2,400,000 Shares of Common Stock
PLACEMENT AGENT AGREEMENT
between
IMAGE ENTERTAINMENT, INC.
a California Corporation and
MDB Capital Group, LLC
Dated: December , 1998
PLACEMENT AGENT AGREEMENT Between Image
Entertainment, Inc. a
California corporation and
MDB Capital Group, LLC
MDB Capital Group, LLC
000 Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
Image Entertainment, Inc., a California corporation (the
"Company"), hereby confirms its agreement with you (the
"Placement Agent" or "you") as follows:
1. Sale of Common Stock on Best Efforts Basis.
1.1 Appointment of Placement Agent. On the basis of the
representations, warranties and covenants contained in
this
Agreement, and subject to the terms and conditions herein
set forth, the Company hereby appoints you, and you agree
to act, as the Company's exclusive agent during the
Offering Period (as defined below) for the purpose of
finding, on a best efforts basis "accredited investors"
(as
defined below) to subscribe for up to 2,400,000 shares of
common stock of the Company (the "Shares").
Your appointment as Placement Agent shall be sole
and
exclusive as of October 13, 1998 and during the Offering
Period
defined in paragraph 1.2 below, provided, however, that you
acknowledge and agree that the Company may set aside up to
1,000,000 of the Shares to be sold to Image Investors Co. or
its
affiliates and for which your compensation will be reduced in
accordance with Section 3.6 below. The Shares shall be sold
only to qualified "accredited investors" as such term is
defined
in Rule 501 promulgated under the Securities Act of 1933, as
amended (the "Act") and are to be sold in accordance with the
terms of the Registration Statement.
1.2 Offering Period and Closing. The "Offering Period" shall
mean that period commencing from the effective date (the
"Effective Date") of the Registration Statement (as such
term is defined below) and continuing until the earlier
of
(i) the date on which all of the Shares have been sold by
the Company, or (ii) December 31, 1998, unless mutually
extended by the Company and the Placement Agent.
1.3 Selected Dealers. You may, in your sole discretion,
request other registered dealers ("Selected Dealers" and,
in the singular, a "Selected Dealer") who are members in
good standing with the National Association of Securities
Dealers, Inc. to assist you as your agents in the efforts
to locate and make offers of the Shares to qualified
persons. Subject to the second paragraph of Section 1.1,
the allocation of Shares to be sold by you and the
Selected
Dealers shall be made by you. Before the Placement Agent
obtains such assistance from any Selected Dealer, the
Placement Agent will cause such Selected Dealer to
execute
an agreement pursuant to which, amount other matters,
such
Selected Dealer is appointed an agent of the Placement
Agent and not of the Company.
2. Representations and Warranties of the Company. The
Company
represents and warrants to the Placement Agent that:
2.1 Filings Under Securities Laws.
2.1.1 Pursuant to the Act. On October 13, 1998
the Company filed with the Securities and Exchange
Commission (the "Commission") a registration statement on
Form S-2 (Registration No. 333-65611), including any
related preliminary prospectus (a "Preliminary
Prospectus"), for the registration of the Shares under
the
Act. On October 22, 1998 the Company filed
Amendment No. 1 to the Registration Statement, on
November
30, 1998 the Company filed Amendment No. 2 to the
Registration Statement and on December 16, 1998 the
Company
filed Amendment No. 3 to the Registration Statement. The
Company either (i) will prepare and file, prior to the
effective date of such registration statement, an
amendment
to such registration statement, including a final
prospectus, or (ii) if the Company shall elect to rely on
Rule 430A promulgated under the Act ("Rule 430A"), will
promptly prepare and file a prospectus, in
accordance with the provisions of Rule 430A and Rule
424(b)
promulgated under the Act ("Rule 424(b)") promptly after
the effectiveness of such registration statement. Except
for information provided by the Placement Agent with
respect to the manner of the offering, such registration
statement, amendment(s) and/or prospectuses have been and
all amendments made subsequent to the date of this
agreement will be prepared by the Company in conformity
with the requirements of the Act, and the rules and
regulations of the Commission under the Act (the
"Regulations"). The registration statement, as amended,
on
file with the Commission at the time it becomes effective
(including the Final Prospectus (as defined below),
financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein
by reference and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule
430A ) is hereinafter called the "Registration
Statement,"
and the form of the Final Prospectus (including the
financial statements and all documents incorporated
therein
by reference), dated the Effective Date or
filed with the Commission pursuant to Rule 424(b), as the
case may be, is hereinafter called the "Prospectus."
2.1.2 Pursuant to the Exchange Act. The Company
has filed with the Commission such forms as may be
appropriate under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in connection with an
offering of the Shares.
2.2 No Stop or Other Orders. Neither the Commission,
nor
any state regulatory authority, has issued any order
preventing or suspending the use of any Preliminary
Prospectus or has instituted or threatened to
institute any proceedings with respect to such an
order. Each Preliminary Prospectus and any
amendment
or supplement thereto at the time of filing thereof,
conformed in all material respects to the
requirements
of the Act and the regulations promulgated
thereunder
("Regulations") and did not contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein, in light
of
the circumstances under which they were made, not
misleading.
2.3 Disclosures in Registration Statement.
2.3.1 Representation as to Contents. At the
time
the Registration Statement became effective and at all
times subsequent thereto up to the date of the closing of
the transactions contemplated hereby (the "Closing
Date"),
the Registration Statement and the Prospectus shall
contain
all material statements that are required to be stated
therein in accordance with the Act and the Regulations,
and
shall in all material respects conform to the
requirements
of the Act and the Regulations; neither the Registration
Statement nor the Prospectus, nor any amendment or
supplement thereto, on such dates, shall contain any
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, in light of the circumstances under
which they were made, not misleading. The representation
and warranty made in this Section 2.3.1 does not apply to
statements made or statements omitted in reliance upon
and
in conformity with information furnished to the Company
by
the Placement Agent expressly for use in the Registration
Statement or Prospectus or any amendment thereof or
supplement thereto. The Company acknowledges that such
information consists solely of the information under the
heading "Plan of Distribution" in the Prospectus and the
Registration Statement.
2.3.2 Disclosure Regarding Contracts. The
description in the Registration Statement and the
Prospectus of contracts, instruments and other documents
is
accurate in all material respects. Neither the Company
nor
Image Distributing, Inc., a Nevada corporation wholly-
owned
by the Company (the "Subsidiary"), is a party to any
contracts, instruments or other documents of a character
required to be described in the Registration Statement or
the Prospectus or to be filed with the Commission as
exhibits to the Registration Statement which have not
been
so described or filed. Each material contract, material
instrument and other material document (however
characterized or described) to which the Company or the
Subsidiary is a party or by which the property or
business
of the Company or of the Subsidiary is or may be bound or
affected and which is referred to in the Prospectus, or
is
material to the business of the Company and the
Subsidiary
taken as a whole, has been duly and validly executed by
the
Company or by the Subsidiary, as the case may be, is in
full force and effect and is enforceable against the
parties thereto in accordance with its terms except as
such
enforceability may be limited by bankruptcy, insolvency
and
creditors' rights generally and except as would not
reasonably be expected to have a material adverse effect
on
the financial condition, results of operations, business
or
properties of the Company and the Subsidiary taken as a
whole. None of the Company, the Subsidiary, nor, to the
best knowledge of the Company, any other party to any
such
material contract is in default thereunder and, to the
Company's best knowledge, no event has occurred which,
with
the lapse of time or the giving of notice, or both, would
constitute a material default by the Company or the
Subsidiary, as the case may be, thereunder.
2.3.3 Prior Securities Transactions. No
securities of the Company have been sold by or for the
benefit of the Company, within one year prior to the date
hereof, except as disclosed in the Registration Statement
(including documents incorporated therein by reference)
and
except for securities issued pursuant to employee plans
or
other outstanding rights to purchase securities.
2.4 No Material Adverse Change. From the date hereof
and
through the Closing Date, except as otherwise
specifically stated in the Registration Statement
and
the Prospectus, (i) there has been no material
adverse
change in the financial condition, results of
operations, assets, properties or business of the
Company and of the Subsidiary (taken as a whole),
including, but not limited to, any material loss or
interference with its business from fire, storm,
explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or
court or governmental action, order or decree,
whether
or not arising in the ordinary course of business,
and
(ii) there have been no transactions entered into by
the Company or the Subsidiary, other than those in
the
ordinary course of business, which are material with
respect to the financial condition, results of
operations, or business of the Company and of the
Subsidiary (taken as a whole).
