UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 8, 2010
IMAGE ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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000-11071
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84-0685613
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(State or other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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20525 Nordhoff Street, Suite 200, Chatsworth, California
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91311
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrants telephone number, including area code:
(818) 407-9100
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(Former name or former address if changed since last report.)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
1
Item 1.01.
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Entry into a Material Definitive Agreement.
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Closing of Securities Purchase Agreement
As previously announced in the Current Reports on Form 8-K filed by Image Entertainment, Inc. (the
"
Company
) with the Securities and Exchange Commission (the
SEC
) on December 22, 2009 and December
31, 2009, on December 21, 2009, the Company entered into a Securities Purchase Agreement with JH Partners, LLC, as the
investor representative (the
Investor Representative
), and JH Partners Evergreen Fund, L.P.
(
JH Evergreen
), JH Investment Partners III, L.P. (
JH Investment III
) and JH Investment
Partners GP Fund III, LLC (
JH Investment GP Fund
and together with JH Evergreen and JH Investment
III, the
Investors
), as amended on December 24, 2009 and December 30, 2009 (as amended, the
SPA
).
The Companys Current Reports on Form 8-K filed on December 22, 2009 and December 31, 2009 contain a description of the
SPA, and the SPA is filed as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and is incorporated herein
by reference.
Pursuant to the SPA, on January 8, 2010 the Company closed the sale to the Investors of 22,000 shares of a newly
authorized series of the Companys capital stock entitled Series B Cumulative Preferred Stock, par value $0.0001 per
share (the
Series B Preferred
), and 196,702 shares of a newly authorized series of the Companys capital
stock entitled Series C Junior Participating Preferred Stock, par value $0.0001 per share (the
Series C
Preferred
and together with the Series B Preferred, the
Preferred Shares
), for an aggregate purchase
price of $22.0 million in cash (the
Closing
). See the information under Item 3.03 below and in Exhibit 99.1
hereto for information on the terms of the Preferred Shares, which information is incorporated herein by reference.
The purchase price for the Preferred Shares was determined after arms-length negotiations between the Company and the
Investors. The Board of Directors of the Company (the
Board
) received a fairness opinion from an independent
financial advisor regarding the fairness of the consideration received by the Company in exchange for the Preferred
Shares.
After payment to the Investors of a transaction fee, reimbursement of the Investors expenses and other
transaction-related expenses, the Company expects to receive net proceeds of approximately $19.0 million from the sale
of the Preferred Shares. In connection with the Closing on January 8, 2010, the Company used $15.0 million of the net
proceeds, along with the issuance of 3.5 million shares of the Companys common stock, par value $0.0001 per share (the
"
Common Stock
), to repay in full and retire its senior secured convertible note due 2011 in the principal
amount of $15.7 million (the
Note
). The remainder of the net proceeds will be used to repay other
outstanding indebtedness and outstanding liabilities and for general working capital.
In connection with the Companys sale to the Investors of the Preferred Shares, JH Evergreen, JH
Investment III and JH Investment GP Fund acquired control of the Company. The source of the $22.0 million used by the
Investors to purchase the Preferred Shares was an advance against a
line of credit with Silicon Valley Bank secured by the
Investors ability to call capital.
Due to the voting rights associated with the Series C Preferred as discussed in more detail in Item 3.03 below and
Exhibit 99.1 attached hereto, after the issuance of the Series C Preferred shares and the issuance of 3.5 million
shares of Common Stock to retire the Note on January 8, 2010, the Investors collectively owned approximately 88.6% of
the Companys outstanding voting securities, with JH Evergreen owning approximately 75.5%, JH Investment III
owning approximately 9% and JH Investment GP Fund owning approximately 4.1%. Pursuant to the closing conditions of the SPA, on January 7, 2010, the Board appointed three
individuals nominated by the Investors to the Board, and all then-current members of the Board resigned, in each case
effective immediately after the Closing. Accordingly, the Investors nominated all of the members of the current Board,
two of whom are currently employed by JH Partners as noted in the Companys Current Report on Form 8-K filed on January
13, 2010. As noted in Item 5.02 below, the current Board appointed a new management team effective January 9, 2010,
which information is incorporated herein by reference.
2
Registration Rights Agreement
On January 8, 2010 in connection with the Closing as discussed above, the Company entered into a Registration
Rights Agreement (the
RRA
) with the Investor
Representative, JH Evergreen, JH Investment III and JH Investment GP Fund.
