Document:

Image Entertainment, Inc.

 

Exhibit 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this 22nd day
of January, 2007, by and between IMAGE ENTERTAINMENT, INC., a Delaware corporation
(“Image”), and Jeffrey Fink, an individual (“Employee”).

I. TERM OF AGREEMENT. Except as otherwise expressly set forth herein, this
Agreement shall remain in full force and effect for an approximate 14-month term commencing on the
date hereof and ending on March 31, 2008. This Agreement shall automatically renew for successive
one year terms unless either party delivers to the other party a written notice terminating the
Agreement effective the following April by the later of December 31st or 60 days after the
consummation of a Change of Control (as defined below), if any. The first initial and any
subsequent periods shall collectively be called the “Term”.

The parties acknowledge that Employee’s hope is that in the event of a Change of Control (as
defined below), he will have the opportunity to renegotiate this Agreement or enter into a new
agreement such that he maintains substantially the same title, duties, responsibilities, authority
and reporting structure, while increasing his Base Salary and extending his current Term by not
less than one year, or receiving a new Term of not less than two years.

II. ENGAGEMENT. Subject to the terms and conditions contained herein, Image hereby engages
the services of Employee and Employee hereby accepts such engagement and agrees to render said to
Image for the Term. Employee shall report directly to Image’s Chief Operating Officer and shall
have the title of “CHIEF MARKETING OFFICER.”

(a) Services and Duties. Employee shall perform such duties, compatible with Employee’s
position as a “Chief Marketing Officer” (as defined below) and as Image’s Executive Officers may
reasonably require from time to time (the “Duties”). In rendering Duties to Image,
Employee shall use Employee’s good faith efforts and ability to maintain, further and promote the
interests and welfare of Image. Employees assigned to the sales, marketing and acquisition
departments, and designated with the title of Executive Vice President, Senior Vice President or
Vice President, will be direct reports to the Chief Marketing Officer.

(b) Duty of Loyalty. Employee hereby acknowledges and agrees that the engagement of Employee
by Image under this Agreement is exclusive and that during the Term Employee shall not, directly or
indirectly, whether for compensation or otherwise, engage in any business that is competitive with
the business of Image, or render any services of a business, commercial or professional nature to
any other person or organization that is a competitor of Image or in a business similar to that of
Image, without the prior written consent of the Chief Operating Officer of Image. Without limiting
the generality of the foregoing, the home entertainment licensing and distribution business shall
constitute a business that is competitive with the business of Image and an entity engaged in the
home entertainment licensing and distribution business shall be deemed a competitor of Image.

 

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III. COMPENSATION.

(a) Base Salary. The amount of Employee’s annualized base salary through March 31, 2008 will
be $275,000.00 (“Base Salary”), or $22,916.66 per month. Upon the earlier of August 1,
2007, or 30 days after the consummation of a Change of Control, Employee’s annualized Base Salary
shall increase to $325,000.00. On April 1, 2008, if this Agreement has not been terminated as
provided for herein, Employee will be entitled to a 3.33% increase in his Base Salary. For each
subsequent year of the Term, if this Agreement is not terminated, as provided for herein, Employee
will be entitled to a cumulative 5% increase in his then Base Salary.

(b) Discretionary Bonus. During the Term, Employee shall be eligible to receive annual bonus
compensation based on the net income of Image for the year in question (“Discretionary
Bonus”). The amount of such Discretionary Bonus (if any) shall be determined by Image’s CEO
and the Compensation Committee of Image’s Board of Directors (the “Committee”), in their
sole and absolute discretion. Employee shall be treated no less favorably than the Chief Financial
Officer and the Chief Operating Officer in connection with Employee’s eligibility for a
Discretionary Bonus, and Employee shall not receive less than the Chief Financial Officer and shall
not receive materially less than the Chief Operating Officer in the event Discretionary Bonuses are
granted.

IV. OPTIONS AND OTHER STOCK-BASED AWARDS.

(a) In addition to Base Salary and Discretionary Bonus, Image may grant stock-based awards
(the “Awards”) to Employee in such form and amounts, and at such time or times, as Image’s
CEO and Board of Directors (or, if applicable, Image’s stock option plan administrators or the
Committee) shall determine from time to time; provided, however, that nothing
contained herein may be construed or interpreted as a right or entitlement to receive any Awards at
anytime during the Term. Employee shall not receive less than the Chief Financial Officer and
shall not receive materially less than the Chief Operating Officer in the event Awards are granted.

