Registration Rights Agreement Series C Junior Participating Preferred Stock
Exhibit 10.4
Series C Junior Participating Preferred Stock
This Registration Rights Agreement, dated as of January 8, 2010, is by and among Image
Entertainment, Inc., a Delaware corporation (the “Company”), JH Partners, LLC as the
Investor Representative, and the several investors listed on Schedule 1 (together with their
Permitted Transferees, collectively, the “Investors”).
WHEREAS, the Company and the Investors entered into a Securities Purchase Agreement dated
December 21, 2009 (the “Purchase Agreement”) pursuant to which the Company agreed to sell
to the Investors, and the Investors agreed to purchase from the Company, 22,000 shares of the
Company’s Series B Cumulative Preferred Stock, par value $0.0001 per share (the “Series B
Preferred”), and 196,702 shares of the Company’s Series C Junior Participating Preferred Stock,
par value $0.0001 per share (the “Series C Preferred”) on the terms and subject to the
conditions set forth in the Purchase Agreement; and
WHEREAS, in connection with such purchase and sale, the Company has agreed to grant to the
Investors the right, under certain circumstances, to purchase up to an additional 8,000 shares of
Series B Preferred and 71,528 shares of the Series C Preferred; and
WHEREAS, it is as an inducement to the Investors to enter into the Purchase Agreement and a
condition to the closing of the transactions contemplated by the Purchase Agreement that the
Company and the Investors enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the agreements contained in this
Agreement, and intending to be legally bound by this Agreement, the Company and the Investors agree
as follows:
1. Definitions. Capitalized terms used and not otherwise defined in this Agreement
that are defined in the Purchase Agreement shall have the respective meanings given such terms in
the Purchase Agreement. As used in this Agreement, the following terms shall have the respective
meanings set forth in this Section 1:
“Automatic Shelf Registration Statement” means an “automatic shelf registration
statement” as defined in Rule 405 under the Securities Act.
“Business Day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday
and is not a day on which banking institutions in New York, New York or Los Angeles, California
generally are authorized or obligated by law, regulation or executive order to close.
“Company” shall have the meaning set forth in the preamble of this Agreement.
“Effectiveness Deadline” means with respect to any registration statement required to
be filed to cover the resale by the Investors of the Registrable Securities pursuant to Section 2,
(i) the date such registration statement is filed, if the Company is a WKSI as of such date and
such registration statement is an Automatic Shelf Registration Statement eligible to become
immediately effective upon filing pursuant to Rule 462, or (ii) if the Company is not a WKSI as of
the date such registration statement is filed, the 5th Business Day following the date
on which the Company is notified by the SEC that such registration statement will not be reviewed
or is not subject to further review and comments and will be declared effective upon request by the
Company.
“Electing Investors” means, with respect to a registration, each of the Investors that
has elected to register Registrable Securities directly owned by such Investor in accordance with
Section 2 or 3, as the case may be, as communicated in writing to the Company by the Investor
Representative in accordance with Section 2(a) or 3(a), as applicable.
“Filing Deadline” means with respect to any registration statement required to be
filed to cover the resale by the Investors of the Registrable Securities pursuant to Section 2, (i)
15 Business Days following the written notice of demand therefor by the Investor Representative, if
the Company is a WKSI as of the date of such demand, or (ii) if the Company is not a WKSI as of the
date of such demand, (x) 20 Business Days following the written notice of demand therefor if the
Company is then eligible to register for resale the Registrable Securities on Form S-3 or (y) if
the Company is not then eligible to use Form S-3, 45 Business Days following the written notice of
demand therefor, provided that, to the extent that the Company has not been provided the
information regarding the Electing Investors and their Registrable Securities in accordance with
Section 9(b) at least two Business Days prior to the applicable Filing Deadline, then the such
Filing Deadline shall be extended to the second Business Day following the date on which such
information is provided to the Company.
“Freely Tradable” shall mean, with respect to any security, a security that (a) is
eligible to be sold by the holder thereof without any volume or manner of sale restrictions under
the Securities Act pursuant to Rule 144 thereunder, (b) bears no legends restricting the transfer
thereof and (c) bears an unrestricted CUSIP number (to the extent such security is issued in global
form).
“Indemnified Party” shall have the meaning set forth in Section 8(c).
“Indemnifying Party” shall have the meaning set forth in Section 8(c).
“Investor Indemnitee” shall have the meaning set forth in Section 8(a).
“Investors” shall have the meaning set forth in the preamble of this Agreement.
“Other Securities” shall have the meaning set forth in Section 3(a).
“Permitted Transferees” shall have the meaning set forth in Section 11(d).
“Piggyback Notice” shall have the meaning set forth in Section 3(a).
“Piggyback Registration” shall have the meaning set forth in Section 3(a).
“prospectus” means the prospectus included in a registration statement (including a
prospectus that includes any information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated under the Securities Act),
as amended or supplemented by any prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by a registration statement, and all other
amendments and supplements to the prospectus, including post-effective amendments.
“Purchase Agreement” shall have the meaning set forth in the recitals of this
Agreement.