Pursuant to the RRA, if at any time following July 8, 2010 the Investor Representative provides the Company a
written notice on behalf of any of the Investors to register under the Securities Act of 1933, as amended (the
"
Securities Act
), (i) shares of Common Stock issuable upon conversion of the Series C Preferred and (ii) any
securities issued as dividend, stock split, recapitalization or other distribution with respect to, or in exchange for,
or in replacement of, the securities referenced in clause (i) (collectively,
Registrable Securities
)
representing at least 5% of the outstanding shares of Common Stock, the Company must file a registration statement
covering all Registrable Securities that the Investor Representative, on behalf of the Investors, requests to be
registered. The Company must file such registration statement as promptly as reasonably practicable but no later than
(y) 15 business days after receipt of the written notice if the Company is a well-known seasoned issuer
(
WKSI
) or (z) if the Company is not a WKSI, (1) 20 business days after receipt of the written notice if the
Company is eligible to register the Registrable Securities on Form S-3 or (2) 45 business days after receipt of the
written notice if the Company is not then eligible to use Form S-3 (the
Filing Deadline
). The Company must
use its commercially reasonable efforts to cause the registration statement to be declared effective as soon as
reasonably practicable but no later than (i) the date the registration statement is filed if the Company is a WKSI or
(ii) the fifth business day following the date on which the Company is notified by the SEC that such registration
statement will not be reviewed or is not subject to further review if the Company is not a WKSI (the
Effectiveness
Deadline
). The Company must also use its commercially reasonable efforts to keep the registration statement
continuously effective under the Securities Act until the earlier of (x) the date on which the Investor Representative
notifies the Company in writing that the Registrable Securities included in such registration statement have been sold
or the offering therefore has been terminated or (y) (1) 15 business days following the date on which such registration
statement was declared effective by the SEC if the Company is a WKSI, (2) 30 business days following the date on which
the registration statement was declared effective by the SEC if the Company is not a WKSI or (3) 50 business days
following the date on which the registration statement was declared effective by the SEC if the Company is neither a
WKSI nor eligible to use Form S-3. Neither the Company nor any other person is entitled to include other securities in
any registration initiated by the Investor Representative pursuant to the foregoing requirements without the Investor
Representatives written consent. The Company will not be required to effect a registration pursuant to the foregoing
requirements after the Company has effected six such registrations or more than twice during any single calendar year.
Under certain circumstances, the Company may delay the Filing Deadline and the Effectiveness Deadline or suspend the
effectiveness or availability of any registration statement for certain time periods upon notice to the Investor
Representative.
If at any time following January 8, 2010, the Company files a registration statement with respect to an offering
of Common Stock or other equity securities of the Company (collectively,
Other Securities
) (subject to
certain exceptions), the Company must use commercially reasonable efforts to give written notice of the filing to the
Investor Representative (the
Piggyback Notice
). The Piggyback Notice will offer the Investors the
opportunity to include in such registration statement the number of Registrable Securities as they may reasonably
request (a
Piggyback Registration
). The Company must use its commercially reasonable efforts to include in
each such Piggyback Registration all Registrable Securities with respect to which the Company has received from the
Investor Representative written requests for inclusion therein within ten business days following receipt of any
Piggyback Notice by the Investor Representative. The Company may not commence or permit the commencement of any sale
of Other Securities in a public offering to which the foregoing requirement applies unless the Investor Representative
has received the Piggyback Notice in respect to such public offering not less than ten business days prior to the
commencement of such sale of Other Securities. No Piggyback Registration will count towards the number of demand
registrations that the Investors are entitled to make in any period or in total pursuant to the prior paragraph. The
Company will not be required to provide notice of, or include any Registrable Securities in, any proposed or filed
registration statement with respect to an offering of Other Securities for sale exclusively for the Companys own
account at any time following January 8, 2017.
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Subject to certain exceptions, all expenses incurred in connection with the foregoing registration obligations,
including all of the Companys expenses and one-half of all reasonable fees and expenses of the Investors related to
the registration of Registrable Securities (including fees and disbursements of one legal counsel to the Investors),
will be borne by the Company. All underwriting discounts, selling commissions and stock transfer taxes, if any,
applicable to the sale of Registrable Securities and all fees and expenses of the Investors not borne by the Company
will be borne by the Investors.
Subject to certain exceptions, the Company agreed to indemnify the Investor Representative and the Investors and
each of their affiliates for certain misstatements or omissions included or incorporated by reference in any
registration statement prepared by the Company pursuant to the RRA. The Investors agreed to severally, and not
jointly, indemnify the Company and its affiliates for certain misstatements and omissions included or incorporated by
reference in any registration statement prepared by the Company pursuant to the RRA to the extent such misstatements or
omissions are based solely on information regarding the Investors furnished in writing to the Company expressly for use
in the registration statement. The indemnification liability of the Investors may not exceed the dollar amount of the
net proceeds received by an Investor upon the sale of Registrable Securities giving rise to the indemnification
obligation.