(b) Notwithstanding the above, upon start of Employee’s employment, Image will grant Employee
10,000 Restricted Stock Units (“RSU’s”), vesting 3,300 RSU’s on the first anniversary of
the date of the grant, 3,300 RSU’s on the second anniversary of the date of the grant and 3,400
RSU’s on the third anniversary of the date of the grant. If Employee’s employment ends prior to any
RSU’s vesting, then all such unvested RSU’s shall be cancelled and forfeited by Employee. However,
upon a Change of Control, Termination Without Cause, or Resignation by Employee for Good Cause (in
each case as defined below) all unvested RSU’s will immediately vest.

 

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(c) For purposes of this Agreement, “Change of Control” shall mean and be deemed to
have occurred on the earliest of the following dates or events:

(i) the date of an acquisition by any person of beneficial ownership (within the
meaning of Rule 13d-3 under Exchange Act of 1934, as amended) or a
pecuniary interest in more than 45% of the common stock or voting securities then
entitled to vote generally in the election of directors of Image (“Voting
Stock”), other than an acquisition by one or more Excluded
Persons (Image, Image Investors Co., Standard Broadcasting Corporation Ltd., or
Messrs. John Kluge, Stuart Subotnick or Martin Greenwald) in connection with a new
issuance of Voting Stock (or rights to acquire Voting Stock) by Image to the
Excluded Person in a transaction that the Committee determines (in advance of the
issuance) does not constitute a Change of Control event, or in the event that one or
more Excluded Persons take Image from a public company to a privately held company;

(ii) approval by the shareholders of Image of a plan of merger, consolidation, or
reorganization of Image involving a more than 50% change in ownership or sale or
other disposition of all or substantially all of Image’s assets (collectively, a
“Business Combination”), other than a Business Combination: (1) (x)
in which substantially all of the holders of Image’s Voting Stock hold or receive
directly or indirectly 50% or more of the voting stock of the resulting entity or a
parent company thereof, and (y) after which no person (other than any one or more of
the Excluded Persons, as defined above) owns more than 50% of the voting stock of
the resulting entity (or a parent company) who did not own directly or indirectly at
least that amount of Voting Stock immediately before the Business Combination; or
(2) in which the holders of Image’s capital stock immediately before such Business
Combination will, immediately after such Business Combination, hold as a group on a
fully diluted basis the ability to elect at least a majority of the directors of the
surviving corporation (or a parent company);

(iii) approval by the Board of Directors and (if required by law) by shareholders of
Image of a plan to consummate the dissolution or complete liquidation of Image; or

(iv) the date the persons who were members of the Board of Directors at the
beginning of any 24-month period shall cease to constitute a majority of the Board,
unless the election, or the nomination for election by Image’s shareholders, of each
new director was approved by two-thirds of the members of the Board of Directors
then in office who were in office at the beginning of the 24-month period.

For purposes of determining whether a Change of Control has occurred, a transaction includes all
transactions in a series of related transactions.

 

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V. FRINGE BENEFITS. Employee acknowledges, understands and agrees he shall receive the
following fringe benefits, on the equivalent basis as the Chief Financial Officer and the Chief
Operating Officer:

(a) Medical, Dental, Life & Long-Term Disability Insurance. Image shall purchase (or if
applicable, maintain) during the Term (and pay the premium for): PPO medical, dental, life and
long-term disability insurance for Employee and Employee’s spouse and dependent children
(collectively, “Insurance”).

(b) Business/Travel Expenses. Employee shall be reimbursed in full for all reasonable and
actual out-of-pocket business (including free participation in Image’s group business plans for
cell phone and BlackBerry use) and travel expenses (including airline upgrades) incurred in the
performance of the Duties, in accordance with Image’s travel reimbursement policies, provided
Employee shall first present an itemized account of such expenditures together with supporting
vouchers. For reference purposes, the Chief Operating Officer and Chief Financial Officer currently
travel via coach class on domestic flights and business class on international flights.

(c) Vacation Time. Notwithstanding anything contained in Image’s Employee Handbook, Employee
is entitled to 4 weeks of paid vacation per calendar year. Vacation time will be capped at eight
(8) weeks maximum accrual at any point in time during the Term. Once Employee has accrued eight
(8) weeks vacation time, he will not accrue additional time unless he uses some vacation time and
his accrued balance thereby drops below eight (8) weeks.