“Register,” “registered,” and “registration” shall refer to a
registration effected by preparing and filing a registration statement with the SEC in compliance
with the Securities Act and applicable rules and regulations thereunder, and the declaration or
ordering of effectiveness of such registration statement by the SEC.
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“Registrable Securities” means (a) shares of Common Stock issued by the Company upon
conversion of any shares of Series C Preferred, and (b) any securities issued as (or issuable upon
the conversion or exercise of any warrant, right or other security that is issued as) a dividend,
stock split, recapitalization or other distribution with respect to, or in exchange for, or in
replacement of, the securities referenced in clause (a) above or this clause (b); provided
that the term “Registrable Securities” shall exclude in all cases any securities (i) that shall
have ceased to be outstanding, (ii) that are sold pursuant to an effective registration statement
under the Securities Act or publicly resold in compliance with Rule 144 or (iii) that are Freely
Tradable (it being understood that, for purposes of determining eligibility for resale under clause
(iii) of this proviso, no securities held by any Investor shall be considered Freely Tradable to
the extent such Investor reasonably determines that it is an “affiliate” (as defined under Rule 144
under the Securities Act) of the Company). Solely for purposes of determining at any time whether
any Registrable Securities are then outstanding, transferred or Freely Tradable, the Series C
Preferred shall be treated, on an as-converted basis, as Registrable Securities.
“Registration Expenses” shall mean, with respect to any registration, (a) all expenses
incurred by the Company in effecting any registration pursuant to this Agreement, including all
registration and filing fees, printing expenses, fees and disbursements of counsel for the Company,
blue sky fees and expenses, (b) one-half of all reasonable fees and expenses related to any
registration of Registrable Securities by the Electing Investors (including the fees and
disbursements of one legal counsel (and only one legal counsel) to the Electing Investors) and (c)
all expenses of the Company’s independent accountants in connection with any regular or special
reviews or audits incident to or required by any such registration; provided that
Registration Expenses shall not include any Selling Expenses.
“registration statement” means any registration statement that is required to register
the resale of the Registrable Securities under this Agreement, and including the related prospectus
and any pre- and post-effective amendments and supplements to each such registration statement or
prospectus.
“Selling Expenses” shall mean all underwriting discounts, selling commissions and
stock transfer taxes, if any, applicable to the sale of Registrable Securities and all fees and
expenses related of the Electing Investors (other than such fees and expenses included in
Registration Expenses).
“Suspension Period” shall have the meaning set forth in Section 2(d).
“WKSI” shall mean a “well known seasoned issuer” as defined in Rule 405 under the
Securities Act.
2. Demand Registration.
(a) Subject to the terms and conditions of this Agreement, including Section 2(c), if at any
time following July 8, 2010, the Company receives a written request from the Investor
Representative on behalf of any Electing Investors that the Company register under the Securities
Act Registrable Securities representing at least 5% of the outstanding shares of Common Stock, then
the Company shall file, as promptly as reasonably practicable but no later than the applicable
Filing Deadline, a registration statement under the Securities Act covering all Registrable
Securities that the Investor Representative, on behalf of the Electing Investors, requests to be
registered. The registration statement shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form for such purpose) and, if the Company is a WKSI
as of the Filing Deadline, shall be an Automatic Shelf Registration Statement. The Company shall
use its commercially reasonable efforts to cause the registration statement to be declared
effective or otherwise to become effective under the Securities Act as soon as reasonably
practicable but, in any event, no later than the Effectiveness Deadline, and shall use
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its commercially reasonable efforts to keep the registration statement continuously effective
under the Securities Act until the earlier of (1) the date on which the Investor Representative
notifies the Company in writing that the Registrable Securities included in such registration
statement have been sold or the offering therefor has been terminated or (2) (x) 15 Business Days
following the date on which such registration statement was declared effective by the SEC, if the
Company is a WKSI and filed an Automatic Shelf Registration Statement in satisfaction of such
demand, (y) 30 Business Days following the date on which such registration statement was declared
effective by the SEC, if the Company is not a WKSI and registered for resale the Registrable
Securities on Form S-3 in satisfaction of such demand, or (z) 50 Business Days following the date
on which such registration statement was declared effective by the SEC, if the Company is neither a
WKSI nor then eligible to use Form S-3 and registered for resale the Registrable Securities on Form
S-1 or other applicable form in satisfaction of such demand; provided that each period
specified in clause (2) of this sentence shall be extended automatically by one Business Day for
each Business Day that the use of such registration statement or prospectus is suspended by the
Company pursuant to Section 2(d) or pursuant to Section 5(i). Neither the Company nor any other
Person (other than any Electing Investor) shall be entitled to include Other Securities in any
registration initiated by the Investor Representative on behalf of the Electing Investors pursuant
to this Section 2 without the prior written consent of the Investor Representative (in the case of
Other Securities of the Company, such consent not to be unreasonably withheld, conditioned or
delayed), and upon such consent the Registrable Securities shall have priority for inclusion in any
firm commitment underwritten offering, ahead of all Other Securities, in any Underwriter Cutback.