The registration rights granted by the RRA will terminate on the date on which all Registrable Securities are (i)
eligible to be sold without any volume or manner of sale restrictions under the Securities Act pursuant to Rule 144
thereunder, (ii) bear no legend restricting the transfer thereof or (iii) bear an unrestricted CUSIP number. The RRA
also contains customary covenants of both the Company and the Investors.
The foregoing description of the RRA does not purport to be complete and is qualified in its entirety by reference
to the RRA, which is filed as Exhibit 10.4 hereto and is incorporated herein by reference.
Two of the three members of the current Board are employed by the Investor Representative and each of the current
Board members was nominated by the Investors and appointed to the Board pursuant to the closing conditions of the SPA.
Fourth Amendment to Loan and Security Agreement
On January 8, 2010, the Company entered into the Fourth Amendment to Loan and Security Agreement (the
"
Amendment
) with Wachovia Capital Finance Corporation (Western), as agent and lender (
Wachovia
),
Egami Media, Inc. and Image Entertainment (UK), Inc. In connection with the Amendment, the Company paid Wachovia a
$100,000 amendment fee. Pursuant to the Amendment:
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the term Applicable Margin was amended to mean (i) with respect to any Prime Rate loan a per annum
rate of 1.5% and (ii) with respect to any Eurodollar rate loan a per annum rate equal to 4%;
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the term Borrowing Base was amended to mean, at any time, the amount equal to 85% of the eligible
accounts of the Company, plus 100% of the outstanding amount available to be drawn on a $5 million
irrevocable standby letter of credit issued on behalf of JH Partners Evergreen Fund, LP naming Wachovia as
beneficiary of such letter of credit for the benefit of the lenders, minus $2.5 million, minus reserves
(as defined in the Loan and Security Agreement). The maximum portion of the Borrowing Base calculated
upon eligible accounts that are unpaid more than 90 days after the date of the original invoice is limited
to $2.5 million;
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the acquisition of the Preferred Shares by the Investors was not deemed a change of control under the
Loan and Security Agreement because the Investors were added to the definition of Permitted Holders;
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the list of permitted liens was expanded to include liens of Arvato Digital Services (
Arvato
)
on the personal property of the Company to secure certain accounts payable owing by the Company to Arvato
so long as such obligations do not exceed $4 million;
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the Agent consented to (i) the issuance of the Preferred Shares to the Investors, (ii) the payment of a
$1 million transaction fee to the Investors and the reimbursement of the Investors expenses up to $1
million as provided by the SPA, (iii) the repayment in full of the Note in accordance with the terms of
the Exchange Agreement (as defined below) and (iv) payment of all outstanding indebtedness of the Company
to Arvato (not including accounts payable) so long as, among other things, the amount of the payment does
not exceed $1.9 million; and
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Wachovia waived enforcement of its rights against the Company arising from the known existing events of
default under the Loan and Security Agreement related to the Companys default under the Note and the
Companys Replication Agreement with Arvato.
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The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by
reference to the Amendment, which is filed as Exhibit 10.5 hereto and is incorporated herein by reference.
Exchange Agreement
As previously disclosed in the Companys Current Report on Form 8-K filed on January 13, 2010, on January 7, 2010,
the Company entered into a Payoff Letter with Portside Growth and Opportunity Fund (
Portside
), the holder of
the Note. The Payoff Letter confirmed Portsides agreement that upon receipt of $15.0 million in cash (the
Cash
Payment
) and 3.5 million shares of Common Stock (the
Payoff Shares
and together with the Cash Payment,
the
Payoff Amount
) and execution of an exchange agreement between the Company and Portside at the Closing,
all of the obligations of the Company under the Note would be terminated and all security interests and other liens
granted to or held by Portside under the security documents securing the Note would be forever satisfied, released and
discharged without further action. The Payoff Shares were to be issued to Portside in exchange for $10,000 in
principal amount of the Note pursuant to an exchange agreement to be reasonably agreed between the Company and
Portside.
On January 8, 2010, the Company entered into an Exchange Agreement with Portside (the
Exchange
Agreement
). Pursuant to the Exchange Agreement, the Company agreed to issue at the Closing the Payoff Shares in
exchange for $10,000 in principal amount of the Note. On January 8, 2010, immediately after the Closing, the Company
paid to Portside the Cash Payment and issued the Payoff Shares in accordance with the Payoff Letter and the Exchange
Agreement thereby retiring the Note.