(d) Employee Handbook to Apply. Except as expressly set forth herein to the contrary, all of
the terms and conditions of the current version of the Image’s Employee Handbook will apply,
including but not limited to provisions relative to confidentiality, periodic insider trading
blackout updates, sick days, holidays, leaves of absence and arbitration of disputes. In that
connection, Employee hereby acknowledges that Employee has been provided with a copy of Image’s
current Employee Handbook and agrees to read and be bound by the terms of such Employee Handbook as
may be in effect from time to time.

(e) Contribution Plan. Throughout the Term, Employee shall be entitled to participate in the
then-current Image 401(k) participation plan according to the guidelines set forth by Image and the
plan’s custodian. Image will match Employee’s contributions to the participation plan, up to a
maximum of 4% of Employee’s Base Salary, at the rate of $0.50 per dollar contributed by Employee.

(f) Automobile Allowance. Employee shall receive an amount equal to $10,000.00 annually for
an automobile allowance, which shall be paid to Employee in equal installments during each pay
period.

VI. WITHHOLDING. There shall be deducted from all compensation payable to Employee
thereunder, such sums, including without limitation, social security, income tax withholding and
unemployment insurance, as Image is by law obligated to deduct.

 

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VII. CONFIDENTIALITY. In consideration of the payments to be received hereunder, Employee
agrees that:

(a) During the Term Employee will have access to and become acquainted with confidential and
proprietary information (“Confidential Information”) of Image. Except as the Duties may
require or as Image may otherwise consent to in writing, Employee will not at any time disclose or
use to the detriment of Image or the sole benefit of Employee or any third party, either directly
or indirectly, any information, knowledge or data he receives in confidence or acquires from Image
or which relates to the Confidential Information of Image. For purposes of this Agreement
“Confidential Information” shall include, but not be limited to:

(i) Financial information, such as Image’s earnings, assets, debts, prices, pricing structure,
volumes of purchases or sales or other financial data, whether relating to Image generally, or to
particular products, services, geographic areas, or time periods;

(ii) Supply and service information, such as goods and services, supplier’s names or
addresses, terms of supply or service contracts, or of particular transactions, or related
information about potential suppliers, to the extent that such information is not generally known
to the public, and to the extent that the combination of suppliers or use of a particular supplier,
though generally known or available, yields advantages to Image, the details of which are not
generally known;

(iii) Marketing information, such as details about ongoing or proposed marketing programs or
agreements by or on behalf of Image, sales forecasts or results of marketing efforts or information
about impending transactions;

(iv) Licensing or distribution information, such as details about ongoing or proposed
negotiations or agreements by or on behalf of Image, terms and details of such negotiations or
agreements or results of licensing or distribution efforts or information about impending
transactions;

(v) Customer information, such as any compilation of past, existing or prospective customers,
customers’ proposals or agreements between customers and status of customers accounts or credit, or
related information about actual or prospective customers; and

(vi) Employee Information, such as information about an employee’s performance and
compensation structure.

(b) Confidential Information shall not include: (i) information already known to Employee
prior to the date on which Employee acquired such information from Image; (ii) information
generally available or known by the public; and (iii) information acquired by the Employee from a
third party not contractually bound by any confidentiality agreement;

(c) Employee will return to Image, or destroy at Image’s discretion, all documents containing
Confidential Information, including all reproductions thereof, at the earliest of: (i) demand
thereof by Image; (ii) accomplishment of the purpose for which they were furnished or created; or
(iii) termination of Employee’s employment with Image for any reason. Employee shall be entitled
to retain his rolodex, outlook and calendar.

 

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VIII. NON-SOLICITATION OF CUSTOMERS.

(a) Employee acknowledges that all customer files, records, documents, and data information,
as well as customer lists are special, valuable and unique assets of Image and are essential to its
continued business success.