2.5 Independent Accountants. To the Company's
knowledge,
KPMG Peat Marwick LLP, whose report is filed with
the
Commission as part of the Registration Statement,
are
independent accountants as required by the Act and
the
Regulations.
2.6 Financial Statements. The financial statements,
including the notes thereto and supporting
schedules,
if any, included in the Registration Statement (or
incorporated therein by reference) fairly present in
all material respects the financial position, the
results of operations and cash flows of the Company
at
the dates and for the periods to which they apply;
and, except as otherwise indicated in the
Registration
Statement, such financial statements have been
prepared in conformity with United States generally
accepted accounting principles, consistently applied
throughout the periods involved (except, in the case
of interim financial statements, for ordinary year-
end
adjustments); and the supporting schedules, if any,
included in the Registration Statement (or
incorporated therein by reference) present fairly
the
information required to be stated therein. No other
financial statements or schedules are required to be
included in the Registration Statement (or to be
incorporated therein by reference).
2.7 Capitalization. The Company had, at the date or
dates
indicated in the Registration Statement and
Prospectus, duly authorized, issued and outstanding
capitalization as set forth in the Registration
Statement and the Prospectus. Based on the
assumptions
stated in the Registration Statement and the
Prospectus, except for shares of common stock sold
or
issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation
plans or pursuant to outstanding options, rights or
warrants described in the Registration Statement,
the
Company will have on the Closing Date the adjusted
stock capitalization set forth therein. Except as
set
forth in the Registration Statement and the
Prospectus
and except for those issued pursuant to employee
benefit plans, qualified stock option plans or other
employee compensation plans, on the Effective Date
there will be no options, warrants, or other rights
to
purchase or otherwise acquire any authorized but
unissued shares of Common Stock or preferred stock
or
any security convertible into shares of Common Stock
or preferred stock, or any contracts or commitments
to
issue or sell shares of Common Stock or Preferred
Stock or any such options, warrants, rights or
convertible securities.
2.8 Representations Regarding Securities.
2.8.1 Outstanding Securities. All issued and
outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-
assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and
none of such securities were issued in violation of the
preemptive rights of any holder of any security of the
Company or similar contractual rights granted by the
Company. The outstanding options and warrants, if any, to
purchase shares of Common Stock constitute the valid and
binding obligations of the Company, enforceable in
accordance with their terms. The authorized Common Stock,
the preferred stock, and any outstanding options and
warrants to purchase shares of Common Stock conform to
all
statements relating thereto contained in the Registration
Statement and the Prospectus. The offers and sales of the
outstanding Common Stock, and any options and warrants to
purchase shares of Common Stock and the preferred stock,
were at all relevant times either registered under the
Act
and applicable state securities or Blue Sky Laws or were
exempt from such registration requirements.
2.8.2 Securities Sold Hereunder. The Shares
have
been duly authorized and, when issued and paid for, will
be
validly issued, fully paid and non-assessable and the
holders thereof are not and will not be subject to
personal
liability by reason of being such holders. Except as
described in the Registration Statement, the Shares are
not
and will not be subject to the preemptive rights of any
holders of any security of the Company or similar
contractual rights granted by the Company; and all
corporate action required to be taken for the
authorization, issuance and sale of the Shares has been
duly and validly taken.
2.9 No Registration Rights. Except as set forth in the
Registration Statement, no holder of any securities
of
the Company or of any options or warrants of the
Company exercisable for or convertible or
exchangeable
into securities of the Company has the right to
require the Company to register any such securities
of
the Company under the Act or to include any such
securities in a registration statement to be filed
by
the Company, including the Registration Statement.
2.10 Representations Regarding This Agreement. The
Company
has full corporate power and authority to enter into
this Agreement. This Agreement has been duly and
validly authorized by the Company and constitutes
the
valid and binding agreement of the Company,
enforceable against the Company in accordance with
its
terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or
similar laws offering creditors' rights generally,
(b)
as enforceability of any indemnification and
contribution provision may be limited under the
federal and state securities laws, and (c) that the
remedy of specific performance and injunctive and
other forms of equitable relief may be subject to
equitable defenses and to the discretion of the
court
before which any proceeding therefor may be brought.
The execution, delivery and performance by the
Company
of this Agreement, the consummation by the Company
of
the transactions herein contemplated and the
compliance by the Company with the terms and
conditions hereof have been duly authorized by all
necessary corporate action and do not and will not,
with or without the giving of notice or the lapse of
time or both, (i) result in a breach of, or conflict
with any of the terms and provisions of, or
constitute
a default under, or result in the creation,
modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of
the Company pursuant to the terms of any indenture,
mortgage, deed of trust, note, loan or credit
agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company
is
a party or by which the Company may be bound or to
which any of the property or assets of the Company
is
subject, which breach, conflict or default would
have
a material adverse effect on the condition
(financial
or other), business, or properties of the Company;
(ii) result in any violation of the provisions of
the
Articles of Incorporation or the Bylaws of the
Company; or (iii) violate any existing applicable
law,
rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its
properties or business which would reasonably be
expected to have a material adverse effect on the
financial condition, results of operations, business
or properties of the Company.
2.11 No Improper Payments. Neither the Company, the
Subsidiary, nor any director, officer, employee,
agent
or other person associated with or acting on behalf
of
the Company or of the Subsidiary has, directly or
indirectly: used any funds of the Company or of the
Subsidiary ("Company Funds") for unlawful
contributions, gifts, entertainment or other
unlawful
expenses relating to political activity; made any
unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic
political parties or campaigns from Company Funds;
violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any
bribe,
rebate, payoff, influence payment, kickback, or
other
unlawful payment; or otherwise received or retained
any funds in violation of any law, rule, regulation
or
ordinance, or of a character required to be
disclosed
in the Prospectus.
2.12 No Defaults; Violations. Except as set forth in the
Prospectus, no default exists in the due performance
and observance by the Company or by the Subsidiary
of
any material term, covenant or condition of any
license, contract, indenture, mortgage, deed of
trust,
note, loan or credit agreement, or any other
agreement
or instrument evidencing an obligation for borrowed
money, or any other agreement or instrument to which
the Company or the Subsidiary is a party or by which
the Company or the Subsidiary may be bound or to
which
any of the properties or assets of the Company or
the
Subsidiary are subject, except for those which would
not reasonably be expected to have a material
adverse
effect on the financial condition, results of
operations, business or properties of the Company
and
the Subsidiary taken as a whole. Neither the
Company
nor the Subsidiary is in violation of any term or
provision of its Articles of Incorporation or any
amendments thereto or of its Bylaws. Neither the
Company nor the Subsidiary is in violation of any
franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having
jurisdiction over the Company, the Subsidiary, or
any
of their respective properties or business, which
violation would reasonably be expected to have a
material adverse effect on the condition (financial
or
other), business or properties of the Company and
the
Subsidiary (taken as a whole).
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. Each of the Company
and the Subsidiary has all requisite corporate power and
authority, and has all necessary material authorizations,
approvals, orders, licenses, certificates and permits of
and from all governmental regulatory officials and bodies
to own or lease its properties and conduct its business
as
described in the Prospectus, and each of the Company and
the Subsidiary is and has been doing business
in compliance with all such authorizations, approvals,
orders, licenses, certificates and permits and all
federal,
state and local laws, rules and regulations, except where
the failure to so comply would not have a material
adverse
effect on the condition (financial or other), business or
properties of the Company and the Subsidiary (taken as a
whole).
2.13.2 Required Consents. Except as set forth in
the Prospectus, the Company has obtained all consents,
authorizations, approvals and orders required in
connection
with the execution and delivery of this Agreement and the
performance of its obligations hereunder, except for
those
which would not reasonably be expected to have a material
adverse effect on the financial condition, results of
operations, business or properties of the Company. No
consent, authorization or order of, and no filing with,
any
court, government agency or other body is required for
the
valid issuance, sale and delivery of the Shares pursuant
to
this Agreement and as contemplated by the Prospectus,
except those required under applicable federal and state
securities laws.