(b) If the Electing Investors intend to distribute the Registrable Securities covered by the
Investor Representative’s request by means of an underwriting, (i) the Investor Representative
shall so advise the Company as a part of its request made pursuant to Section 2(a) and (ii) the
Investor Representative shall have the right to appoint the book-running, managing and other
underwriter(s) in consultation with the Company.
(c) The Company shall not be required to effect a registration pursuant to this Section 2: (i)
after the Company has effected six registrations pursuant to this Section 2, and each of such
registrations has been declared or ordered effective and kept effective by the Company as required
by Section 5(a); or (ii) more than twice during any single calendar year.
(d) Notwithstanding anything to the contrary in this Agreement, (1) upon notice to the
Investor Representative, the Company may delay the Filing Deadline and/or the Effectiveness
Deadline with respect to, or suspend the effectiveness or availability of, any registration
statement for up to 90 days in the aggregate in any 12-month period (a “Suspension Period”)
if the Board of Directors of the Company determines that there is a valid business purpose for
delay of filing or effectiveness of, or suspension of, the registration statement; provided
that any suspension of a registration statement pursuant to Section 6 shall be treated as a
Suspension Period for purposes of calculating the maximum number of days of any Suspension Period
under this Section 2(d); and (2) upon notice to the Investor Representative, the Company may delay
the Filing Deadline and/or the Effectiveness Deadline with respect to any registration statement
for a period not to exceed 30 days prior to the Company’s good faith estimate of the launch date
of, and 90 days after the closing date of, a Company initiated registered offering of equity
securities (including equity securities convertible into or exchangeable for Common Stock);
provided that (i) the Company is actively employing in good faith all commercially
reasonable efforts to launch such registered offering throughout such period, (ii) the Investors
are afforded the opportunity to include Registrable Shares in such registered offering in
accordance with Section 3 and (iii) the right to delay or suspend the effectiveness or available of
such registration statement pursuant to this clause (2) shall not be exercised by the Company more
than twice in any twelve-month period and not more than 90 days in the aggregate in any
twelve-month period. If the Company shall delay any Filing Deadline pursuant to this clause (d)
for more than 10 Business Days, the Investor Representative
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may, on behalf of the Electing Investors, withdraw the demand therefor at any time after such
10 Business Days so long as such delay is then continuing by providing written notice to the
Company to such effect, and any demand so withdrawn shall not count as a demand for registration
for any purpose under this Section 2, including Section 2(c).
3. Piggyback Registration.
(a) Subject to the terms and conditions of this Agreement, if at any time following January 8,
2010, the Company files a registration statement under the Securities Act with respect to an
offering of Common Stock or other equity securities of the Company (such Common Stock and other
equity securities collectively, “Other Securities”), whether or not for sale for its own
account (other than a registration statement (i) on Form X-0, Xxxx X-0 or any successor forms, (ii)
filed solely in connection with any employee benefit or dividend reinvestment plan or (iii)
pursuant to a demand registration in accordance with Section 2), then the Company shall use
commercially reasonably efforts to give written notice of such filing to the Investor
Representative (for distribution to the Investors) at least five Business Days before the
anticipated filing date (or such later date as it becomes commercially reasonable to provide such
notice) (the “Piggyback Notice”). The Piggyback Notice and the contents thereof shall be
kept confidential by the Investor Representative, the Investors and their respective Affiliates and
representatives, and the Investor Representative and the Investors shall be responsible for
breaches of confidentiality by their respective Affiliates and representatives. The Piggyback
Notice shall offer the Investors the opportunity to include in such registration statement, subject
to the terms and conditions of this Agreement, the number of Registrable Securities as they may
reasonably request (a “Piggyback Registration”). Subject to the terms and conditions of
this Agreement, the Company shall use its commercially reasonable efforts to include in each such
Piggyback Registration all Registrable Securities with respect to which the Company has received
from the Investor Representative written requests for inclusion therein within 10 Business Days
following receipt of any Piggyback Notice by the Investor Representative, which request shall
specify the maximum number of Registrable Securities intended to be disposed of by the Electing
Investors and the intended method of distribution. For the avoidance of doubt and notwithstanding
anything in this Agreement to the contrary, the Company may not commence or permit the commencement
of any sale of Other Securities in a public offering to which this Section 3 applies unless the
Investor Representative shall have received the Piggyback Notice in respect to such public offering
not less than 10 Business Days prior to the commencement of such sale of Other Securities. The
Electing Investors, acting through the Investor Representative, shall be permitted to withdraw all
or part of the Registrable Securities from a Piggyback Registration at any time at least two
Business Days prior to the effective date of the registration statement relating to such Piggyback
Registration. No Piggyback Registration shall count towards the number of demand registrations that
the Investors are entitled to make in any period or in total pursuant to Section 2. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be required to provide notice of,
or include any Registrable Securities in, any proposed or filed registration statement with respect
to an offering of Other Securities for sale exclusively for the Company’s own account at any time
following January 8, 2017.