(b) Employee agrees that, except for those customers listed by Employee on Exhibit “A”, during
the Term and for a period of one (1) year thereafter, Employee will not, directly or indirectly, as
an employee, owner, proprietor, partner, joint venturer, shareholder, director, officer,
independent contractor, consultant, agent, beneficiary, or in any other capacity whatsoever,
solicit any client of Image for the purpose of providing any services or products directly
competitive to those of Image. Any entity or person shall be deemed a client of Image if: (i) it
was a client as of the date of termination of Employee’s employment; or (ii) it was a client during
the one (1) year period prior to the date of termination of Employee’s employment. Employee
further agrees that his being prohibited from soliciting such clients is fair and reasonable, and
does not prevent his pursuit of employment in his field. The providing of competitive products or
services shall include but not be limited to video or audio software production, acquisitions and
distribution. The provisions of this Subparagraph VIII(b) shall not apply in the event of a
Termination Without Cause or a Resignation by Employee for Good Cause.

IX. NON-SOLICITATION OF EMPLOYEES. Employee further agrees that, during the Term and for a
period of one (1) year following the termination for any reason of his employment, and regardless
of any claims that Image may have against Employee or that Employee may have against Image, he will
not directly or indirectly employ or seek to employ any person who is employed by Image or induce
any such person to terminate employment with Image.

X. WORK FOR HIRE. Image shall be the sole and exclusive owner of all right, title and
interest in and to all Confidential Information and any and all works, materials, ideas, products,
services, developments, projects and other matters, including, without limitation, all computer
programs and source code, created, suggested, submitted or otherwise worked on by Employee at any
time during Employee’s employment by Image (whether prior to or after the date hereof), and all
other results and proceeds of services performed by Employee (collectively, the
“Property”). Employee acknowledges and agrees that all Property shall be considered a
“work made for hire” for Image as that term is defined in §101 of the 1976 Copyright Act. To the
extent the Property, or any portion thereof, is determined by a court of competent jurisdiction or
administrative agency not to be a “work made for hire”, Employee hereby assigns all proprietary
rights in the Property to Image without further compensation, and further agrees to execute any and
all documents deemed necessary or appropriate by Image to effectuate a complete transfer of
ownership of all rights to Image throughout the world. Employee also agrees that the Image shall
have the sole and exclusive right in perpetuity to use, exploit, distribute and otherwise turn to
account any or all of the Property, and that Image may modify, change or alter all or any part of
the Property, all as Image may determine from time to time in its sole discretion.

 

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XI. INJUNCTIVE RELIEF.

(a) Any material violation of the terms of Sections VII, VIII, IX or X hereof will constitute
a material breach of this Agreement and will cause Image immediate and irreparable harm and that
the damages which Image will suffer may be difficult or impossible to measure. Therefore, upon any
actual or impending violation of Sections VII, VIII, IX or X hereof, Image shall be entitled to the
issuance by a court or arbitrator of a restraining order, preliminary and permanent injunction,
without bond, restraining or enjoining such violation by Employee or any entity or person acting in
concert with Employee. Such remedy shall be additional to and not in limitation of any other
remedy which may otherwise be available to Image. Any arbitrator selected by the parties to
resolve any dispute arising from this Agreement or Employee’s employment with Image shall have the
power and authority to issue a restraining order, and preliminary and permanent injunction, without
bond, and Employee agrees to the authority of any such arbitrator to do so.

(b) The covenants and agreements contained in Sections VII, VIII, IX or X hereof are
independent of any other provision of this Agreement or any other understanding between the
parties, and the existence of any claim or cause of action of Employee against Image, of whatsoever
nature, shall not constitute a defense to the enforcement by Image of the covenants contained
herein. In the event the restrictive covenants contained in Sections VII, VIII, IX or X hereof
shall be adjudicated by any court of competent jurisdiction or arbitrator to be partially or
totally invalid or unenforceable for any reason, such covenants shall be deemed modified to the
extent necessary to render them valid and enforceable under the laws of such jurisdiction, or shall
be excised from this Agreement, as circumstances may require, and said restrictive covenants,
subject to such modification or deletion, shall be enforced to the maximum extent and scope
permitted by the laws of such jurisdiction.

XII. ARBITRATION. Employee and Image agree to be bound by the Arbitration Agreement
contained in the Employee Handbook. Employee represents that he has read and agrees to the
Arbitration Agreement.

XIII. INDEMNIFICATION OF EMPLOYEE. Image will, to the maximum extent permitted by
applicable law and its charter and by-laws, indemnify and hold Employee harmless against expenses
(including reasonable attorney’s fees), judgments, fines, settlements and other amounts actually
and reasonably incurred in connection with any proceeding arising by reason of Employee’s
employment by Image. Image shall advance to Employee any expenses incurred in defending any
proceeding to the maximum extent permitted by applicable law and its charter and by-laws.