2.13.3 Subsidiaries. The Company owns all of the
outstanding capital stock of U.S. Laser Video
Distributors,
Inc. ("U.S. Laser") and Image Newco, Inc., a California
corporation ("Image/KC"). Neither U.S. Laser nor
Image/KC
conducts any material business activities or owns any
material assets, except that Image/KC is a party to that
certain Asset Purchase Agreement dated as of August 20,
1998 between Xxx Xxxxx'x Magnavox City, Inc. d/b/a Xxx
Xxxxx'x Home Entertainment (the "Seller") and Image/KC
pursuant to which Image/KC has agreed to acquire the
retail
LD and DVD sales business of the Seller.
2.14 Title to Property; Insurance. Except as described
in
the Registration Statement, each of the Company and
the Subsidiary has good and marketable title to, or
valid and enforceable leasehold interests in, all
items of real and personal property (tangible and
intangible) owned or leased by it, free and clear of
all liens, encumbrances, claims, security interests,
defects and restrictions of any material nature
whatsoever. Each of the Company and the Subsidiary
maintains such property, casualty and other
insurance
as is usually maintained by companies engaged in the
same business or in similar businesses.
2.15 Litigation. Except as set forth in the Registration
Statement, there is no action, suit, proceeding,
inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the knowledge
of the Company, threatened against, or involving the
properties or business of, the Company or of the
Subsidiary which would materially adversely affect
the
financial position or the properties or the business
of the Company and the Subsidiary taken as a whole,
or
which question the validity of the capital stock of
the Company or this Agreement or of any action taken
or to be taken by the Company pursuant to, or in
connection with, this Agreement. There are no
outstanding orders, judgments or decrees of any
court,
governmental agency or other tribunal naming the
Company or the Subsidiary and enjoining the Company
or
the Subsidiary from taking, or requiring the Company
or the Subsidiary to take, any action, or to which
the
Company or the Subsidiary or its respective
properties
or business, is bound or subject.
2.16 Organization; Good Standing. Each of the Company
and
the Subsidiary has been duly incorporated and is
validly existing as a corporation and is in good
standing under the laws of its state of
incorporation.
Each of the Company and the Subsidiary is duly
qualified and licensed and in good standing as a
foreign corporation in each jurisdiction in which
ownership or leasing of any properties or the
character of its operations requires such
qualification or licensing.
2.17 Taxes. The Company has filed all returns required
to be filed with taxing authorities prior to the
date
hereof or has duly obtained extensions of time for
the
filing thereof. The Company has paid all taxes shown
as due on such returns that were filed and has paid
all taxes imposed on or assessed against the
Company.
No issues have been raised (and are currently
pending)
by any taxing authority in connection with any of
the
returns or taxes asserted as due from the Company,
and
no waivers of statutes of limitation with respect to
the returns or collection of taxes have been given
by
or requested from the Company or any subsidiary.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finders' Fees. To the Company's
knowledge,
other than this Agreement, there are no claims, payments,
issuances, arrangements or understandings for services in
the nature of finders' or origination fees with respect
to
the sale of the Shares hereunder or any other
arrangements,
agreements, understandings, payments or issuances with
respect to the Company that may affect the Placement
Agent's compensation, as determined by the National
Association of Securities Dealers, Inc. (the "NASD").
2.18.2 Payments Within Twelve (12) Months. The
Company has not made any direct or indirect payments (in
cash, securities or otherwise) to (i) any person, as a
finder's fee, investing fee or otherwise, in
consideration
of such person raising capital for the Company or
introducing to the Company persons who provided capital
to
the Company, (ii) to any NASD member that is
participating
in the transactions contemplated hereby, or (iii) to any
person or entity that had any direct or indirect
affiliation with any NASD member prior to October 23,
1994,
and that is participating in the transactions
contemplated
hereby. 2.18.3 Use of Proceeds. Except a set forth in
the Registration Statement, none of the net proceeds of
the
offering will be paid by the Company to any NASD member
that is participating in the transactions contemplated
hereby or any of its affiliates.
2.18.4 Insiders' NASD Affiliation. No officer,
director or, to the Company's knowledge, holder of five
percent (5%) or more of any class of securities of the
Company has any direct or indirect affiliation or
association with any NASD member. No beneficial owner of
the Company's unregistered securities has any direct or
indirect affiliation or association with any NASD member
that is participating in the transactions contemplated
hereby.
2.19 Internal Accounting Controls. The Company
maintains a system of internal accounting control
sufficient to provide reasonable assurance that
(i)
transactions are executed in accordance with
management's general or specific authorization;
(ii) transactions are recorded as necessary to
permit preparation of financial statements in
conformity with generally accepted accounting
principles and to maintain accountability for
assets; (iii) access to assets is permitted only
in
accordance with management's general or specific
authorization; and (iv) the recorded
accountability
for assets is compared with existing assets at
reasonable intervals and appropriate action is
taken with respect to any differences.
2.20 Nasdaq NMS Listing. The Shares have been (or as
of
the Effective Date will be) approved for listing
on
the National Association of Securities Dealers
Automated Quotation National Market System
("Nasdaq
NMS").
2.21 Intangibles. Each of the Company and the
Subsidiary owns or possesses the requisite
licenses
or rights to use all trademarks, service marks,
service names, trade names, patents and patent
applications, copyrights and other rights
(collectively, the "Intangibles") owned or used
by
it, except to the extent that the lack of
ownership, license or right to use the same would
not reasonably be expected to have a material
adverse effect on the financial condition,
results
of operations, business or properties of the
Company and of the Subsidiary taken as a whole.
There is no claim or action by any person, or
proceeding pending or, to the Company's
knowledge,
threatened, and neither the Company nor the
Subsidiary has received any notice of conflict
with
the asserted rights of others, which challenges
the
right of the Company or the Subsidiary with
respect
to any Intangibles used in the conduct of the
Company's business or in the conduct of the
Subsidiary's business. To the Company's
knowledge,
the Intangibles and products, services and
processes of the Company and of the Subsidiary do
not infringe on any Intangibles held by any third
party. To the best of the Company's knowledge, no
others have infringed or are infringing upon the
Intangibles of the Company or of the Subsidiary.
2.22 Employee Matters. The Company and the Subsidiary
are in compliance with all federal, state and
local
laws and regulations respecting the employment of
its employees and employment practices, terms and
conditions of employment and wages and hours
relating thereto, except to the extent that the
failure to so comply would not reasonably be
expected to have a material adverse effect on the
financial condition, results of operations,
business or properties of the Company or of the
Subsidiary. There are no pending investigations
involving the Company or of the Subsidiary by the
U.S. Department of Labor or any other
governmental
agency responsible for the enforcement of such
federal, state or local laws and regulations.
There
is no unfair labor practice charge or complaint
against the Company or the Subsidiary pending
before the National Labor Relations Board or any
strike, picketing, boycott, dispute, slowdown or
stoppage pending or threatened against or
involving
the Company or the Subsidiary or any predecessor
entity, and none has ever occurred. No issue
concerning representation exists respecting the
employees of the Company or of the Subsidiary and
no collective bargaining agreement or
modification
thereof is currently being negotiated by the
Company or the Subsidiary. No grievance or
arbitration proceeding is pending or threatened
under any expired or existing collective
bargaining
agreement of the Company or of the Subsidiary, if
any.
2.23 Investment Company Representations. The Company
is
not an "investment company" or an "affiliated
person" of, or "promoter" or "principal
underwriter" for, an "investment company," as
such
terms are defined in the Investment Company Act
of
1940, as amended.
2.24 No Stabilization or Manipulation. Neither the
Company, the Subsidiary, nor any of their
respective officers, directors or controlling
persons, has taken, directly or indirectly, any
action designed, or which reasonably might be
expected, to cause or result, under the Act or
otherwise, in, or that has constituted,
stabilization or manipulation of the price of any
security of the Company or to facilitate the sale
or
resale of the Shares.