The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its
entirety by reference to the Exchange Agreement, which is filed as Exhibit 10.6 hereto and is incorporated herein by
reference.
Item 1.02.
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Termination of a Material Definitive Agreement.
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On January 8, 2010, immediately prior to the issuance of the Preferred Shares as discussed under Item 1.01 above,
the Rights Agreement between the Company and Computershare Trust Company, N.A., as rights agent, was terminated
pursuant to its terms. As a result of the termination of the Rights Agreement, the holders of the Companys preferred
stock purchase rights (
Rights
) issued pursuant to the Rights Agreement no longer hold Rights and are no
longer entitled to the rights set forth in the Rights Agreement. See the Companys Registration Statement on Form 8-A
filed with the SEC on November 3, 2005, as amended and supplemented by Amendment No. 1 filed on April 2, 2007,
Amendment No. 2 filed on July 2, 2007, Amendment No. 3 filed on February 6, 2008, Amendment No. 4 filed on November 21,
2008 and Amendment No. 6 filed on December 24, 2009 for a brief description of the terms and conditions of the Rights
Agreement.
5
Item 3.01.
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Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
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On January 8, 2010, the Company received Nasdaq Staff Deficiency Letters from the staff of the Nasdaq Stock Market
Listing Qualifications Department (the
Staff
). The first letter indicated that the issuance of the Preferred
Shares pursuant to the SPA resulted in the following rule violations: (i) Listing Rule 5635(d) due to the potential
issuance of 20% or more of the pre-transaction shares outstanding at a discount to the then-market share price without
obtaining prior shareholder approval; (ii) Listing Rule 5635(b) due to the potential issuance of securities that will
result in a change of control of the Company without prior shareholder approval; and (iii) Listing Rule 5640 due to the
issuance of a super-voting stock that disparately reduces the voting rights of existing shareholders. The letter
indicated that each of these rule violations serve as additional bases for delisting the Common Stock from The Nasdaq
Stock Market (
Nasdaq
). The letter further noted that on December 16 and 22, 2009, the Company notified
Nasdaq of its intention to close the sale of Preferred Shares and that the Staff informed the Company that, if
completed, such transaction would result in the aforementioned violations of Nasdaqs Listing Rules. The Staff stated
that it believes that the continued listing of the Company, after it knowingly entered into a transaction in violation
of Nasdaqs shareholder approval and voting rights rules, raises public interest concerns under Listing Rule 5101 and
that in that regard, the continued listing of the Company would erode public confidence in Nasdaq. Furthermore, the
Staff noted that it is concerned that the disregard shown by the Companys management for Nasdaqs rules in this
instance places the Companys shareholders at additional risk in future transactions. This matter serves as an
additional basis for delisting the Common Stock from Nasdaq. The letter also served as formal notification that the
Hearings Panel (the
Panel
) will consider these matters in rendering a determination regarding the Companys
continued listing on The Nasdaq Global Market and that pursuant to Listing Rule 5810(d), the Company should present its
views with respect to these additional deficiencies at its Panel hearing appealing the Staffs delisting determination.
In connection with its appeal to the Panel of the Staffs delisting determination, the Company requested that the
Panel waive compliance with Listing Rules 5635(d) and 5635(b) in connection with the Closing. As of the date of this
Current Report on Form 8-K, the Company has not determined what action or response it will take in response to the
violation of Listing Rule 5640.
The second letter indicated that during the period from November 19, 2009 to December 20, 2009 the Audit Committee
of the Board (the
Audit Committee
) did not consist of three members as required by Listing Rule
5605(c)(2)(A). Accordingly, the Company violated the audit committee composition requirements for continued listing on
Nasdaq. On December 20, 2009, the Board appointed a third, independent member to the Audit Committee thereby curing
the deficiency. Accordingly, the Company regained compliance with Listing Rule 5605(c)(2)(A) and the Staff considers
this matter now closed.