(b) If any Other Securities are to be sold in an underwritten offering, (1) the Company or
other Persons designated by the Company shall have the right to appoint the book-running, managing
and other underwriter(s) for such offering in their discretion and (2) the Electing Investors shall
be permitted to include all Registrable Securities requested to be included in such registration in
such underwritten offering on the same terms and conditions as such Other Securities proposed by
the Company or any third party to be included in such offering; provided, however,
that if such offering involves an underwritten offering and the managing underwriter(s) of such
underwritten offering advise the Company in writing that it is their good faith opinion that the
total amount of Registrable Securities requested to be so included, together with all Other
Securities that the Company and any other Persons having rights to participate in such registration
intend to include in such offering (an “Underwriter
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Cutback”), exceeds the total number or dollar amount of such securities that can be
sold without having an adverse effect on the price, timing or distribution of the Registrable
Securities to be so included together with all Other Securities, then there shall be included in
such firm commitment underwritten offering the number or dollar amount of Registrable Securities
and such Other Securities that in the good faith opinion of such managing underwriter(s) can be
sold without so adversely affecting such offering, and such number of Registrable Securities and
Other Securities shall be allocated for inclusion as follows: (x) to the extent such public
offering is the result of a registration initiated by the Company, (i) first, all Other
Securities being sold by the Company; (ii) second, all Registrable Securities requested to
be included in such registration by the Electing Investors, pro rata, based on the number of
Registrable Securities beneficially owned by such Electing Investors; and (iii) third, all
Other Securities of any holders thereof (other than the Company and the Electing Investors)
requesting inclusion in such registration, pro rata, based on the number of Other Securities
beneficially owned by each such holder of Other Securities or (y) to the extent such public
offering is the result of a registration by any Persons (other than the Company or the Investors)
exercising a contractual right to demand registration, (i) first, all Other Securities
owned by such Persons exercising the contractual right, pro rata, based on the number of Other
Securities beneficially owned by each such holder of Other Securities; (ii) second, all
Registrable Securities requested to be included in such registration by the Electing Investors, pro
rata, based on the number of Registrable Securities beneficially owned by such Electing Investors;
and (iii) third, all Other Securities being sold by the Company; and (iv) fourth,
all Other Securities requested to be included in such registration by other holders thereof (other
than the Company and the Electing Investors), pro rata, based on the number of Other Securities
beneficially owned by each such holder of Other Securities.
4. Expenses of Registration. Except as specifically provided for in this Agreement,
all Registration Expenses incurred in connection with any registration, qualification or compliance
hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any
registration hereunder, shall be borne by the Electing Investors in proportion to the number of
Registrable Securities for which registration was requested. The Company shall not, however, be
required to pay for expenses of any registration proceeding begun pursuant to Section 2, the
request of which has been subsequently withdrawn by the Investor Representative unless (a) the
withdrawal is based upon a Material Adverse Effect or material adverse information concerning the
Company that (i) the Company had not publicly disclosed in a report filed with or furnished to the
SEC at least 48 hours prior to the request or (ii) the Company had not disclosed to any Investor
Designee in person or by telephone at the last meeting of the Board of Directors or any committee
of the Board of Directors, in each case, at which an Investor Designee is present or at any time
since the date of such meeting of the Board of Directors and which effect or information would
reasonably be expected to result in a Material Adverse Effect or constitute material adverse
information concerning the Company, (b) the withdrawal is made in accordance with the last sentence
of Section 2(d), or (c) the Investor Representative agrees on behalf of the Investors to forfeit
their right to one requested registration pursuant to Section 2.
5. Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities pursuant to Section 2 or 3 of this Agreement, the Company shall, as promptly
as reasonably practicable:
(a) Prepare and file with the SEC a registration statement (including all required exhibits to
such registration statement) with respect to such Registrable Securities and use commercially
reasonable efforts to cause such registration statement to become effective, or prepare and file
with the SEC a prospectus supplement with respect to such Registrable Securities pursuant to an
effective registration statement and keep such registration statement effective or such prospectus
supplement current, in the case of a registration pursuant to Section 2, in accordance with Section
2.
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(b) Prepare and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in connection with such
registration statement as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration statement.
(c) To the extent reasonably practicable, not less than five Business Days prior to the filing
of a registration statement or any related prospectus or any amendment or supplement thereto, the
Company shall furnish to the Investor Representative on behalf of the Electing Investors copies of
all such documents proposed to be filed and give reasonable consideration to the inclusion in such
documents of any comments reasonably and timely made by the Investor Representative or its legal
counsel, provided that the Company shall include in such documents any such comments that
are necessary to correct any material misstatement or omission regarding an Electing Investor.
(d) Furnish to the Investor Representative such number of copies of the applicable
registration statement and each such amendment and supplement thereto (including in each case all
exhibits but not documents incorporated by reference) and of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
the Investor Representative may reasonably request on behalf of the Electing Investors in order to
facilitate the disposition of Registrable Securities owned by the Electing Investors. The Company
hereby consents to the use of such prospectus and each amendment or supplement thereto by each of
the Electing Investors in accordance with applicable laws and regulations in connection with the
offering and sale of the Registrable Securities covered by such prospectus and any amendment or
supplement thereto.