2.25 Absence of Certain Proceedings. Neither the
Company
nor any of the officers or directors of the
Company:
(i) Has filed a registration statement which is
the subject of any pending proceeding or examination under
Section 8
of the Act or is the subject of any refusal order or stop
order
thereunder within five years prior to the date of this
Agreement;
(ii) Is subject to any pending proceeding under Rule a
261
or any similar rule adopted under Section 3(b) of the Act or
to
an order entered thereunder within five years prior to the
date
of this Agreement;
(iii) Has been convicted within five years prior to the
date of this Agreement of any felony or misdemeanor in
connection with the purchase or sale of any security or
involving the making of any false filing with the Commission;
(iv) Is subject to any order, judgment or decree of any
court of competent jurisdiction temporarily or preliminary
restraining or enjoining, or is subject to any order, judgment
or decree or any court of competent jurisdiction entered
within
five years prior to the date of this Agreement permanently
restraining or enjoining such person from engaging in or
continuing any conduct or practice in connection with the
purchase or sale of any security or involving the making of
any
false filing with the Commission;
(v) Is subject to a United States Postal Service false
representation order entered under Section 3005 of Title 39,
United States Code, within five years prior to the date of
this
Agreement or is subject to a temporary restraining order or
preliminary injunction entered under Section 3007 of Title 000
Xxxxxx Xxxxxx Code, with respect to conduct alleged to have
violated Section 3005 of Title 000 Xxxxxx Xxxxxx Code;
(vi) Is subject to an order of the Commission entered pursuant
to Section 15(b), 15B(a) or 15B(c) of the Exchange Act or is
subject to any order of the Commission entered pursuant to
Section 203(3) or (f) of the Investment Advisers Act of 1940;
(vii) Is suspended or expelled from membership in or
suspended or barred from association with a member of an
exchange registered as a national securities exchange pursuant
to Section 6 of the Exchange Act, an association registered as
a
national securities association under Section 15A of the
Exchange Act, or a Canadian securities exchange or
association
for any act or omission to act constituting conduct
inconsistent
with just and equitable principles of trade; or
(viii) Is currently the subject of a Formal Order of
Investigation issued by the Commission.
3. Covenants of the Company. The Company covenants and
agrees with the Placement Agent as follows:
3.1 Amendments to Registration Statement. The
Company
shall deliver to the Placement Agent, prior to filing, any
amendment
or supplement to the Registration Statement or Prospectus
proposed
to be filed after the Effective Date and shall not file any
such
amendment or supplement to which the Placement Agent shall
reasonably object.
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when a
Prospectus is required to be delivered under the Act, the
Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act, the Regulations and
the
Exchange Act and by the regulations under the Exchange Act, as
from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Shares in
accordance
with the provisions hereof and the Prospectus. If at any time
when a Prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or
counsel for the Placement Agent, the Prospectus, as then
amended or supplemented, includes any untrue statement of a
material fact or omits to state any material fact required to
be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company shall notify
the
Placement Agent promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate
amendment or supplement in accordance with Section 10 of the
Act.
3.2.2 Filing of Prospectus. The Company shall
file the Prospectus (in form and substance reasonably
satisfactory to the Placement Agent) with the Commission
pursuant to the requirements of Rule 424 of the Regulations.
3.3 Blue Sky Filings. The Company shall endeavor in
good
faith, in cooperation with the Placement Agent and counsel to
the Placement Agent, at or prior to the time the Registration
Statement becomes effective, to qualify the Shares for
offering
and sale under the securities laws of such jurisdictions as
the
Placement Agent may reasonably designate, provided that no
such
qualification shall be required in any jurisdiction where, as
a
result thereof, the Company would be subject to service of
general process or would be required to qualify to do business
as a foreign corporation. In each jurisdiction where such
qualification shall be effected, the Company shall, unless the
Placement Agent agrees that such action is not at the time
necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may be
required by the laws of such jurisdiction.
3.4 Delivery of Filings to Placement Agent. The Company
shall deliver to the Placement Agent, without charge, from
time
to time during the period when the Prospectus is required to
be
delivered under the Act, such number of copies of each
Preliminary Prospectus and the Prospectus as the Placement
Agent
may reasonably request and, immediately after the Registration
Statement or any amendment or supplement thereto is filed,
deliver to the Placement Agent five (5) original executed
Registration Statements, or conformed copies thereof,
including
exhibits, and all post-effective amendments thereto and copies
of documents filed therewith and all original executed
consents
of certified experts.
3.5 Effectiveness and Events Requiring Notice to the
Placement Agent. The Company shall cause the Registration
Statement to remain effective and shall notify the Placement
Agent immediately and shall promptly confirm the notice in
writing of (i) the effectiveness of the Registration Statement
and any amendment thereto, (ii) the issuance by the Commission
of any stop order or of the initiation, or the threatening,
of
any proceeding for that purpose, (iii) the issuance by any
state
securities commission of any proceedings for the suspension of
the qualification of the Shares for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) the mailing and delivery to
the Commission for filing of any amendment or supplement to
the
Registration Statement or Prospectus, (v) the receipt of any
comments or request for any additional information from the
Commission, and (vi) the happening of any event during the
period described in Section 3.4 hereof that makes any
statement
of a material fact made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes
in
the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading. If the Commission or any
state securities commission shall enter a stop order or
suspend
such qualification at any time, the Company shall make every
reasonable effort to obtain promptly the lifting of such
order.
3.6 Compensation of Placement Agent. Funds from the sale of
Shares will be forwarded or caused to be forwarded directly
to
the Company on the Closing Date. The Company shall pay you
eight percent (8%) of the gross proceeds from the sale of
Shares; provided, however, that with respect to any Shares
sold
by the Company to Image Investors Co. or its affiliates (as
contemplated by Section 1.1), the Company shall pay you four
percent (4%) of the gross proceeds from the sale of such
Shares. The Company shall remit your compensation, including
the expenses referenced in Section 3.7.2 below, on the Closing
Date.
3.7 Payment of Expenses.
3.7.1 General Expenses. The Company shall bear
and pay all expenses incident to the performance of the
obligations of the Company under this Agreement, including,
but
not limited to, (i) the preparation, printing, filing and
mailing (including the payment of postage with respect to such
mailing) of the Registration Statement, the Preliminary
Prospectuses and the Prospectus and the printing and mailing
of
this Agreement and related documents, including the cost of
all
copies thereof and any amendments or supplements thereto
supplied to the Placement Agent in quantities as reasonably
may
be required by the Placement Agent, (ii) the printing,
engraving, issuance and delivery of the Shares, including any
transfer taxes and other taxes payable thereon, (iii) to the
extent applicable, the qualification of the Shares under state
or foreign securities or Blue Sky laws, including the costs of
printing and mailing the "Preliminary Blue Sky Registration
Statement," and all amendments and supplements thereto, fees
and disbursements for the Placement Agent's counsel and fees
and
disbursements of local counsel, if any, retained for such
purpose, (iv) filing fees incurred in registering the offering
with the NASD, (v) fees and disbursements of the transfer
agent,
(vi) any listing of the Shares on NASDAQ NMS, and (vii) all
other costs and expenses incident to the performance of its
obligations hereunder that are not otherwise specifically
provided for in this Section 3.7.1. The Placement Agent may
deduct or cause to be deducted from the net proceeds of the
offering payable to the Company, the expenses set forth herein
to be paid by the Company if not paid by the Company. If this
Agreement shall not be carried out for any reason whatsoever,
the Company shall remain liable for all of its actual out-of-
pocket expenses pursuant to this Section 3.7.1.
3.7.2 Placement Agent's Expenses. The Company further
agrees that, in addition to the expenses payable pursuant to
Section 3.7.1, upon the sale of the Shares, it shall pay to
the
Placement Agent, as a nonaccountable expense allowance, an
amount equal to two percent (2%) of the gross proceeds payable
to the Company from the sale of the Shares by certified or
cashier's check or, at the election of the Company, by
deduction
from the proceeds of the offering contemplated hereby. If the
offering contemplated by this Agreement is not consummated for
any reason, the Company shall be liable for the reasonable
actual documented out-ofpocket expenses of the Placement
Agent,
including fees and costs billed by counsel to the Placement
Agent.
3.8 Application of Net Proceeds. The Company shall
apply
the net proceeds from the offering received by it in a manner
consistent with the application described under the caption
"Use
of Proceeds" in the Prospectus and shall file such reports, if
any, with the Commission with respect to the sale of the
Shares
and the application of the proceeds therefrom as may be
required
pursuant to Rule 463 under the Act.
3.9 Press Releases. After the date hereof, except with
respect to press releases issued by the Company in the
ordinary
course of business relating to new LD or DVD releases, the
Company shall not issue a press release or engage in any other
publicity until twenty-five (25) days after the Effective
Date,
without the Placement Agent's prior written consent, which
consent shall not be unreasonably withheld.
4. Representations and Warranties and Covenants of the
Placement Agent. You represent and warrant to the Company and
agree that:
4.1 This Agreement has been duly authorized, executed
and
delivered by you and is a valid and binding agreement on your
part in accordance with its terms.