XIV. DEATH & DISABILITY.

(a) In the event of Employee’s death, notwithstanding Section I above, this
Agreement will automatically terminate on the last day of the calendar month in which Employee’s
death occurs. In the event of Employee’s Permanent Disability (as defined below), notwithstanding
Paragraph I above, Image shall have the right to terminate this Agreement on the last day of the
calendar month in

 

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which Employee’s Permanent Disability occurs. “Permanent Disability” shall mean any disability rendering Employee unable to
perform the essential functions of his job hereunder, with or without reasonable accommodation,
for a period in excess of twelve (12) consecutive weeks, or six (6) months in the aggregate of any
twelve (12) month period; provided, however, that this Subparagraph XIV(a) shall not diminish
Employee’s right to take statutory leaves of absence under the Family and Medical Leave Act or
California Family Rights Act. Employee acknowledges and agrees that as of the date hereof,
Employee constitutes a “Key Employee” for purposes of the Family and Medical Leave Act of 1993, as
provided in Section 825.217 of Title 29 of the Code of Federal Regulations.

(b) Upon termination of this Agreement pursuant to employee’s death or Permanent
Disability as described above, Employee (or employee’s heirs or assignees, as applicable) shall be
entitled to receive:

	 	(i)	 	Base Salary continuation for the remainder of the Term, plus
for an additional period of six (6) months;
	 
	 	(ii)	 	a prorated portion of Discretionary Bonus, if any, otherwise
payable pursuant to Subparagraph III(b) for any partial fiscal year that has
occurred prior to the expiration or early termination of the Term;
	 
	 	(iii)	 	Insurance for the remainder of the Term, and continuing for an
additional period of six (6) months; and
	 
	 	(iv)	 	if applicable, all life insurance benefits described in
Subparagraph V(a).

XV. TERMINATION FOR CAUSE. In the event of “Cause” (as defined below), Image may terminate
this Agreement at any time effective upon delivery of written notice to Employee. In any such
event, and notwithstanding any provision of this Agreement to the contrary, all of Image’s
obligations hereunder will immediately terminate without further liability. Moreover, after the
date of such termination, Employee shall not be entitled to receive any severance, fringe benefits,
compensation or other such rights, nor shall Employee be entitled to receive any portion, pro-rata
or otherwise, of the Discretionary Bonus otherwise payable pursuant to Subparagraph III(b). For
purposes of this Agreement, “Cause” shall include, but is not limited to:

(a) Employee’s: (i) conviction of fraud or a felony; or (ii) material dishonesty, willful
misconduct or gross negligence in the performance of the Duties hereunder; provided,
however, that bona fide disputes as to expense reimbursement shall not be deemed material
dishonesty or breach by Employee of any material provision of this Agreement;

(b) Employee’s breach of any material provision of this Agreement or any other material
agreement between Image and Employee;

 

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(c) Suspension of the Duties as a result of an unauthorized (i.e. not otherwise permitted by
this Agreement or applicable law, rule or regulation) leave of absence for any reason;

(d) Employee’s express and intentional failure to follow any reasonable and lawful direction
from any Executive Officer or the Board; or

Employee shall be given written notice by Image of termination pursuant to Subparagraphs (b)
and (d) hereinabove, and Employee shall be provided, where applicable, fifteen (15) days after
notice of such breach to cure such breach.

XVI. TERMINATION WITHOUT CAUSE OR NON-RENEWAL BY IMAGE

If Image terminates this Agreement without Cause or if Image elects not to renew the
Agreement, Employee shall be entitled to receive, with no duty to mitigate:

(i) Base Salary continuation in accordance with Image’s normal payroll practices for the
remainder of the Term, plus for an additional period of six (6) months;

(ii) Discretionary Bonus, if any, in accordance with Image’s normal payroll practices
otherwise payable pursuant to Subparagraph III(b) for the remainder of the Term; and

(iii) Insurance for the remainder of the Term, and continuing for an additional period of
six (6) months.

