**Exhibit 10.3**

**EXECUTIONVERSION**

**AMENDMENTNUMBER TWOTO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT**

This **AMENDMENT NUMBER TWO****TO AMENDEDAND RESTATED LOAN AND SECURITY AGREEMENT** (this “Amendment”)is entered into as of June 23, 2006, by **WELLSFARGO****FOOTHILL, INC.**, a Californiacorporation (“Lender”), and **IMAGE ENTERTAINMENT, INC.**,a Delaware corporation, f/k/a Image Entertainment, Inc., a Californiacorporation, (“Borrower”), with reference to the following:

**WHEREAS**,Borrower and Lender are parties to that certain Amended and Restated Loan andSecurity Agreement, dated as of August 10, 2005 (as amended, restated,supplemented, or otherwise modified from time to time, the “Loan Agreement”);

**WHEREAS**,Borrower has requested that Lender make certain amendments to the LoanAgreement, grant certain consents, and grant a waiver of certain Events ofDefault that have occurred under the Loan Agreement; and

**WHEREAS**,subject to the terms and conditions set forth herein, Lender is willing to makethe amendments and grant the consents and waiver requested by Borrower.

**NOW, THEREFORE**,in consideration of the foregoing and the mutual covenants herein contained,and for other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the parties hereby agree as follows:

# 1.     Defined Terms. Capitalizedterms used herein and not otherwise defined herein shall have the meaningsascribed to them in the Loan Agreement, as amended hereby.

# 2.     Amendments to Loan Agreement.

## (a)           Section 3.5 ofthe Loan Agreement is hereby amended and restated in its entirety asfollows:

3.5           **Early Termination byBorrower**. The provisions of Section 3.3 that allowtermination of this Agreement by Borrower only on the Renewal Date and certainanniversaries thereof notwithstanding, Borrower has the option, at any timeupon one hundred twenty (120) days prior written notice to Foothill, toterminate this Agreement by paying to Foothill, in full in cash, theObligations (including an amount equal to 105% of the undrawn amount of theL/Cs or L/C Guarantees), together with a premium (the “Early TerminationPremium”) equal to:  (a) on orbefore June 30, 2007, the sum of one and one-half percent (1.50%) timesthe Maximum Revolving Credit Amount plus one and one-half percent (1.50%) timesthe principal amount of any Capital Expenditure Loans outstanding as of the

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effective date ofthe termination of this Agreement; (b) after June 30, 2007 but on orbefore June 30, 2008, the sum of one percent (1.00%) times the MaximumRevolving Credit Amount plus one percent (1.00%) times the principal amount ofany Capital Expenditure Loans outstanding as of the effective date of thetermination of this Agreement; (iii) after June 30, 2008, the sum ofone-half of one percent (0.50%) times the Maximum Revolving Credit Amount plusone-half of one percent (0.50%) times the principal amount of any CapitalExpenditure Loans outstanding as of the effective date of the termination ofthis Agreement.

## (b)           Section 6.12(a) ofthe Loan Agreement is hereby amended and restated in its entirety asfollows:

(a)           EBITDA. (i) Borrower shall nothave two consecutive fiscal quarters of EBITDA losses (exclusive of thequarters ending June 30, 2005, March 31, 2006, and June 30,2006) and (ii) Borrower shall maintain EBITDA, for each fiscal period setforth below, of not less than the amount indicated below opposite such fiscalperiod:

| for the immediately  preceding twelve-month period ending 06/30/06                                                                                |   | $ | 3,500,000 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|-----------|--------|
| for the  immediately preceding twelve-month period ending 09/30/06                                                                                |   | $ | 3,750,000 |   |
| for the  immediately preceding twelve-month period ending 12/31/06                                                                                |   | $ | 4,250,000 |   |
| for the  immediately preceding twelve-month period ending 03/31/07                                                                                |   | $ | 4,250,000 |   |
| for the immediately  preceding twelve-month period ending 06/30/07 and for each twelve-month  period ending at each fiscal quarter end thereafter |   | $ | 5,000,000 |   |

 

# 3.     Consents. Lender herebyconsents to (a) Borrower’s entering into that certain ReplicationAgreement, with Sonopress LLC, a Delaware limited liability company (the “SonopressReplication Agreement”), in form and substance satisfactory to Agent in itssole discretion (it being understood between the parties that the form ofagreement attached hereto as Exhibit B is satisfactory to Agent),and (b) notwithstanding anything to the contrary in Section 7.2of the Loan Agreement, Borrower’s incurrence of a lien in connection with theSonopress Replication Agreement so long as such lien is (i) expresslyjunior and subordinate to Lender’s lien in Borrower Collateral and (ii) subjectto a subordination agreement satisfactory to Lender in its sole discretion.