4.2 The consummation of the transactions contemplated
herein and those contemplated by the Registration Statement
will
not result in any breach of any of the terms or conditions of
or
constitute a default under any agreement or instrument to
which
you are a party, or by which you are bound, or any existing
law,
rule, regulation or existing order, writ injunction or decree
of
any government, governmental instrumentality, agency or body,
arbitration tribunal or court, domestic or foreign, directed
to
you and over which such body has jurisdiction.
4.3 You are a broker-dealer duly registered pursuant to
the provisions of the Exchange Act and are a member in good
standing of the NASD and you are duly licensed as a broker-
dealer under the applicable statutes and regulations of each
state in which you propose to and do offer or sell the
Shares.
You agree to maintain all of the foregoing registrations in
good
standing throughout the term of the offer and sale of the
Shares and you agree to comply with all statutes and other
requirements applicable to you as a broker-dealer pursuant to
those requirements or in respect of your activities in
connection with the offer or sale of the Shares.
4.4 Pursuant to your appointment:
(i) You will use your best efforts to sell the Shares
but will limit your offering of the Shares to persons whom
you have
reasonable grounds to believe and do believe are "accredited
investors," as such term is defined in Regulation D.
(ii) You will provide each offeree with a complete copy
of the Prospectus and all amendments and supplement(s) thereto
during the course of the offering and prior to sale and you
will
not deliver, and have not delivered, any Prospectus,
Registration Statement or Preliminary Prospectus without
delivering all items required to be delivered therewith in
accordance with the Act, as described under the caption
"Incorporation of Certain Information by Reference;
Deliveries"
in the Registration Statement.
(iii) In the event you utilize any sales materials,
reports or other analyses other than the Prospectus, you will
refrain from providing any such materials to any offeree of
the
Shares unless such specific materials are approved in advance
and in writing by the Company and Prospectus are also
delivered
to a purchaser before such purchaser acquires any Shares.
(iv) Until the termination of this Agreement, if any event
affecting the Company or you shall occur which, in the opinion
of the Company's counsel, should be set forth in a supplement
or
amendment to the Prospectus, you agree to distribute such
supplement or amendment to all persons who have previously
received a copy of the Prospectus from you and further agree
to
include such supplement or amendment in all further deliveries
of the Prospectus. The Company will at its own expense prepare
and furnish to you a reasonable number of copies of that
supplement or amendment for such distribution.
(v) You will promptly notify the Company in writing: (A)
when any event shall have occurred as a result of which any of
your representations or warranties herein would not be true
and
(B) of the receipt of any notification with respect to the
modification, rescission, withdrawal or suspension of the
qualification or registration of the Shares, or of an
exemption
from such registration or qualification, in any jurisdiction.
4.5 All of the information relating to you in the
Prospectus, or any amendment or supplement thereto, is true
and
correct, and there is no material information available to you
which should be included in the Prospectus in order to comply
with applicable securities laws that is not so included. With
respect only to information contained in the Prospectus
supplied
by you (including, without limitation, the information
contained
under the caption "Plan of Distribution"), the Prospectus, on
the date of issuance, will be accurate in all material
respects
and will not contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the
statements contained therein supplied by you, in light of the
circumstances existing at such dates, not misleading, and the
Prospectus will include all material information required to
be
included under applicable securities laws.
4.6 You will not offer the Shares for sale in any state
until the Company's counsel has advised you that the Shares
may
be offered for sale in such state(s). Upon being so advised,
you
shall offer the Shares for sale in any such state only in such
a
manner as shall be exempt from registration or qualification
with the applicable governmental authority of such state.
4.7 Neither you nor any of your officers, directors or
controlling persons, has taken, directly or indirectly, any
action designed, or which reasonably might be expected, to
cause
or result, under the Act or otherwise, in, or that has
constituted, stabilization or manipulation of the price of any
security of the Company or to facilitate the sale or resale of
the Shares.
5. Conditions of the Placement Agent's Efforts. The efforts
of the Placement Agent to sell the Shares on behalf of the
Company, as provided herein, shall be subject to the
continuing
accuracy of the representations and warranties of the Company
as
of the date hereof, to the accuracy of the statements of
officers of the Company made pursuant to the provisions hereof
and to the performance by the Company of its obligations
hereunder and to the following conditions:
5.1 Regulatory Matters.
5.1.1 Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later
than 5:00 P.M., Los Angeles time, on January 15, 1998, or such
later date and time as shall be consented to in writing by
you,
and, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
proceedings
for the purpose shall have been instituted or shall be pending
or contemplated by the Commission and any request on the part
of
the Commission for additional information shall have been
complied with to the reasonable satisfaction of Xxxxx Xxxxxxx
Xxxxxx & Xxxxxx LLP, counsel to the Placement Agent.
5.1.2 NASD Clearance. On or before the
Effective Date, the Placement Agent shall have received
clearance from the Corporate Financing Department of the NASD
as to the amount of compensation allowable or payable to the
Placement Agent as described in the Registration Statement.
5.1.3 No Blue Sky Stop Orders. No order
suspending the sale of the Shares in any jurisdiction
designated by you pursuant to Section 3.3 hereof shall have
been issued and no proceedings for that purpose shall have
been instituted or shall be Contemplated.
5.2 Company Counsel Matters.
5.2.1 Opinion of Counsel. On the Closing Date,
the Placement Agent shall have received the favorable opinion
of Xxxxxx X. Xxx, general counsel of the Company, dated the
Effective Date and the Closing Date, respectively, addressed
to the Placement Agent and in form and substance reasonably
satisfactory to Xxxxx Xxxxxxx Xxxxxx & Xxxxxx LLP, counsel to
the Placement Agent, to the effect that, subject to certain
assumptions, qualifications and exceptions:
(i) Each of the Company and the Subsidiary has been
duly
organized and is validly existing as a corporation and is in
good standing under the laws of its state of incorporation.
Each of the Company and the Subsidiary is duly qualified and
licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such
qualification or licensing (except where the failure to be so
qualified or licensed would not have a material adverse effect
on the Company and the Subsidiary taken as a whole).
(ii) To such counsel's knowledge, each of the Company and
the Subsidiary has all requisite corporate power and
authority,
and has all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all
governmental
or regulatory officials and bodies to own or lease its
properties and to conduct its business as described in the
Prospectus, and the Company is, to such counsel's knowledge,
in
compliance with all such authorizations, approvals, orders,
licenses, certificates and permits and all federal, state and
local laws, rules and regulations. Each of the Company and
the
Subsidiary has all requisite corporate power and authority to
enter into this Agreement and to carry out the terms and
conditions hereof. No consents, approvals, authorizations or
orders of, and no known filing with any court or governmental
agency or body (other than such as may be required under the
Act
and applicable Blue Sky laws), is required for the valid
authorization, issuance, sale and delivery of the Shares, and
the consummation of the transactions and agreements
contemplated
by this Agreement and as contemplated by the Prospectus or, if
required, all such authorizations, approvals, consents,
orders,
registrations, licenses and permits have been duly obtained
and
are in full force and effect and have been disclosed to the
Placement Agent.
(iii) The outstanding securities of the
Company have been duly authorized by all necessary corporate
action and are validly issued, fully paid and non-assessable.
The outstanding options, warrants and rights to purchase
shares
of Common Stock have been duly authorized by all necessary
corporate action on the part of the Company and have been
validly issued by the Company. To such counsel's knowledge,
the
authorized and outstanding capital stock of the Company set
forth within the Registration Statement are correct.
(iv) The Shares have been duly authorized and when issued
and delivered in accordance herewith will be, validly issued,
fully paid and non-assessable; the holders thereof are not and
will not be subject to personal liability by reason of being
such holders. The Shares are not and will not be subject to
the
preemptive rights of any holders of any security of the
Company
or, to the best of such counsel's knowledge after due inquiry,
similar contractual rights granted by the Company. All
corporate
action required to be taken by the Company for the
authorization, issuance and sale of the Shares has been duly
and validly taken. (v) Except as set forth in the Prospectus,
no holder of any securities of the Company or of any options,
warrants or securities of the Company exercisable for or
convertible or exchangeable into securities of the Company has
the right to require the Company to register any such
securities
of the Company under the Act or to include any such securities
in a registration statement to be filed by the Company,
including the Registration Statement.
(vi) The Shares have been approved for listing on Nasdaq
NMS.