XVII. RESIGNATION BY EMPLOYEE FOR GOOD CAUSE

If Employee resigns for Good Cause, Employee shall be entitled to receive, with no duty to
mitigate:

(a) Base Salary continuation in accordance with Image’s normal payroll practices for the
remainder of the Term, plus for an additional period of six (6) months;

(b) Discretionary Bonus, if any, in accordance with Image’s normal payroll practices otherwise
payable pursuant to Subparagraph III(b) for the remainder of the Term; and

(c) Insurance for the remainder of the Term, and continuing for an additional period of six
(6) months.

For the purposes of this Paragraph XVII, “Good Cause” shall mean:

(i) Image requires Employee to relocate outside Los Angeles County;

(ii) There is a material breach of this Agreement by Image which Image fails to cure within
fifteen (15) days after receipt of such notice;

(iii) There is a material change in Employee’s duties;

 

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(iv) There is a change in Employee’s reporting structure other than a direct report to the
Board of Directors, CEO, COO, CFO or President of Image or any successor entity;

(v) There is a material reduction in Employee’s authority with respect to performing his
Duties; or

(vi) There is a reduction in Employee’s title.

XVIII. GENERAL PROVISIONS.

(a) Successors and Assigns. This Agreement is binding upon any successor or assignee of
Image. The parties hereto agree that Employee’s services are personal and that Employee shall
have no right to sell, transfer or assign this Agreement in any manner whatsoever.

(b) Entire Understanding. This Agreement, as well as the Employee Handbook, constitutes the
entire understanding and agreement between the parties with respect to the subject matter hereof,
and supersedes: (i) any and all prior and preliminary discussions; and (ii) any and all prior
written or oral and any and all contemporaneous written or oral agreements, understandings and
negotiations between the parties, including but not limited to prior written or oral employment
agreements and severance agreements, and, there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof except as set forth or
referred to herein. This Agreement shall not be modified, amended or altered except by an
instrument in writing executed by the parties hereto.

(c) Severability. In case one or more of the provisions contained in this Agreement (or any
portion of any such provision) shall for any reason be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement (or any portion of any such provision), but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision (or portion thereof) had never been contained
herein.

(d) Waiver. The failure by Image, at any time, to require performance by Employee of any of
the provisions hereof, shall not be deemed a waiver of any kind nor shall it in any way affect
Image’s rights thereafter to enforce the same.

(e) Notices. All notices, requests, demands and other communications provided for by this
Agreement shall be in writing and shall be deemed to have been given 24 hours after deposit there
of for mailing at any general or branch United States Post Office, enclosed in a registered or
certified postpaid envelope and addressed as follows:

	 	 	 	 	 
	 

	 	To Image:
	 	IMAGE ENTERTAINMENT, INC.
	 

	 	 	 	20525 Nordhoff Street — Suite 200
	 

	 	 	 	Chatsworth, CA 91311
	 

	 	 	 	Attn: Dennis Hohn Cho

 

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	 	To Employee:
	 	JEFFREY FINK
	 

	 	 	 	c/o Image Entertainment, Inc.
	 

	 	 	 	20525 Nordhoff Street, Suite 200
	 

	 	 	 	Chatsworth, CA 91311

The parties hereto may designate a different place at which notice shall be
given; provided, however, that any such notice of change of address shall be
effective only upon receipt.

(f) Good Faith. The parties hereto shall perform, fulfill and discharge their duties and
obligations hereunder in a reasonable manner in good faith.

(g) Governing Law. This Agreement and all rights, obligations and liabilities arising
hereunder shall be construed and enforced in accordance with the laws of the State of California.

(h) Advice of Counsel. The parties represent and warrant that in executing this Agreement,
they have each had the opportunity to obtain independent financial, legal, tax and other
appropriate advice, and are relying upon any other party (or the attorneys or other agents of such
other party) for any such advice.

(i) Subject Headings and Defined Terms. Subject headings and choice of defined terms are
included for convenience only and shall not be deemed part of this Agreement.

(j) Cumulative Rights and Remedies. The rights and remedies provided for in this Agreement
shall be cumulative; resort to one right or remedy shall not preclude resort to another or to any
other right or remedy provided for by law or equity.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	IMAGE ENTERTAINMENT, INC.

	 	 	 	JEFFREY FINK
	 
	 	 	 	 
	/S/ DAVID BORSHELL

	 	 	 	/S/ JEFFREY FINK
	 

	 	 	 	 
	By: David Borshell
	 	 	 	 
	Title: Chief Operating Officer
	 	 	 	 

 

12Image Entertainment, Inc.