# 4.     Waiver. Lender hereby waivesthe Event of Default that has occurred as a result of the failure by Borrowerto comply with Section 6.12(a) of the Loan Agreement withrespect to the fiscal period ending March 31, 2006.

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# 5.     Conditions Precedent to Amendment.The satisfaction of each of the following shall constitute conditionsprecedent to the effectiveness of this Amendment and each and every provisionhereof:

## (a)           Lendershall have received this Amendment, duly executed by the parties hereto, andthe same shall be in full force and effect.

## (b)           Lendershall have received a reaffirmation and consent substantially in the formattached hereto as Exhibit A, duly executed and delivered by eachGuarantor.

## (c)           Lendershall have received an amendment fee in the amount of $20,000, which amountBorrower authorizes Lender to charge to the Loan Account.

## (d)           Therepresentations and warranties herein and in the Loan Agreement and the otherLoan Documents shall be true and correct in all material respects on and as ofthe date hereof, as though made on such date (except to the extent that suchrepresentations and warranties relate solely to an earlier date).

## (e)           NoDefault or Event of Default shall have occurred and be continuing on the datehereof, nor shall result from the consummation of the transactions contemplatedherein.

## (f)            Noinjunction, writ, restraining order, or other order of any nature prohibiting,directly or indirectly, the consummation of the transactions contemplatedherein shall have been issued and remain in force by any Governmental Authorityagainst Borrower, any Guarantor, or Lender.

# 6.     Release. Borrower herebywaives, releases, remises and forever discharges Lender, each of itsAffiliates, and each of its officers, directors, employees, and agents(collectively, the “Releasees”), from any and all claims, demands,obligations, liabilities, causes of action, damages, losses, costs and expensesof any kind or character, known or unknown, past or present, liquidated orunliquidated, suspected or unsuspected, which Borrower ever had, now has ormight hereafter have against any such Releasee which relates, directly orindirectly, to the Loan Agreement or any other Loan Document, or to any acts oromissions of any such Releasee with respect to the Loan Agreement or any otherLoan Document, or to the lender-borrower relationship evidenced by the LoanDocuments. As to each and every claim released hereunder, Borrower herebyrepresents that it has received the advice of legal counsel with regard to thereleases contained herein, and having been so advised, Borrower specificallywaives the benefit of the provisions of Section 1542 of the Civil Code ofCalifornia which provides as follows:

“A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HISFAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

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As to each and everyclaim released hereunder, Borrower also waives the benefit of each othersimilar provision of applicable federal or state law, if any, pertaining togeneral releases after having been advised by its legal counsel with respectthereto.

# 7.     Representations and Warranties.Borrower represents and warrants to Lender that (a) the execution,delivery, and performance of this Amendment and of the Loan Agreement, asamended hereby, (i) are within its powers, (ii) have been dulyauthorized by all necessary action, and (iii) are not in contravention ofany law, rule, or regulation applicable to it, or any order, judgment, decree,writ, injunction, or award of any arbitrator, court, or Governmental Authority,or of the terms of its Governing Documents, or of any contract or undertakingto which it is a party or by which any of its properties may be bound oraffected; (b) this Amendment and the Loan Agreement, as amended hereby,are legal, valid and binding obligations of Borrower, enforceable againstBorrower in accordance with their respective terms; and (c) no Default orEvent of Default has occurred and is continuing on the date hereof or as of thedate upon which the conditions precedent set forth herein are satisfied.

# 8.     Choice of Law. The validityof this Amendment, its construction, interpretation and enforcement, the rightsof the parties hereunder, shall be determined under, governed by, and construedin accordance with the laws of the State of California.

# 9.     Counterpart Execution. This Amendmentmay be executed in any number of counterparts, all of which when taken togethershall constitute one and the same instrument, and any of the parties hereto mayexecute this Amendment by signing any such counterpart. Delivery of an executedcounterpart of this Amendment by telefacsimile or electronic mail shall beequally as effective as delivery of an original executed counterpart of thisAmendment. Any party delivering an executed counterpart of this Amendment bytelefacsimile or electronic mail also shall deliver an original executedcounterpart of this Amendment, but the failure to deliver an original executedcounterpart shall not affect the validity, enforceability, and binding effectof this Amendment.

# 10.   Effect on Loan Documents.

## (a)           TheLoan Agreement, as amended hereby, and each of the other Loan Documents shallbe and remain in full force and effect in accordance with their respectiveterms and hereby are ratified and confirmed in all respects. The execution,delivery, and performance of this Amendment shall not operate, except asexpressly set forth herein, as a modification or waiver of any right, power, orremedy of Lender under the Loan Agreement or any other Loan Document. Thewaivers, consents, and modifications herein are limited to the specificshereof, shall not apply with respect to any facts or occurrences other thanthose on which the same are based, shall not excuse future non-compliance withthe Loan Documents, and shall not operate as a consent to any further or othermatter under the Loan Documents.