On January 13, 2010, the Company received an additional Staff Deficiency Letter from the Staff. The letter
indicated that as a result of the resignation of all the former members of the Board effective immediately after the
Closing and the appointment of new Board members effective immediately after the Closing as previously disclosed in the
Companys Current Report on Form 8-K filed on January 13, 2010, none of the new Board members are independent
directors as defined in Listing Rule 5605(a)(2). Without any independent directors on the Board, the letter noted
that the Company failed to meet the following requirements for continued listing on Nasdaq: (i) Listing Rule
5605(b)(1), which requires that a majority of the board of directors must be comprised of independent directors; (ii)
Listing Rule 5605(c)(2)(A), which requires that each company must have, and certify that it has and will continue to
have, an audit committee of at least three members, each of whom must be independent; (iii) Listing Rule 5605(d), which
requires that compensation of a companys executive officers be determined, or recommended to the board of directors
for determination, either by independent directors constituting a majority of the boards independent directors in a
vote in which only independent directors participate or a compensation committee consisting solely of independent
directors; and (iv) Listing Rule 5605(e), which requires that director nominees must either be selected, or recommended
for the boards selection either by independent directors constituting a majority of the boards independent directors
in a vote in which only independent directors participate or a nominations committee consisting solely of independent
directors. The letter noted that these rule violations serve as additional bases for delisting the Companys
securities from Nasdaq. The letter also served as formal notification that the Panel will consider these matters in
rendering a determination regarding the Companys continued listing on The Nasdaq Global Market and that pursuant to
Listing Rule 5810(d), the Company should present its views with respect to these additional deficiencies at its Panel
hearing. As of the date of this Current Report on Form 8-K, the Company has not determined what action or response it
will take in response to this letter.
6
Item 3.03.
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Material Modification to Rights of Security Holders.
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Immediately prior to the issuance of the Preferred Shares on January 8, 2010, the Company filed with the Secretary
of State of the State of Delaware (the
Delaware Secretary of State
) a Certificate of Designation for the
Series B Preferred (the
Series B Certificate of Designation
) and a Certificate of Designation for the Series
C Preferred (the
Series C Certificate of Designation
and together with the Series B Certificate of
Designation, the
Certificates of Designation
) designating the preferences, limitations, voting powers,
conversion features and relative rights of the Series B Preferred and Series C Preferred, respectively. The
Certificates of Designation became effective with the Delaware Secretary of State upon filing.
A description of the terms of the Series B Preferred and Series C Preferred was set forth under the headings
Terms of the Series B Preferred and Terms of the Series C Preferred under Item 1.01 of the Companys Current Report
on Form 8-K filed on December 22, 2009, pertinent sections of which are filed as Exhibit 99.1 hereto and are
incorporated herein by reference. The description of the terms of the Series B Preferred and Series C Preferred set
forth in Exhibit 99.1 does not purport to be complete and is qualified in its entirety by reference to the Series B
Certificate of Designation and the Series C Certificate of Designation, respectively, which are filed as Exhibit 3.1
and Exhibit 3.2, respectively, hereto and are incorporated herein by reference.
As noted in more detail under the heading Terms of the Series B Preferred in Exhibit 99.1, the holders of the
Series B Preferred have preferential dividend and liquidation rights over the holders of the Common Stock and so long
as the Series B Preferred are outstanding the Company will be limited in the payment of dividends on the Common Stock
and the repurchase of shares of its capital stock. As noted in more detail under the heading Terms of the Series C
Preferred in Exhibit 99.1, the holders of the Series C Preferred have preferential dividend, voting and liquidation
rights over the holders of the Common Stock and the Company is limited in the payment of dividends on the Common Stock
and the repurchase of shares of its capital stock unless all declared and unpaid dividends and distributions on shares
of Series C Preferred outstanding have been paid in full.
The information set forth in Item 1.02 of this Current Report on Form 8-K is incorporated into this Item 3.03 by
reference.
Item 5.01.
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Changes in Control of Registrant.
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The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading Closing of Securities
Purchase Agreement is incorporated into this Item 5.01 by reference.
Item 5.02.
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Departures of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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On January 9, 2010, the Board appointed Theodore Green as the Companys Chairman of the Board and Chief Executive
Officer, John Avagliano as the Companys Chief Financial Officer and Chief Operating Officer and John Hyde as the
Companys Vice Chairman. In connection with the appointment of Mr. Avagliano as Chief Financial Officer and Chief
Operating Officer, Jeff Framer will no longer serve as the Companys Chief Financial Officer and Derek Eiberg will no
longer serve as the Companys Chief Operating Officer.
7
The bios for each of the new executive officers are as follows:
Theodore S. (Ted) Green, Age 57
. Mr. Green was appointed as the Companys Chairman of the Board and Chief
Executive Officer and is also a director. Since 2007, Mr. Green has served as a Director of China MediaExpress, a
publicly traded company that operates the largest television advertising network on inter-city express buses in China.