(vii) The Company's execution and delivery of, and
performance of its obligations on or prior to the date of this
opinion under, the Agreement, and the Company's issuance of
the
Shares, do not (a) violate the Company's Articles or Bylaws,
(b)
violate, breach or result in a default under any existing
obligation of or restriction on the Company under any other
agreement listed as an exhibit to the Registration Statement
(the "Other Agreements") or (c) to my knowledge, breach or
otherwise violate any existing obligation of or restriction on
the Company under any order, judgment or decree of any
California or federal court or governmental authority binding
on
the Company provided that counsel need express no opinion as
to
the effect of the Company's performance of its obligations in
the Agreement on the Company's compliance with financial
covenants in the Other Agreements.
(viii) The Shares and all other securities issued or
issuable by the Company conform in all material respects to
the
description thereof contained in the Registration Statement
and
the Prospectus. Statements in the Prospectus (other than those
supplied by the Placement Agent and set forth under the
caption
"Plan of Distribution"), insofar as they refer to statements
of
law, descriptions of statutes, licenses, rules or regulations
have been reviewed by such counsel and are correct in all
material respects. No statute or regulation or legal or
governmental proceeding required to be described in the
Prospectus is not described as required, nor are any
contracts,
instruments or other documents known to such counsel, after
due
inquiry, of a character required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement not so described or
filed
as required.
(ix) Such counsel has participated in conferences with
officers and other representatives of the Company,
representatives of the independent public accountants for the
Company, Placement Agent at which the contents of the
Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except as otherwise
expressly set forth in her opinion), on the basis of the
foregoing (relying as to the factual matters upon the
statements
of officers and other representatives of the Company and state
officials) no facts have come to the attention of such counsel
that caused her to believe that the Registration Statement
(other than the financial statements and notes thereto and
other
financial, numerical, statistical and accounting data included
therein, or omitted therefrom, as to which no opinion is
requested or need be rendered) as amended or supplemented, at
the time such Registration Statement became effective,
contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading (other than
information omitted therefrom in reliance on Rule 430A under
the
Act), or the Prospectus (other than the financial statements
and
notes thereto and other financial, numerical, statistical and
accounting data included therein, or omitted therefrom, as to
which no opinion is requested or need be rendered) as amended
or
supplemented, as of its date and the date of this Agreement,
contained an untrue statement of material fact or omitted to
state a material fact necessary in order to make the
statements
therein, in light of the circumstances under which they were
made, not misleading.
(x) The Registration Statement is effective under the
Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to such counsel's
knowledge, are pending or threatened under the Act or
applicable state securities laws. (xi) To such counsel's
knowledge, except as described in the Prospectus, no material
default exists in the due performance and observance of any
term, covenant or condition of any material license, contract,
indenture, mortgage, deed of trust, note, loan or credit
agreement, or any other material agreement, instrument or
other document evidencing an obligation for borrowed money, or
any other material agreement, instrument or other document to
which the Company is a party or by which the Company may be
bound or to which any of the properties or assets of the
Company is subject. The Company is not in violation of any
term or provision of its Articles of Incorporation, including
any amendments thereto, or Bylaws, or, to such counsel's
knowledge, any material franchise, license, permit, applicable
law, rule, regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over
the Company or any of its properties or business, except as
described in the Prospectus.
(xii) To such counsel's knowledge after due inquiry,
except as described in the Registration Statement, the Company
does not own any interest in any corporation, partnership,
joint venture, trust or other business entity.
(xiii) To counsel's knowledge after due inquiry,
except as set forth in the Prospectus, there is no action,
suit or proceeding before or by any court of governmental
agency or body, domestic or foreign, now pending, or
threatened against the Company, which would have a material
adverse effect on the Company.
(xiv) To the knowledge of such counsel, since the
effective date of the Registration Statement, no event has
occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus
which has not been set forth in such an amendment or
supplement.
5.2.2 Closing Date Opinion of Outside Counsel. On
the Closing Date, the Placement Agent shall have received the
favorable opinion of O'Melveny & Xxxxx LLP, outside counsel to
the Company, and dated the Closing Date, addressed to the
Placement Agent and in form and substance reasonably
satisfactory to Xxxxx Xxxxxxx Xxxxxx & Xxxxxx LLP, counsel to
Placement Agent, to the effect that subject to certain
assumptions, qualifications and exceptions:
(i) The Company has been duly incorporated, and is
validly existing in good standing under the laws of the State
of California, with corporate power to own its properties and
assets, to carry on its business as described in the
Prospectus, to enter into the Agreement and to perform its
obligations under the Agreement.
(ii) The authorized capital stock of the Company consists
of 25,000,000 shares of Common Stock and 3,365,385 shares of
Preferred Stock.
(iii) The Shares have been duly authorized by all
necessary corporate action on the part of the Company and,
upon payment for
and delivery of the Shares in accordance with the Agreement
and the countersigning of the certificate or certificates
representing the Shares by a duly authorized signatory of the
registrar for the Company's Common Stock, the Shares will be
validly issued, fully paid, and non-assessable.
(iv) No personal liability for the debts of the Company
will be imposed on any holders of the Shares under the laws of
the State
of California solely as a result of the ownership of the
Shares.
(v) Holders of the outstanding shares of Common Stock of
the Company are not entitled to any preemptive right to
subscribe to
any additional shares of the Company's capital stock pursuant
to
the Company's Restated Articles or Bylaws.
(vi) The execution, delivery and performance of the
Agreement have been duly authorized by all necessary corporate
action on the part of the Company, and the Agreement has been
duly executed and delivered by the Company.
(vii) The Company's execution and delivery of, and
performance of its obligations on or prior tot he date of this
opinion under, the Agreement, and the Company's issuance of
the Shares, do not violate the Company's Restated Articles or
the Bylaws.
(viii) No order, consent, permit or approval of any
California or federal governmental authority that such counsel
has, in the exercise of customary professional diligence,
recognized as applicable to the Company or to transactions of
the type contemplated by the Agreement is required on the part
of the Company for the execution and delivery of the Agreement
or for the issuance and sale of the Shares, except such as
have been obtained under the Act and such as may be required
under applicable Blue Sky or state securities laws.
(ix) The Registration Statement, on the date it was
filed, appeared on its face to comply in all material respects
with the requirements as to form for registration statements
on Form S-2 under the Act and the related rules and
regulations in effect at
the date of filing, except that we express no opinion
concerning (a) the financial statements and other financial
information contained or incorporated by reference therein or
(b) the information provided by you included under the caption
"Plan of Distribution."
(x) The statements in the Prospectus under the caption
"Description of Capital Stock," insofar as they summarize
provisions of the Company's Restated Articles and Bylaws,
fairly present the information required by Form S-2.
(xi) The Registration Statement has been declared
effective under the Act and, to such counsel's knowledge, no
stop order
suspending the effectiveness of the registration Statement has
been issued or threatened by the Commission.
(xii) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(xiii) The execution, delivery and performance of the
Acquisition Agreement have been duly authorized by all
necessary corporate action on the part of Image/KC, and the
Acquisition Agreement has been duly executed and delivered by
Image/KC.
(xiv) The Acquisition Agreement constitutes the
legally valid and binding obligation of Image/KC, enforceable
against Image/KC
in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws)
and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good
faith, and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
(xv) Image/KC's execution and delivery of, and
performance of its obligations on or prior to the date of this
opinion under, the
Acquisition Agreement do not violate Image/KC's Articles of
Incorporation or Bylaws.
5.2.3 Reliance. In rendering such opinions, such
counsel may rely (i) as to matters involving the application
of laws other than the laws of the United States, the laws of
the state of California and jurisdictions in which they are
admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Placement
Agent' counsel) of other counsel reasonably acceptable to
Placement Agent's counsel, familiar with the applicable laws,
and (ii) as to matters of fact, to the extent they deem
proper, (A) on certificates or other written statements of
responsible officers of the Company and (B) on certificates or
other written statements of officers of departments of various
jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be
delivered to Placement Agent's counsel. Opinions of each
counsel shall include a statement to the effect that they may
be relied upon by counsel for the Placement Agent. Such
opinion may assume the due authorization, execution and
delivery of all documentation referred to therein by the
parties thereto other than the Company.