## (b)           Uponand after the effectiveness of this Amendment, each reference in the LoanAgreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of likeimport referring to the Loan Agreement, and each reference in the other LoanDocuments to “the Loan Agreement”, “thereunder”, “therein”, “thereof” or wordsof like import referring to

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the Loan Agreement, shallmean and be a reference to the Loan Agreement as modified and amended hereby.

## (c)           Tothe extent that any terms and conditions in any of the Loan Documents shallcontradict or be in conflict with any terms or conditions of the LoanAgreement, after giving effect to this Amendment, such terms and conditions arehereby deemed modified or amended accordingly to reflect the terms andconditions of the Loan Agreement as modified or amended hereby.

## (d)           ThisAmendment is a Loan Document.

# 11.   Entire Agreement. ThisAmendment embodies the entire understanding and agreement between the partieshereto with respect to the subject matter hereof and supersedes any and allprior or contemporaneous agreements or understandings with respect to thesubject matter hereof, whether express or implied, oral or written.

[signature page follows]

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IN WITNESSWHEREOF, the parties have entered into this Amendment as of the date firstabove written.
|        | ** ** | **IMAGE ENTERTAINMENT, INC.,** |   |
|--------|------------|--------------------------------|--------|
|   |       | a Delaware corporation         |   |
|   |       |                           |   |   |
|   |       |                           |   |   |
|   |       | By                             |   | /s/ JEFF M. FRAMER |
|   |       | Title:                         |   | Chief Financial Officer |
|        |            |                                |        |  |  |

 

[SIGNATURE PAGE TOAMENDMENT NUMBER TWO TOAMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]

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|        | ** ** | **WELLS FARGO FOOTHILL, INC.,** |
|--------|------------|---------------------------------|
|   |       | a California corporation        |
|   |       |                            |   |   |
|   |       |                            |   |   |
|   |       | By                              |   | /s/ Terri Le |
|   |       | Title:                          |   | Vice President |

 

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**Exhibit A**

REAFFIRMATION ANDCONSENT

Dated as of June 23,2006

Reference herebyis made to that certain Amendment Number Two to Loan and Security Agreement,dated as of the date hereof (the “Amendment”), between Wells FargoFoothill, Inc. (“Lender”), and Image Entertainment, Inc. (“Borrower”).Capitalized terms used herein shall have the meanings ascribed to them in thatcertain Amended and Restated Loan and Security Agreement, dated as of August 10,2005 (as amended, restated, supplemented, or otherwise modified from time totime, the “Loan Agreement”), between Borrower and Lender. Each of theundersigned hereby (a) represents and warrants that the execution anddelivery of this Reaffirmation and Consent are within its powers, have beenduly authorized by all necessary action, and are not in contravention of anylaw, rule, or regulation applicable to it, or any order, judgment, decree,writ, injunction, or award of any arbitrator, court, or Governmental Authority,or of the terms of its Governing Documents, or of any contract or undertakingto which it is a party or by which any of its properties may be bound oraffected, (b) consents to the amendment of the Loan Agreement set forth inthe Amendment and any waivers granted therein; (c) acknowledges andreaffirms all obligations owing by it to Lender under any Loan Document towhich it is a party; (d) agrees that each Loan Document to which it is aparty is and shall remain in full force and effect, and (e) ratifies andconfirms its consent to any previous amendments of the Loan Agreement and anyprevious waivers granted with respect to the Loan Agreement. Although each ofthe undersigned have been informed of the matters set forth herein and haveacknowledged and agreed to same, each of the undersigned understands thatLender shall have no obligation to inform the undersigned of such matters inthe future or to seek the undersigned’s acknowledgement or agreement to futureamendments, waivers, or modifications, and nothing herein shall create such aduty.

[signature page follows]

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       IN WITNESSWHEREOF, the undersigned have executed this Reaffirmation and Consent as of thedate first set forth above.

 
|            | **HOME VISION ENTERTAINMENT, INC.,** |
|------------|--------------------------------------|
|       | a Delaware corporation               |
|       |                                 |   |
|       | By:                                  | /s/ JEFF M. FRAMER |
|       | Name: Jeff M. Framer                 |
|       | Title: Chief Financial Officer       |
|       |                                 |   |
|       |                                 |   |
| ** ** | **EGAMI MEDIA, INC.,**               |
|       | a Delaware corporation               |
|       |                                 |   |
|       | By:                                  | /s/ JEFF M. FRAMER |
|       | Name: Jeff M. Framer                 |
|       | Title: Chief Financial Officer       |

 

[SIGNATURE PAGE TOREAFFIRMATION AND CONSENT TO AMENDMENT NUMBER TWO TO

AMENDED ANDRESTATED LOAN AND SECURITY AGREEMENT]

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**Exhibit B**

FORM OFSONOPRESS REPLICATION AGREEMENT

 

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