The Company is a successor to TM Entertainment and Media, Inc., a
company for whom Mr. Green served as Chairman and Co-CEO from
2007 to 2009. From 2003 to 2006, Mr. Green was the CEO and Co-Owner of Anchor Bay Entertainment, which at such time was
the subsidiary of IDT Entertainment, Inc. that focused on the production, marketing and distribution of various media.
Mr. Green began serving as CEO upon the acquisition of Anchor Bay from The Handleman Company. Mr. Green had full
operating authority over the marketing, financial, sales, products, operations, legal, business and corporate
resources. Prior to that, in 2001, Mr. Green established Greenlight Consulting Inc., a project-based consulting
practice focused on the media and entertainment industry. Greenlight Consultings clients include Sony Music and
Vivendi-Universal as well as numerous other regional media organizations. Prior to founding Greenlight Consulting, in
2000, Mr. Green was President and Chief Operating Officer of MaMaMedia, Inc., an Internet company that created
activity-based learning products for children and their families. From 1992 to 2000, Mr. Green was the founder and
President of Sony Wonder, the division of Sony BMG Music Entertainment responsible for the production and distribution
of media geared toward youthful audiences and also for all home video distribution. Mr. Green was responsible for all
creative, production, operations, finance, marketing and business efforts. Beginning in 1989, Mr. Green was the
Executive Vice President of Administration and Operations for ATCO Records, a music industry label co-owned with The
Warner Music Group. Mr. Green was responsible for all business, legal and financial operations. From 1982 until 1989,
Mr. Green served as the Senior Vice President of Polygram Records, overseeing the Business Affairs and Music Publishing
divisions of the company. Mr. Green was responsible for negotiations, administration, rights and contracts.
Mr. Greens career in the entertainment industry began first in the legal department and thereafter as the Director of
Business Affairs for CBS Records. Prior to that Mr. Green practiced general entertainment law at the firm of Moses
Singer.
John P.
Avagliano, Age 53
. Mr. Avagliano was appointed as the Companys Chief Operating Officer and Chief
Financial Officer. From 2004 to 2009, Mr. Avagliano was President of Britannia Holdings providing strategic and
financial management services to the film, music, video and apparel industries. Current clients of Britannia Holdings
include Live Nation Entertainment, Ticketmaster Entertainment,
Frontline Management, Palm Pictures (an integrated film and
music company founded by Chris Blackwell the former Chairman of Island Records), CAK Entertainment (a joint venture music
publishing company funded by GTCR, a private equity firm based in Chicago), Menichetti, Ltd. (high-end apparel
manufacturer/distributor), Pacific Connections, Inc. (mass market apparel and accessory distributor) and DIC
Entertainment. From 1999 to 2004, Mr. Avagliano worked in various positions for Time Warner Inc. From 2001 to 2004,
Mr. Avagliano worked for Warner Music Group as SVP of Financial Operations, where he was responsible for financial
oversight of the global manufacturing, distribution and print businesses, worldwide financial planning and analysis,
U.S. advertising procurement, real estate management, office services support and U.S. purchasing activities. From 1999
to 2001, Mr. Avagliano was CFO of Warner Home Entertainment, the leading global manufacturer and distributor of DVD and
VHS product, where he was responsible for managing the overall finance function, leading negotiations in acquiring and
distributing independent theatrical and TV content and managing the Video-On-Demand activities as related to the Warner
Bros. film release schedule. Previously Mr. Avagliano was employed at companies such as Revlon, Playtex Products, Avon,
Sanofi Beaute and PolyGram Distribution.
John W. Hyde, Age 68.
Mr. Hyde was appointed as the Companys Vice Chairman. In 2007, Mr. Hyde founded Rehab
Incorporated which consists of Rehab Entertainment, a television and film and intellectual rights company, as well as
Rehab Consulting, an entertainment and media consulting company. Since 2007, Mr. Hyde has served as CEO of Rehab
Incorporated. Mr. Hyde currently has in development
Short Circuit
for The Weinstein Company and
Flight of the
Navigator
for Disney. Since October 2007, Mr. Hyde has served as Vice Chairman of The Jim Henson Company, creator of
The Muppets and a family entertainment company, where he is responsible for strategic planning, new media and business
development. From 2007 to 2008, Mr. Hyde served as the Vice Chairman of Starz Media, where he was responsible for
integrating the IDT Entertainment operations into the Starz group of companies. From 2003 to 2006, Mr. Hyde was the
COO of IDT Entertainment and CEO of IDTE Productions and New Ark Entertainment. In those roles, Mr. Hyde oversaw all
of IDT Entertainments operations. Mr. Hyde was responsible for running the day-to-day operations of IDTEs production
and distribution companies. From 2000 to 2006, Mr. Hyde was the CEO of Film Roman responsible for running the
animation company producing
The Simpsons
,
King of the Hill
,
Hellboy: Animated
,
Eloise
, and
Wow! Wow! Wubbzy!