5.3 Cold Comfort Letter. At the Effective Date and at
the Closing Date, you shall have received a letter, addressed
to the Placement Agent and in form and substance reasonably
satisfactory in all respects (including the non-material
nature of the changes or decreases, if any, referred to in
clause (iii) below) to you of KPMG Peat Marwick LLP dated,
respectively, as of the date of this Agreement and as of the
Closing Date:
(i) Confirming that they are independent accountants
with respect to the Company within the meaning of the Act and
the applicable Regulations;
(ii) Stating that in their opinion the financial
statements of the Company included in the Registration
Statement and Prospectus (or incorporated by reference
therein) comply as to form in all material respects with the
applicable accounting requirements of the Act and the
Regulations;
(iii) Stating that, on the basis of a limited review
which included a reading of the latest available unaudited
interim financial statements of the Company (with an
indication of the date of such unaudited financial
statements), a reading of the latest available minutes of the
stockholders and Board of Directors of the Company and the
various committees of the Board of Directors of the Company,
consultations with officers and other employees of the Company
responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their
attention which would lead them to believe that (a) the
unaudited financial statements of the Company included in the
Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements
of the Act and the Regulations or are not fairly presented in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements of the Company included in the
Registration Statement, (b) at a date not later than five (5)
days prior to the Effective Date and Closing Date (or other
date as may be agreed upon between them and the Placement
Agent) as the case may be, there was any change in the capital
stock or long-term debt of the Company, or any decrease in the
stockholders' equity of the Company as compared with amounts
shown in the most recent balance sheet included in the
Registration Statement (or incorporated by reference therein),
other than as set forth in or contemplated by the Registration
Statement, or, if there was any decrease, setting forth the
amount of such decrease, and (c) during the period from
October 1, 1998 to a specified date not later than five (5)
days prior to the Effective Date or Closing Date, if any, as
the case may be, there was any decrease in revenues, net
earnings or net earnings per share of Common Stock, in each
case as compared with the corresponding period in the
preceding year, other than as set forth in or contemplated by
the Registration Statement, or, if there was any such
decrease, setting forth the amount of such decrease;
(iv) Stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings and other financial information pertaining to the
Company set forth in the Prospectus in each case to the extent
that such amounts, numbers, percentages and information may be
derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring
an interpretation by legal counsel, with the results obtained
from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not
constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found
them to be in agreement; and
(v) Statements as to such other matters incident to the
transactions contemplated hereby as you may reasonably
request.
5.4 Certificates.
5.4.1 Officers' Certificates. At the Closing
Date, the Placement Agent shall have received a certificate of
the Company signed by each of the Chief Executive Officer and
the Chief Financial Officer of the Company, dated the Closing
Date, to the effect that the Company has performed in all
material respects all covenants and complied in all material
respects with all conditions required by this Agreement to be
performed or complied with by the Company prior to and as of
the Closing Date, and that the conditions set forth in Section
5.5 hereof have been satisfied as of such date and that, as of
the Closing Date, the representations and warranties of the
Company set forth in Section 2 hereof are true and correct in
all material respects. In addition, the Placement Agent shall
have received such other and further certificates of officers
of the Company as the Placement Agent may reasonably request.
5.4.2 Secretary's Certificate. At the Closing
Date, the Placement Agent shall have received a certificate of
the Company signed by the Secretary of the Company, dated the
Closing Date, certifying (i) that the Articles of
Incorporation, as amended, and Bylaws, as amended, of the
Company are true and complete, have not been modified and are
in full force and effect, (ii) that the resolutions relating
to the offering contemplated by this Agreement and the
transactions contemplated hereby are in full force and effect
and have not been modified, (iii) all correspondence between
the Company or its counsel and the Commission, (iv) all
correspondence between the Company or its counsel and Nasdaq
and (v) as to the incumbency of the officers of the Company.
The documents referred to in such certificate shall be
attached to such certificate.
5.5 No Material Changes. Prior to and on the Closing
Date, (i) there shall have been no material adverse change in
the financial condition or the business of the Company from
the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus, (ii) there shall
have been no transaction, not in the ordinary course of
business, entered into by the Company from the latest date as
of which the financial condition of the Company is set forth
in the Registration Statement and the Prospectus which has
been materially adverse to the Company, (iii) the Company
shall not be in default under any provision of any instrument
relating to any outstanding indebtedness which default would
have a material adverse effect on the Company, (iv) no
material amount of the assets of the Company shall have been
pledged or mortgaged, except as described in the Registration
Statement, (v) no action, suit or proceeding, at law or in
equity, shall be pending or threatened against the Company or
affecting any of its property or business before or by any
court or federal or state commission, board or other
administrative agency wherein an unfavorable decision, ruling
or finding may materially adversely affect the business,
operations, or financial condition of the Company, except as
set forth in the Registration Statement or Prospectus, (vi) no
stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened
by the Commission, and (vii) the Registration Statement and
the Prospectus and any amendments or supplements thereto shall
contain all material statements that are required to be stated
therein in accordance with the Act and the Regulations and
shall conform in all material respects to the requirements of
the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any 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, in light
of the circumstances under which they were made, not
misleading.
5.6 Opinion of Counsel for the Placement Agent. All
proceedings taken in connection with the authorization,
issuance or sale of the Shares as herein contemplated shall be
reasonably satisfactory in form and substance to you and to
counsel to the Placement Agent, and you shall have received
from such counsel a favorable opinion, dated the Closing Date
with respect to such of these proceedings as you may
reasonably require. On or prior to the Closing Date, counsel
for the Placement Agent shall have been furnished with such
documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 5.6, or in order
to evidence the accuracy, completeness or satisfaction of any
of the representations, warranties or conditions herein
contained.
6. Indemnification.
6.1 Indemnification of the Placement Agent.
6.1.1 General. Subject to the conditions set
forth below, the Company agrees to indemnify and hold harmless
the Placement Agent, its directors, officers and employees and
each person, if any, who controls the Placement Agent (a
"controlling person") within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against any and all
loss, liability, claim, damage and expense whatsoever (subject
to the Company's right to assume the defense as set forth in
Section 6.1.2, including but not limited to any and all legal
or other expenses reasonably incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) to which they or any of
them may become subject under the Act, the Exchange Act or any
other statute or at common law or otherwise or under the laws
of foreign countries, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact
contained in (i) the Registration Statement, any Preliminary
Prospectus or the Prospectus (as from time to time each may be
amended or supplemented); (ii) in any post-effective amendment
or amendments or any new registration statement and prospectus
in which the Shares are included; or (iii) any application or
other document or written communication (in this Section 6
collectively called "application") executed by the Company or
based upon written information furnished by the Company in any
jurisdiction in order to qualify the Shares under the
securities laws thereof or filed with the Commission, any
state securities commission or agency, or Nasdaq NMS; or the
omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, unless such statement or
omission was made in reliance upon and in conformity with
written information furnished to the Company with respect to
the Placement Agent by or on behalf of the Placement Agent
expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be.
The Company agrees promptly to notify the Placement Agent of
the commencement of any litigation or proceedings against the
Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Shares or
in connection with the Registration Statement or the
Prospectus.
6.1.2 Procedure. If any action is brought against
the Placement Agent or controlling person in respect of which
indemnity may be sought against the Company pursuant to
Section 6.1.1, the Placement Agent shall promptly notify the
Company in writing of the institution of such action, (but the
failure or delay to so notify the Company shall not relieve it
from any liability it may have hereunder, except to the extent
that such failure or delay results in the forfeiture by the
Company of rights or defenses or any other loss to the
Company) and the Company shall have the right to assume the
defense of such action, including the employment and fees of
counsel (which counsel shall be reasonably satisfactory to the
Placement Agent) and payment of actual expenses incurred in
connection therewith. The Placement Agent or controlling
person shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel
shall be at the expense of the Placement Agent or such
controlling person unless (i) the employment of such counsel
shall have been authorized in writing by the Company in
connection with the defense of such action, (ii) the Company
shall not have employed counsel to have charge of the defense
of such action, or (iii) counsel for such indemnified party or
parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or
in addition to those available to the Company and which are
not being pursued by the Company (in which case the Company
shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties), in any of
which events the fees and expenses of not more than one
additional firm of attorneys selected by the Placement Agent
and/or controlling person shall be borne by the Company;
provided that the person seeking indemnity shall provide the
Company with reasonably prompt notice in writing if separate
counsel is employed for the reasons set forth in clauses (ii)
or (iii) above.
Notwithstanding anything to the contrary contained herein, if
the Placement Agent or controlling person shall assume the
defense of such action as provided above, the Company shall
have the right to approve the terms of any settlement of such
action which approval shall not be unreasonably withheld.
