares will only be treated as registerable securities if and so
long as they have not been (a) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (b) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such Shares are removed upon the
consummation of such sale and the seller and Investor receive an opinion of counsel for Company, in
form and content reasonably satisfactory to the seller and buyer and their respective counsel, to
the effect that the Shares in the hands of investor are freely transferable without restriction or
registration under the Act in any public or private transaction.

7. Reporting Requirements. Company will maintain the effectiveness of its
registration under Section 12 of the Securities Exchange Act of 1934, as amended (“Exchange Act”)
and file timely (whether or not it is then required to do so) such information, documents and
reports as the SEC may require or prescribe under Section 15(d) of the Exchange Act. Company will,
forthwith upon request, furnish to Investor (a) a written statement by Company that it has complied
with such reporting requirements, (b) a
copy of the most recent annual or quarterly report of Company and (c) such other reports and
documents filed by Company with the SEC as Investor may reasonably request in availing itself of an
exemption for the sale of Shares without registration under the Act. Company acknowledges that the
purposes of the requirements contained in this Section 7 are (i) to enable Investor to comply with
the current public information requirement contained in paragraph (c) of Rule 144 under the Act
should Investor ever wish to dispose of any of the securities of Company acquired by it without
registration under the Act in reliance upon Rule 144 (or any other similar exemptive provision) and
(ii) to qualify Company for the use of registration statements on Form S-3. In addition, Company
will take such other measures and file such other information, documents and reports, as may be
required of it hereafter by the SEC as a condition to the availability of Rule 144 (or any similar
exemptive provision hereafter in effect) and the use of Form S-3 and will use its commercially
reasonable efforts to qualify for the use of Form S-3.

8. Information. Investor will furnish Company with such information with respect to
Investor and the Shares as Company may from time to time reasonably request in writing and as may
be required by law or by the SEC.

9. Forms. All references in this Agreement to particular forms of registration
statements under the Act are intended to include, and will be deemed to include, references to all
successor forms which are intended to replace, or to apply to similar transactions as, the forms
herein referenced.

10. Miscellaneous

(a) Waivers and Amendments. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally or by course of dealing, but only
by a statement in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. Specifically, but without limiting the
generality of the foregoing, the failure of one party at any time or times to require
performance of any provision hereof by the other party will not affect the right at a later
time to enforce the same. No waiver by any party of the breach of any term or provision
contained in this Agreement, in any one or more instances, will be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant contained in this Agreement.

(b) Successors and Assigns. The provisions of this Agreement will inure to
the benefit of and be binding upon the successors and assigns of each of the parties
hereto. Notwithstanding the foregoing, neither Investor nor Company will assign or delegate
any of its rights or obligations under this Agreement.

 

7

 

(c) No Third-Party Beneficiaries. No person or entity not a party to this
Agreement will be deemed to be a third-party beneficiary hereunder or entitled to any
rights hereunder.

(d) Interpretation. The words “include,” “includes,” and “including” when
used herein will be deemed in each case to be followed by the words “without limitation.”
This Agreement has been negotiated by the respective parties hereto and their attorneys and
the language hereof will not be construed for or against any party. The words “hereof,”
“herein,” “herewith,” “hereby” and “hereunder” and words of similar import will, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement.

(e) Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws, then, if possible, such illegal,
invalid or unenforceable provision will be modified to such extent as is necessary to
comply with such present or future laws and such modification will not affect any other
provision hereof; provided that if such provision may not be so modified, such illegality,
invalidity or unenforceability will not affect any other provision, but this Agreement will
be reformed, construed and enforced as if such invalid, illegal or unenforceable provision
had never been contained herein.

(f) Descriptive Headings. The descriptive headings used in this Agreement
are inserted for convenience of reference and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.

(g) Expenses. Each party will pay all costs and expenses incurred by it in
connection with the execution and delivery of this Agreement and the transactions
contemplated hereby, including fees of legal counsel.

(h) Further Assurances. Each party to this Agreement will do and perform or
cause to be done and performed all such further acts and things and will execute and
deliver all such agreements, certificates, instruments and documents as the other party
hereto may reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

 

8

 

(i) Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed given if
delivered personally, by facsimile (with oral confirmation) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as will be
specified by like notice):

	 	 	 	 	 
	 

	 	If to Company:
	 	Image Entertainment, Inc.

9333 Oso Avenue

Chatsworth, California 91311

Attn.: Jeff M. Framer, CFO

Phone: (818) 407-9100

Fax: (818) 407-9331
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Greenberg Traurig, LLP

2450 Colorado Avenue, Suite 400E

Santa Monica, California 90404

Attn.: John C. Kirkland, Esq.

Phone: (310) 586-7786

Fax: (818) 586-0286
	 
	 	 	 	 
	 

	 	If to Investor:
	 	Standard Broadcasting Corporation Limited

2 St. Clair Avenue West, Suite 1100

Toronto, Ontario, Canada M4V 1L6

Attn.: David Coriat, EVP

Phone: (416) 960-9911

Fax: (416) 323-6828

(j) Arbitration. Any controversy, dispute or claim of any nature whatsoever
arising out of, in connection with or in relation to this Agreement, or otherwise involving
the parties hereto, 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 awarded all attorney’s fees, costs and expenses in addition to other allowable
costs.

(k) Governing Law. This Agreement 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 State of California, without regard
to conflicts of laws.

(l) Counterparts. This Agreement may be executed in counterparts, each of
which will be an original and all of which together will constitute one and the same
instrument.

(m) Entire Agreement. This Agreement, together with the related written
agreements entered into on the same date, constitutes the entire agreement between the
parties. No representations, agreements or promises have been made except as expressly set
forth herein. This Agreement supersedes any prior negotiations, understandings or
agreements, whether written or oral, and any contemporaneous oral understandings or
agreements.

 

9

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set
forth above.

	 	 	 	 	 
	 	COMPANY:

IMAGE ENTERTAINMENT, INC.

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

STANDARD BROADCASTING CORPORATION LIMITED

 	 
	 	By:  	/s/ David Coriat 	 
	 	 	David Coriat 	 
	 	 	Its Executive Vice President 	 

 

10

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