8
The information required by Item 5.02(c)(3) of Form 8-K is not determined or is unavailable at the time of this
filing. The Company will file an amendment to this Current Report on Form 8-K containing such information within four
business days after the information is determined or becomes available.
Item 5.03.
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Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
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The information set forth under Item 3.03 of this Current Report on Form 8-K is incorporated into this Item 5.03
by reference.
On January 11, 2010, the Company issued a press release announcing the Closing, which is filed as Exhibit 99.2
hereto and is incorporated herein by reference.
On January 12, 2010, the Company issued a press release announcing the new officers of the Company and new Board
members, which is filed as Exhibit 99.3 hereto and is incorporated herein by reference.
On January 14, 2010, the Company issued a press release announcing receipt of the Nasdaq deficiency letters
discussed under Item 3.01 above, which is filed as Exhibit 99.4 hereto and is incorporated herein by reference.
This Current Report on Form 8-K includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 relating to, among other things, the amount and use of the net proceeds from the sale of
the Preferred Shares. These statements may be identified by the use of words such as will, may, estimate,
expect, intend, plan, and believe. All forward-looking statements are based on managements current
expectations and involve inherent risks and uncertainties, including factors (some of which may be beyond the Companys
ability to control or predict) that could delay, divert or change any of them, and could cause actual outcomes and
results to differ materially from current expectations. For details and a discussion of other risks and uncertainties,
see Forward-Looking Statements and Risk Factors in the Companys most recent Annual Report on Form 10-K, and the
Companys most recent Quarterly Reports on Form 10-Q. Unless otherwise required by law, the Company undertakes no
obligation to publicly update any forward-looking statement, whether as a result of new information, future events or
otherwise.
Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit Number
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Exhibit Description
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3.1
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Certificate of Designations of Series B Cumulative Preferred Stock, par value $0.0001 per share, of Image Entertainment, Inc.
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3.2
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Certificate of Designation of Series C Junior Participating Preferred Stock of Image Entertainment, Inc.
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10.1
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Securities Purchase Agreement, dated December 21, 2009, by and between Image
Entertainment, Inc., JH Partners, LLC, as the Investor Representative, and JH Investment Partners
Evergreen Fund, L.P., JH Investment Partners III, L.P. and JH Investment Partners GP Fund III, LLC
(incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K (File No.
000-11071) filed on December 22, 2009).
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10.2
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Amendment to Securities Purchase Agreement, dated December 24, 2009, by and between Image
Entertainment, Inc. and JH Partners, LLC (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K (File No. 000-11071) filed on December 31, 2009).
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10.3
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Amendment Number 2 to Securities Purchase Agreement, dated December 30, 2009, by and
between Image Entertainment, Inc. and JH Partners, LLC (incorporated by reference to Exhibit 10.2
to the Companys Current Report on Form 8-K (File No. 000-11071) filed on December 31, 2009).
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10.4
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Registration Rights Agreement, dated as of January 8, 2010, by and among Image
Entertainment, Inc., JH Partners, LLC, JH Partners Evergreen Fund, LP, JH Investment Partners III,
LP and JH Investment Partners GP Fund III, LLC.
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10.5
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Fourth Amendment to Loan and Security Agreement, dated as of January 8, 2010, between
Wachovia Capital Finance Corporation (Western), Image Entertainment, Inc., Egami Media, Inc. and
Image Entertainment (UK), Inc.
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10.6
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Exchange Agreement, dated January 8, 2010, by and between Image Entertainment, Inc. and
Portside Growth and Opportunity Fund.
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99.1
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Pertinent sections of Item 1.01 of Current Report on Form 8-K filed on December 22, 2009.
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99.2
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Press Release dated January 11, 2010.
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99.3
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Press Release dated January 12, 2010.
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99.4
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Press Release dated January 14, 2010.
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Cautionary Statements Regarding the SPA
The SPA is being filed as an exhibit to this Current Report on
Form 8-K
to provide investors
and security holders with information regarding its terms. It is not intended to provide any other
factual or disclosure information about the Company, the Investor Representative, the Investors or
their respective subsidiaries and affiliates. The representations, warranties and covenants
contained in the SPA were made only for purposes of that agreement and as of the specific dates set
forth therein, except as noted therein, were solely for the benefit of the parties to the SPA, and
may be subject to limitation agreed upon by the contracting parties, including being qualified by
confidential disclosures, made for the purposes of allocating contractual risk between the parties
to the SPA rather than establishing these matters as facts, which disclosures are not necessarily
reflected in the SPA, and also may be subject to standards of materiality deemed relevant to the
contracting parties but that differ from those matters that may be deemed material to investors.