(e) Use its commercially reasonable efforts to register and qualify the securities covered by
such registration statement under blue sky or such other state securities laws of such U.S.
jurisdictions as shall be reasonably requested by the Investor Representative and to keep such
registration or qualification in effect for so long as such registration statement remains in
effect; provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
(f) Enter customary agreements and take such other actions as are reasonably required in order
to facilitate the disposition of such Registrable Securities, including, if the method of
distribution of Registrable Securities is by means of an underwritten offering, using commercially
reasonable efforts to, (i) participate in and make documents available for the reasonable and
customary due diligence review of underwriters during normal business hours, on reasonable advance
notice and without undue burden or hardship on the Company, provided that (A) any party
receiving confidential materials shall execute a confidentiality agreement on customary terms if
reasonably requested by the Company and (B) the Company may in its reasonable discretion restrict
access to competitively sensitive or legally privileged documents or information, (ii) cause the
chief executive officer and chief financial officer available at reasonable dates and times to
participate in “road show” presentations and/or investor conference calls to market the Registrable
Securities during normal business hours, on reasonable advance notice and without undue burden or
hardship on the Company, provided that the aggregate number of days of “road show”
presentations in connection with an underwritten offering of Registrable Securities for each
registration pursuant to a demand made under Section 2 shall not exceed five Business Days and
(iii) negotiate and execute an underwriting agreement in customary form with the managing
underwriter(s) of such offering and such other documents reasonably required under the terms of
such underwriting arrangements, including using commercially reasonable efforts to procure a
customary legal opinion and auditor “comfort” letters. The Electing Investors shall also enter
into and perform their obligations under such underwriting agreement.
(g) Give notice to the Investor Representative as promptly as reasonably practicable:
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(i) when any registration statement filed pursuant to Section 2 or in which
Registrable Securities are included pursuant to Section 3 or any amendment to such
registration statement has been filed with the SEC and when such registration
statement or any post-effective amendment to such registration statement has become
effective;
(ii) of any request by the SEC for amendments or supplements to any
registration statement (or any information incorporated by reference in, or
exhibits to, such registration statement) filed pursuant to Section 2 or in which
Registrable Securities are included pursuant to Section 3 or the prospectus
(including information incorporated by reference in such prospectus) included in
such registration statement or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of any registration statement filed pursuant to Section 2 or in which Registrable
Securities are included pursuant to Section 3 or the initiation of any proceedings
for that purpose;
(iv) of the receipt by the Company or its legal counsel of any notification
with respect to the suspension of the qualification of the Common Stock for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) at any time when a prospectus relating to any such registration statement
is required to be delivered under the Securities Act, of the happening of any event
as a result of which such prospectus (including any material incorporated by
reference or deemed to be incorporated by reference in such prospectus), as then in
effect, includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, which event requires the
Company to make changes in such effective registration statement and prospectus in
order to make the statements therein or incorporated by reference therein not
misleading (which notice shall be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have been made).
(h) Use its commercially reasonable efforts to prevent the issuance or obtain the withdrawal
of any order suspending the effectiveness of any registration statement referred to in Section
5(g)(iii) at the earliest practicable time.
(i) Upon the occurrence of any event contemplated by Section 5(g)(v), reasonably promptly
prepare a post-effective amendment to such registration statement or a supplement to the related
prospectus or file any other required document so that, as thereafter delivered to the Investor
Representative, the prospectus will not contain (or incorporate by reference) an untrue statement
of a material fact or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the Company notifies the
Investor Representative in accordance with Section 5(g)(v) to suspend the use of the prospectus
until the requisite changes to the prospectus have been made, then the Electing Investors shall
suspend use of such prospectus and use their commercially reasonable efforts to return to the
Company all copies of such prospectus (at the Company’s expense) other than permanent file copies
then in the Electing Investors’ possession, and the period of effectiveness of such registration
statement provided for in Section 5(a) above shall be extended by the number of days from and
including the date of the giving of such notice to the date the Investor Representative shall have
received such amended or supplemented prospectus pursuant to this Section 5(i).
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(j) Use commercially reasonable efforts to procure the cooperation of the Company’s transfer
agent in settling any offering or sale of Registrable Securities, including with respect to the
transfer of physical stock certificates into book-entry form in accordance with any procedures
reasonably requested by the Investor Representative or the managing underwriter(s). In connection
therewith, if reasonably required by the Company’s transfer agent, the Company shall promptly after
the effectiveness of the registration statement cause an opinion of counsel as to the effectiveness
of the registration statement to be delivered to and maintained with its transfer agent, together
with any other authorizations, certificates and directions required by the transfer agent which
authorize and direct the transfer agent to issue such Registrable Securities without legend upon
sale by the holder of such shares of Registrable Securities under the registration statement.
6. Suspension of Sales. Upon receipt of written notice from the Company pursuant to
Section 5(g)(v), the Electing Investors shall immediately discontinue disposition of Registrable
Securities until the Investor Representative (i) has received copies of a supplemented or amended
prospectus or prospectus supplement pursuant to Section 5(i) or (ii) is advised in writing by the
Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed,
and, if so directed by the Company, the Electing Investors shall deliver to the Company (at the
Company’s expense) all copies, other than permanent file copies then in the Electing Investors’
possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable
Securities current at the time of receipt of such notice.
