Image Entertainment and Nyx Agree to Extend Merger Closing Date

Amendment to Merger Agreement Includes, Among Other Things, a $500,000 Addition to Business Interruption Fee in Exchange for March 20, 2009 Closing Date

Image Entertainment, Inc. (NASDAQ: DISK), a leading independent licensee, producer and distributor of home entertainment programming in North America, announced today that it has amended the merger agreement previously entered into with Nyx Acquisitions, Inc., an affiliate of Q-Black, LLC, whereby Nyx agreed to acquire 100% of the outstanding common stock of Image Entertainment for $2.75 per share in cash.

The amended merger agreement provides that, among other things, the closing date for the pending merger is extended to March 20, 2009. Pursuant to the extension, under the amended merger agreement, Nyx has agreed to increase the amount of the business interruption fee by $500,000 to $2.3 million, to be deposited into an account to be held in trust for the benefit of Image on March 2, 2009. Nyx also has a final option to extend the closing date to March 26, 2009, if it agrees to increase the business interruption fee by an additional $500,000 and deposits the additional amount on March 19, 2009, into the trust account. This extension would bring the business interruption fee to $2.8 million.

In addition, Nyx has agreed to waive certain closing conditions as of the original closing date (February 26, 2009). Notwithstanding, Image shall continue to conduct its operations in the ordinary course of business, preserve its current business organization, and refrain from soliciting other potential acquisition proposals.

The parties have also amended the trust instructions relating to the business interruption fee. Under the amendment, Nyx waives the right to challenge Image Entertainment’s right to collect the business interruption fee in the event Nyx does not close the merger. In return, Image Entertainment has waived potential remedies against Nyx under the merger agreement in excess of the business interruption fee, as long as Nyx does not challenge Image Entertainment’s right to the business interruption fee.

Image Entertainment will file with the Securities and Exchange Commission a Current Report on Form 8-K describing the amendments which were made to the transaction documents.

About Image Entertainment:

Image Entertainment, Inc. is a leading independent licensee, producer and distributor of home entertainment programming in North America, with approximately 3,500 exclusive DVD titles and approximately 370 exclusive CD titles in domestic release and approximately 600 programs internationally via sublicense agreements. For many of its titles, the Company has exclusive audio and broadcast rights and, through its subsidiary Egami Media, Inc., has digital download rights to approximately 2,000 video programs and over 300 audio programs containing more than 4,500 tracks. The Company is headquartered in Chatsworth, California. For more information about Image Entertainment, Inc., please go to www.image-entertainment.com.

Forward-Looking Statements:

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, among other things, our goals, plans and projections regarding our financial position, results of operations, market position, product development and business strategy. These statements may be identified by the use of words such as “will,” “may,” “estimate,” “expect,” “intend,” “plan,” “believe,” and other terms of similar meaning in connection with any discussion of future operating or financial performance or other events or developments. All forward-looking statements are based on management’s current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations.

These factors include, among other things, our inability to raise additional working capital, changes in debt and equity markets, increased competitive pressures, changes in our business plan, and changes in the retail DVD and entertainment industries. For further details and a discussion of these and other risks and uncertainties, see “Forward-Looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K, and our most recent Quarterly Report on Form 10-Q. In addition, we may not be able to complete the proposed transaction on the proposed terms or other acceptable terms, or at all, due to a number of factors, including (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (2) the outcome of any legal proceedings that have been or may be instituted against Image Entertainment and others following announcement of the proposal or the merger agreement; (3) the inability to complete the merger due to the failure to obtain shareholder approval or the failure to satisfy other conditions to the completion of the merger, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of other required regulatory approvals; (4) the failure to obtain the necessary financing provided for in commitment letters received prior to execution of the definitive agreement; (5) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; (6) the ability to recognize the benefits of the merger; (7) the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger; and (8) the impact of the substantial indebtedness incurred to finance the consummation of the merger. Many of the factors that will determine the outcome of the subject matter of this press release are beyond Image Entertainment’s ability to control or predict.

Unless otherwise required by law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contacts

The Honig Company, Inc.
Steve Honig, 818-986-4300
press {at} honigcompany(.)com