Investors are not third party beneficiaries under the SPA and should not rely on the
representations, warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or conditions of the Company, the Investor Representative or the Investors or
any of their respective subsidiaries or affiliates. In addition, the respective compliance dates
for any such representations, warranties and covenants vary, and thus any individual term or
condition may not be relevant at any particular time. Moreover, information concerning the subject
matter of the representation and warranties may change after the date of the SPA, which subsequent
information may or may not be fully reflected in the Companys public disclosure. Additional
information about the Company may be found in the Companys other public filings, which are
available without charge through the SECs website at http://www.sec.gov.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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IMAGE ENTERTAINMENT, INC.
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Dated: January 14, 2010
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By:
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/s/ Michael B. Bayer
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Michael B. Bayer
Corporate Secretary
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EXHIBIT INDEX
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Exhibit No.
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Description
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3.1
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Certificate of Designations of Series B Cumulative Preferred Stock, par value $0.0001
per share, of Image Entertainment, Inc.
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3.2
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Certificate of Designation of Series C Junior Participating Preferred Stock of Image
Entertainment, Inc.
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10.1
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Securities Purchase Agreement, dated December 21, 2009, by and between Image
Entertainment, Inc., JH Partners, LLC, as the Investor Representative, and JH Investment
Partners Evergreen Fund, L.P., JH Investment Partners III, L.P. and JH Investment
Partners GP Fund III, LLC (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 000-11071) filed on December 22, 2009).
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10.2
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Amendment to Securities Purchase Agreement, dated December 24, 2009, by and between
Image Entertainment, Inc. and JH Partners, LLC (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K (File No. 000-11071) filed on December
31, 2009).
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10.3
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Amendment Number 2 to Securities Purchase Agreement, dated December 30, 2009, by and
between Image Entertainment, Inc. and JH Partners, LLC (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K (File No. 000-11071) filed on
December 31, 2009).
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10.4
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Registration Rights Agreement, dated as of January 8, 2010, by and among Image
Entertainment, Inc., JH Partners, LLC, JH Partners Evergreen Fund, LP, JH Investment
Partners III, LP and JH Investment Partners GP Fund III, LLC.
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10.5
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Fourth Amendment to Loan and Security Agreement, dated as of January 8, 2010, between
Wachovia Capital Finance Corporation (Western), Image Entertainment, Inc., Egami Media,
Inc. and Image Entertainment (UK), Inc.
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10.6
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Exchange Agreement, dated January 8, 2010, by and between Image Entertainment, Inc. and
Portside Growth and Opportunity Fund.
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99.1
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Pertinent sections of Item 1.01 of Current Report on Form 8-K filed on December 22, 2009.
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99.2
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Press Release dated January 11, 2010.
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99.3
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Press Release dated January 12, 2010.
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99.4
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Press Release dated January 14, 2010.
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Cautionary Statements Regarding the SPA
The SPA is being filed as an exhibit to this Current Report on
Form 8-K
to provide investors
and security holders with information regarding its terms. It is not intended to provide any other
factual or disclosure information about the Company, the Investor Representative, the Investors or
their respective subsidiaries and affiliates. The representations, warranties and covenants
contained in the SPA were made only for purposes of that agreement and as of the specific dates set
forth therein, except as noted therein, were solely for the benefit of the parties to the SPA, and
may be subject to limitation agreed upon by the contracting parties, including being qualified by
confidential disclosures, made for the purposes of allocating contractual risk between the parties
to the SPA rather than establishing these matters as facts, which disclosures are not necessarily
reflected in the SPA, and also may be subject to standards of materiality deemed relevant to the contracting parties but that differ from those matters that may be deemed
material to investors. Investors are not third party beneficiaries under the SPA and should not
rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or conditions of the Company, the Investor
Representative or the Investors or any of their respective subsidiaries or affiliates. In addition,
the respective compliance dates for any such representations, warranties and covenants vary, and
thus any individual term or condition may not be relevant at any particular time. Moreover,
information concerning the subject matter of the representation and warranties may change after the
date of the SPA, which subsequent information may or may not be fully reflected in the Companys
public disclosure. Additional information about the Company may be found in the Companys other
public filings, which are available without charge through the SECs website at http://www.sec.gov.
Image Entertainment (NASDAQ:DISK)
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