7. Free Writing Prospectuses. The Electing Investors shall not use any free writing
prospectus (as defined in Rule 405 under the Securities Act) in connection with the sale of
Registrable Securities without the prior written consent of the Company given to the Investor
Representative; provided that the Electing Investors may use any free writing prospectus
prepared and distributed by the Company.
8. Indemnification.
(a) Notwithstanding any termination of this Agreement, the Company shall indemnify and hold
harmless the Investor Representative, each of the Electing Investors and each of their respective
officers, directors, employees, agents, partners, members, stockholders, representatives and
Affiliates, and each person or entity, if any, that controls the Investor Representative or the
Electing Investors within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and the officers, directors, employees, agents and employees of each such controlling
Person (each, an “Investor Indemnitee”), against any and all losses, claims, damages,
actions, liabilities, costs and expenses (including reasonable fees, expenses and disbursements of
attorneys and other professionals), joint or several, arising out of or based upon any untrue or
alleged untrue statement of material fact contained or incorporated by reference in any
registration statement, including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto or contained in any “issuer free writing prospectus” (as
such term is defined in Rule 433 under the Securities Act) prepared by the Company or authorized by
it in writing for use by the Investors or any amendment or supplement thereto; or any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading; provided that the Company shall not be liable to such Investor Indemnitee in
any such case to the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration statement, including any
such preliminary prospectus or final prospectus contained therein or any such amendments or
supplements thereto or contained in any “issuer free writing prospectus” (as such term is defined
in Rule 433 under the Securities Act) prepared by the Company or authorized by it in writing for
use by the Investors or any amendment or supplement thereto,
9
in reliance upon and in conformity with information regarding such Investor Indemnitee or its
plan of distribution or ownership interests which such Investor Indemnitee furnished in writing to
the Company for use in connection with such registration statement, including any such preliminary
prospectus or final prospectus contained therein or any such amendments or supplements thereto,
(ii) offers or sales effected by or on behalf such Investor Indemnitee “by means of” (as defined in
Securities Act Rule 159A) a “free writing prospectus” (as defined in Securities Act Rule 405) that
was not authorized in writing by the Company, or (iii) the failure to deliver or make available to
a purchaser of Registrable Securities a copy of any preliminary prospectus, pricing information or
final prospectus contained in the applicable registration statement or any amendments or
supplements thereto (to the extent the same is required by applicable law to be delivered or made
available to such purchaser at the time of sale of contract); provided that the Company
shall have delivered to the Investor Representative such preliminary prospectus or final prospectus
contained in the applicable registration statement and any amendments or supplements thereto
pursuant to 5(d) no later than the time of contract of sale in accordance with Rule 159 under the
Securities Act.
(b) Each Electing Investor shall severally, and not jointly, indemnify and hold harmless the
Company and its officers, directors, employees, agents, representatives and Affiliates against any
and all losses, claims, damages, actions, liabilities, costs and expenses (including reasonable
fees, expenses and disbursements of attorneys and other professionals) arising out of or based upon
any untrue or alleged untrue statement of material fact contained in any registration statement,
including any preliminary prospectus or final prospectus contained therein or any amendments or
supplements thereto or contained in any “issuer free writing prospectus” (as such term is defined
in Rule 433 under the Securities Act), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, but only to the extent, that such
untrue statements or omissions are based solely upon information regarding such Electing Investor
furnished in writing to the Company by the Investor Representative on behalf of such Electing
Investor expressly for use therein. In no event shall the liability of any Electing Investor
hereunder be greater in amount than the dollar amount of the net proceeds received by such Electing
Investor upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) If any proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense in such proceeding, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in
connection with such defense; provided that any such notice or other communication pursuant
to this Section 8 between the Company and an Indemnifying Party or an Indemnified Party, as the
case may be, shall be delivered to or by, as the case may be, the Investor Representative;
provided, further, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Section
8, except (and only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying Party. An Indemnified
Party shall have the right to employ separate counsel in any such proceeding and to participate in
the defense of such proceeding, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to
pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party
in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that representation of both such Indemnified Party and the
Indemnifying Party by the same counsel would be
10
inappropriate because of an actual conflict of interest between the Indemnifying Party and
such Indemnified Party (in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be
at the expense of the Indemnifying Party); provided that the Indemnifying Party shall not
be liable for the fees and expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such
proceeding effected without its written consent, which consent shall not be unreasonably withheld,
conditioned or delayed. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed),
effect any settlement of any pending proceeding in respect of which any Indemnified Party is a
party, unless such settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such proceeding. All fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, promptly upon receipt of written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder, provided that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification under this Section 8).