6.2 Indemnification of the Company. The Placement Agent
agrees to indemnify and hold harmless the Company against any
and all loss, liability, claim, damage and expense described
in the foregoing indemnity from the Company to the Placement
Agent, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions
directly relating to the transactions effected by the
Placement Agent in connection with this offering made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto or in any
application in reliance upon, and in strict conformity with,
written information furnished to the Company by the Placement
Agent (including the information contained in the Prospectus
under the caption "Plan of Distribution") expressly for use in
such Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto or in any
such application. In case any action shall be brought against
the Company, based on any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or
supplement thereto or any application, and in respect of which
indemnity may be sought against the Placement Agent, the
Placement Agent shall have the rights and duties given to the
Company and the Company shall have the rights and duties given
to the Placement Agent by the provisions of Section 6.1.2.
Notwithstanding anything in this Agreement to the contrary,
the maximum liability of the Placement Agent for
indemnification or contribution under this Agreement shall not
exceed the amount of commissions received by the Placement
Agent at Closing.
6.3 Contribution. In order to provide for just and
equitable contribution under the Act in any case in which (i)
any person entitled to indemnification under this Section 6
makes claim for indemnification pursuant hereto but it is
judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 6 provides for
indemnification in such case, or (ii) contribution under the
Act, the Exchange Act or otherwise may be required on the part
of any such person in circumstances for which indemnification
is provided under this Section 6, then, and in each such case,
each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement
Agent on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the
Company on the one hand and the Placement Agent on the other
hand; provided, however, that, no person guilty of a
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this
paragraph 6.3, the Placement Agent shall not be required to
contribute in the aggregate any amount in excess of the
limitation set forth in the last sentence of paragraph 6.2.
For purposes of this Section 6, each respective director,
officer and employee of the Placement Agent, and each
respective person, if any, who controls the Placement Agent
within the meaning of Section 15 of the Act shall have the
same rights to contribution as the Placement Agent.
7. Representations and Agreements to Survive Delivery.
Except as the context otherwise requires, all representations,
warranties and agreements contained in this Agreement shall be
deemed to be representations, warranties and agreements at the
Closing Date, and such representations, warranties and
agreements of the Placement Agent and the Company, including
the indemnity agreements contained in Section 6 hereof, shall
remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Placement Agent,
the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of
the Shares.
8. Effective Date of This Agreement and Termination Hereof.
8.1 Effective Date. This Agreement shall become
effective upon its execution.
8.2 Termination.
8.2.1 Termination by Placement Agent. You shall
have the right to terminate this Agreement at any time prior
to the Closing Date: (i) if trading on the New York Stock
Exchange or the American Stock Exchange, or in the over-the-
counter market shall have been suspended, or minimum or
maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities shall have been
required in the over-the-counter market by the NASD or by
order of the Commission or any other government authority
having jurisdiction and such suspension or limitation has not
been lifted or removed within three business days of first
being implemented, (ii) if a banking moratorium has been
declared by a New York State or federal authority and such
moratorium has not been lifted or removed within three
business days of first being implemented, (iii) if a
moratorium on foreign exchange trading has been declared which
materially adversely impacts the United States securities
market and such moratorium has not been lifted or removed
within three business days of first being implemented, (iv) if
the Company shall have sustained a material loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such
loss shall have been insured, will, in your opinion, make it
impossible to sell the Shares, (v) if the Company has breached
any of its representations, warranties or obligations
hereunder in any material respect, or failed to expeditiously
proceed with the offering or to cooperate with you in
requesting effectiveness of the Registration Statement at such
time as you may deem appropriate, (vi) if the Placement Agent
shall have become aware after the date hereof of such a
material adverse change in the financial condition or business
of the Company as in your judgment would make it impracticable
to proceed with the offering, sale and/or delivery of the
Shares or to enforce contracts made by the Placement Agent for
the sale of the Shares, or (vii) if the Placement Agent shall
have become aware after the date hereof of such material
adverse change in general market conditions as in your
judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Shares or to enforce
contracts made by the Placement Agent for the sale of the
Shares.
8.2.2 Termination by the Company. The Company
shall have the right to terminate this Agreement at any time
prior to the Closing Date if: (i) the Placement Agent shall
have failed, refused or been unable to perform any of its
material obligations hereunder; (ii) any other material condition
hereunder which is required to be fulfilled by the Placement
Agent is not fulfilled; (iii) the Asset Purchase Agreement
dated as of August 20, 1998 between the Company and Xxx
Xxxxx'x Magnavox City, Inc., as amended, is abandoned or
terminated; (iv) the parties are unable to agree on a price
for which the Shares are to be sold or the price necessary to
sell the Shares would result in any existing shareholder of
the Company having the right to purchase additional shares of
common stock of the Company in accordance with anti-dilution
rights held by such shareholders; (v) the Company shall have
become aware after the date hereof of such a material adverse
change in general market conditions or in the market for the
Company's common stock as would make it impracticable for the
Company to proceed with the offering contemplated hereby for
the purposes for which such offering is contemplated; or (vi)
the Board of Directors of the Company, in its sole discretion,
determines that it would not be in the best interests of the
Company or its shareholders for the Company to consummate the
transactions contemplated hereby.
8.3 Notice. If either party elects to terminate this
Agreement as provided in paragraph 8.2, the other party shall
be notified on the same day as such election is made by
telephone or telecopy, confirmed by letter.
8.4 Expenses. In the event that this Agreement shall
not be carried out for any reason whatsoever within the time
specified herein or any extensions thereof pursuant to the
terms herein, the obligations of the Company to pay the
expenses related to the transactions contemplated herein shall
be governed by paragraph 3.7 hereof.
8.5 Indemnification. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder
or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section
6 shall not be in any way affected by such election or
termination or failure to carry out the terms of this
Agreement or any part hereof.
9. Miscellaneous.
9.1 Notices. All communications hereunder, except as
herein otherwise specifically provided, shall be in writing
and shall be mailed, delivered or telecopied and confirmed:
If to the Placement Agent:
MDB Capital Group LLC
000 Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
Copy (not constituting notice) to:
Xxxxx Xxxxxxx Xxxxxx & Xxxxxx LLP
00000 Xxxxx Xxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
If to the Company:
Image Entertainment Inc.
0000 Xxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx
Attention: Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
Telecopier No.: (000) 000-0000
Copy (not constituting notice) to:
O'Melveny & Xxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
9.2 Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any
way limit or affect the meaning or interpretation of any of
the terms or provisions of this Agreement.
9.3 Amendment. This Agreement may only be amended by a
written instrument executed by each of the parties hereto.
9.4 Entire Agreement. This Agreement (together with the
other agreements and documents being delivered pursuant to or
in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject
matter hereof,
and supersede all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter
hereof.
9.5 Binding Effect. This Agreement shall inure
solely to the benefit of and shall be binding upon, the
Placement Agent, the Company, and the controlling persons,
directors and officers referred to in Section 9 hereof, and
their respective successors, legal representatives and
assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions
herein contained.
9.6 Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of California, without giving effect to conflict of laws
rules of such State. In the event of any action between the
Company and the Placement Agent, the prevailing party in any
action shall be entitled to recover from the other party all
of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with
the preparation therefor.
9.7 Bound Volumes. The Company shall supply to the
Placement Agent and the Placement Agent's counsel, at the
Company's cost, not less than three bound volumes each of all
relevant documents and other materials relating to the
offering, the Closing, and related post-Closing materials.
9.8 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall
be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by
each of the parties hereto and delivered to each of the other
parties hereto.
9.9 Waiver, Etc. The failure of any of the parties
hereto to at any time enforce any of the provisions of this
Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of
the parties hereto to thereafter enforce each and every
provision of this Agreement. No waiver of any breach, non-
compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or
which enforcement of such waiver is sought; and no waiver of
any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent
breach, non-compliance or non-fulfillment.
If the foregoing correctly sets forth the understanding
among the Placement Agent and the Company, please so indicate
in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
IMAGE ENTERTAINMENT, INC.
By:
Xxxxxx X. Xxxxxxxxx,
Chairman of the
Board and Chief Executive Officer
Accepted as of the date first
above written
Los Angeles, California
MDB CAPITAL GROUP LLC
By:
Xxxxxxxxxxx X. Xxxxxxx Managing Director