(d) If the indemnification provided for in Section 8(a) or 8(b) is unavailable to an
Indemnified Party with respect to any losses, claims, damages, actions, liabilities, costs or
expenses referred to in Section 8(a) or 8(b), as the case may be, or is insufficient to hold the
Indemnified Party harmless as contemplated therein, then the 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, claims, damages, actions, liabilities, costs or
expenses in such proportion as is appropriate to reflect the relative fault of the Indemnified
Party, on the one hand, and the Indemnifying Party, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages, actions, liabilities, costs
or expenses as well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party, on the one hand, and of the Indemnified Party, on the other hand, shall be
determined by reference to, among other factors, whether the untrue or alleged untrue statement of
a material fact or omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission. The Company, the
Investor Representative and the Investors agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations referred to in this
Section 8(d). Notwithstanding the foregoing, in no event shall the liability of any Electing
Investor hereunder be greater in amount than the dollar amount of the net proceeds received by such
Electing Investor upon the sale of the Registrable Securities giving rise to such contribution
obligation. No Indemnified Party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from an Indemnifying Party
not guilty of such fraudulent misrepresentation.
9. “Market Stand-Off” Agreement; Agreement to Furnish Information.
(a) The Investors agree that they will not sell, transfer, make any short sale of, grant any
option for the purchase of, or enter into any new hedging or similar transaction with the same
economic effect as a sale with respect to, any Common Stock (or other securities of the Company)
held by the Investors (other than those included in the registration) for a period specified by the
representatives of the book-running managing underwriters of Common Stock (or other securities of
the Company convertible into Common Stock) not to exceed 10 days prior and 90 days following any
registered public
11
sale of securities by the Company in which the Company gave the Investors an opportunity to
participate in accordance with Section 3; provided that executive officers and directors of
the Company enter into similar agreements and only as long as such Persons remain subject to such
agreement (and are not fully released from such agreement) for such period. Each of the Investors
agrees to execute and deliver such other agreements as may be reasonably requested by the
representatives of the underwriters which are consistent with the foregoing or which are necessary
to give further effect thereto.
(b) In addition, if requested by the Company or the book-running managing underwriters of
Common Stock (or other securities of the Company convertible into Common Stock), the Investor
Representative shall provide on behalf of each Electing Investor such information regarding each
Electing Investor and its respective Registrable Securities as may be reasonably required by the
Company or such representative of the book-running managing underwriters in connection with the
filing of a registration statement and the completion of any public offering of the Registrable
Securities pursuant to this Agreement.
10. Rule 144 Reporting. With a view to making available to the Investors the benefits
of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities
that are Common Stock to the public without registration, the Company agrees to use its
commercially reasonable efforts to: (i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of this Agreement; (ii)
file with the SEC, in a timely manner, all reports and other documents required of the Company
under the Exchange Act; and (iii) so long as the Investors own any Registrable Securities, furnish
to the Investor Representative forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 under the Securities Act, and of the
Exchange Act; a copy of the most recent annual or quarterly report of the Company; and such other
reports and documents as the Investor Representative on behalf of the Investors may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to sell any such Common
Stock without registration.
11. Miscellaneous.
(a) Termination of Registration Rights. The registration rights granted under this
Agreement shall terminate on the date on which all Registrable Securities are Freely Tradable.
(b) Governing Law. This Agreement shall be governed in all respects by the laws of the
State of State of New York without regard to any choice of laws or conflict of laws provisions that
would require the application of the laws of any other jurisdiction.
(c) Jurisdiction; Enforcement. The parties agree that irreparable damage would occur
if any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that each of the parties shall be
entitled (in addition to any other remedy that may be available to it, including monetary damages)
to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement exclusively in any state or federal courts located in
the City of San Francisco and any appellate court therefrom within the State of California. In
addition, each of the parties irrevocably agrees that any legal action or proceeding with respect
to this Agreement and the rights and obligations arising hereunder, or for recognition and
enforcement of any judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the other party or its successors or assigns, shall be brought and determined
exclusively in any state or federal courts located in the City of San Francisco and any appellate
court therefrom within the State of California. The parties further agree that no party to this
Agreement shall be required to obtain, furnish or post any bond or similar instrument in connection
with
12
or as a condition to obtaining any remedy referred to in this Section and each party waives
any objection to the imposition of such relief or any right it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument. Each of the parties hereby
irrevocably submits with regard to any such action or proceeding for itself and in respect of its
property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and
agrees that it will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties
hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above named courts for any reason other than the
failure to serve in accordance with this Section, (b) any claim that it or its property is exempt
or immune from jurisdiction of any such court or from any legal process commenced in such courts
(whether through service of notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by the
applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each party
hereby consents to service being made through the notice procedures set forth in Section 11(g) and
agrees that service of any process, summons, notice or document by registered mail (return receipt
requested and first-class postage prepaid) to the respective addresses set forth in Section 11(g)
shall be effective service of process for any suit or proceeding in connection with this Agreement
or the transactions contemplated by this Agreement. EACH OF THE PARTIES KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY WITH AND UPON THE ADVICE OF COMPETENT COUNSEL IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(d) Successors and Assigns. Except as otherwise provided in this Agreement, the
provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties.
(e) No Third-Party Beneficiaries. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied, is intended to confer, and this
Agreement shall not confer, on any Person other than the parties to this Agreement any rights,
remedies, obligations or liabilities under or by reason of this Agreement, and no other Persons
shall have any standing with respect to this Agreement or the transactions contemplated by this
Agreement; provided, however that each Indemnified Party (but only, in the case of
an Investor Indemnitee, if such Investor Indemnitee has complied with the requirements of Section
8(c), including the first proviso of Section 8(c)) shall be entitled to the rights, remedies and
obligations provided to an Indemnified Party under Section 8, and each such Indemnified Party shall
have standing as a third-party beneficiary under Section 8 to enforce such rights, remedies and
obligations.
(f) Entire Agreement. This Agreement, the Purchase Agreement and the other documents
delivered pursuant to the Purchase Agreement constitute the full and entire understanding and
agreement among the parties hereto with regard to the subjects of this Agreement and such other
agreements and documents.
(g) Notices. Except as otherwise provided in this Agreement, all notices, requests,
claims, demands, waivers and other communications required or permitted under this Agreement shall
be in writing and shall be mailed by reliable overnight delivery service or delivered by hand,
facsimile or messenger as follows:
13
if to the Company:
|
Image Entertainment, Inc. | |
| 00000 Xxxxxxxx Xxxxxx, Xxxxx 000 | ||
| Xxxxxxxxxx, Xxxxxxxxxx | ||
| Attention: Chief Financial Officer | ||
| Facsimile: (000) 000-0000 | ||
with a copy to: |
||
if to any of the Investors or |
||
the Investor Representative:
|
JH Partners, LLC | |
| 000 Xxxxxxx Xxxxxx | ||
| Xxx Xxxxxxxxx, Xxxxxxxxxx | ||
| Attention: Xxxxxxx X. Xxxxxxx | ||
| Facsimile: (000) 000-0000 | ||
with a copy to:
|
Xxxxxx & Xxxxxxx LLP | |
| 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000 | ||
| Xxx Xxxxxxxxx, Xxxxxxxxxx | ||
| Attention: Xxxxxx X. Xxxxxxx | ||
| Facsimile: (000) 000-0000 |
or in any such case to such other address, facsimile number or telephone as any party hereto may,
from time to time, designate in a written notice given in a like manner. Notices shall be deemed
given when actually delivered by overnight delivery service, hand or messenger, or when received by
facsimile if promptly confirmed.
(h) Delays or Omissions. No delay or omission to exercise any right, power, or remedy
accruing to any party to this Agreement shall impair any such right, power, or remedy of such
party, nor shall it be construed to be a waiver of or acquiescence in any breach or default, or of
or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach
or default be deemed a waiver of any other breach or default. All remedies, either under this
Agreement or by law or otherwise afforded to any Investor, shall be cumulative and not alternative.
(i) Expenses. The Company and the Investors shall bear their own expenses and legal
fees incurred on their behalf with respect to this Agreement and the transactions contemplated
hereby, except as otherwise provided in Section 4.
(j) Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only if such amendment or waiver is in writing
and signed, in the case of an amendment, by the Company and the Investor Representative or, in the
case of a waiver, by the party against whom the waiver is to be effective. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of any Registrable
Securities at the time outstanding (including securities convertible into Registrable Securities),
each future holder of all such Registrable Securities, and the Company.
14
(k) Counterparts. This Agreement may be executed in any number of counterparts and
signatures may be delivered by facsimile or in electronic format, each of which may be executed by
less than all the parties, each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one instrument.
(l) Severability. If any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable, or void, portions of such provision, or
such provision in its entirety, to the extent necessary, shall be severed from this Agreement and
the balance of this Agreement shall be enforceable in accordance with its terms.
(m) Titles and Subtitles; Interpretation. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in construing or interpreting
this Agreement. When a reference is made in this Agreement to a Section or Schedule, such reference
shall be to a Section or Schedule of this Agreement unless otherwise indicated. Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Any agreement, instrument or statute, rule or
regulation defined or referred to in this Agreement means such agreement, instrument or statute,
rule or regulation as from time to time amended, modified or supplemented, including (in the case
of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes. Any reference to any section under the Securities Act or Exchange
Act, or any rule promulgated thereunder, shall include any publicly available interpretive
releases, policy statements, staff accounting bulletins, staff accounting manuals, staff legal
bulletins, staff “no-action,” interpretive and exemptive letters, and staff compliance and
disclosure interpretations (including “telephone interpretations”) of such section or rule by the
SEC. Each of the parties has participated in the drafting and negotiation of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
it is drafted by each of the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| IMAGE ENTERTAINMENT, INC. |
||||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | President and Chief Financial Officer | |||
| JH PARTNERS, LLC, as the Investor Representative |
||||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | ||||
| JH PARTNERS EVERGREEN FUND, LP |
||||
| By: | JH Investment Management III, LLC Its: General Partner |
|||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Its: Managing Member | ||||
| JH INVESTMENT PARTNERS III, LP |
||||
| By: | JH Investment Management III, LLC Its: General Partner |
|||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Its: Managing Member | ||||
| JH INVESTMENT PARTNERS GP FUND III, LLC |
||||
| By: | JH Investment Management III, LLC Its: Manager |
|||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Its: Managing Member | ||||
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
Schedule 1
Investors
JH Partners Evergreen Fund, LP
JH Investment Partners III, LP
JH Investment Partners GP Fund III, LLC