 

Exhibit 10.4

	 	 	 	 	 
	 	Image Entertainment, Inc. 

2004 Incentive Compensation Plan

Stock Unit Award Grant Notice

 	 
	 	 	 
	 	 	 
	 	 	 
	 

Image Entertainment, Inc. (the “Company”), pursuant to its 2004 Incentive Compensation Plan
(the “Plan”), hereby grants to Participant a right to receive the number of shares of the Company’s
Common Stock set forth below. This Stock Unit award is subject to all of the terms and conditions
as set forth herein and in the Stock Unit Award Agreement and the Plan, all of which are attached
hereto and incorporated herein in their entirety.

	 	 	 
	Participant:

	 	[NAME]
	 

	 	 
	Date of Grant:

	 	[DATE]
	 

	 	 
	Vesting Commencement Date:

	 	[DATE]
	 

	 	 
	Number of Stock Units:

	 	[NUMBER]
	 

	 	 

	 	 	 
	Expiration Date:

	 	Subject to termination as provided in Section 3(b) of the Stock Unit Award Agreement

	 	 	 
	Vesting Schedule:

	 	[NUMBER] of the Stock Units subject to this award vest on the first
anniversary of the Vesting Commencement Date, [NUMBER] of the Stock Units subject to this
award vest on the second anniversary of the Vesting Commencement Date, and [NUMBER] of the
Stock Units subject to this award vest on the third anniversary of the Vesting Commencement
Date. All vesting is subject to Participant’s Continuous Service.

Delivery Schedule: Shares of Company Common Stock shall be delivered to the Participant within ten
(10) days of vesting of the respective Stock Units.

Additional Terms/Acknowledgements: The undersigned Participant acknowledges receipt of, and
understands and agrees to, this Stock Unit Award Grant Notice, Stock Unit Award Agreement and the
Plan. Participant further acknowledges that as of the Date of Grant, this Stock Unit Award Grant
Notice, the Stock Unit Award Agreement and the Plan set forth the entire understanding between
Participant and the Company regarding the acquisition of Common Stock in the Company and supersede
all prior oral and written agreements on that subject with the exception of (i) options previously
granted and delivered to Participant under the Plan, and (ii) the following agreements only:

	 	 	 	 	 
	 

	 	Other Agreements:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	Image Entertainment, Inc.	 	Participant:
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Signature
	 	Signature

	 
	 	 	 	 	 	 
	Title:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

Attachments: Stock Unit Award Agreement and 2004 Incentive Compensation Plan.

 

 

 

Attachment I

Stock Unit Award Agreement

 

 

 

Image Entertainment, Inc.

2004 Incentive Compensation Plan

Stock Unit Award Agreement

Image Entertainment, Inc. (the “Company”) wishes to grant to the person (the
“Participant”) named in the Notice of Grant of Stock Unit Award (the “Notice of
Grant”) a Stock Unit award (the “Award”) pursuant to the provisions of the Company’s
2004 Incentive Compensation Plan (the “Plan”). The Award will entitle Participant to
shares of Common Stock from the Company, if Participant meets the vesting requirements described
herein. Therefore, pursuant to the terms of the attached Notice of Grant and this Stock Unit Award
Agreement (the “Agreement”), the Company grants Participant the number of Stock Units
listed in the Notice of Grant.

The details of the Award are as follows:

1. Grant Pursuant to Plan. This Award is granted pursuant to the Plan, which is
incorporated herein for all purposes. The Participant hereby acknowledges receipt of a copy of the
Plan and agrees to be bound by all of the terms and conditions of this Agreement and of the Plan.
All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement,
or, if such term is not defined in this Agreement, such term shall have the meaning assigned to it
under the Plan.

2. Stock Unit Award. The Company hereby grants to the Participant the Stock Units
listed in the Notice of Grant as of the grant date specified in the Notice of Grant (the “Grant
Date”). Such number of Stock Units may be adjusted from time to time pursuant to Section 11(a)
of the Plan.

3. Vesting and Forfeiture of Stock Units.

(a) Vesting. The Participant shall become vested in the Stock Units in accordance
with the vesting schedule in the Notice of Grant, except as otherwise accelerated pursuant to
Section 3(b).

(b) Forfeiture. The Participant shall forfeit any unvested Stock Units, if any, in
the event that the Participant’s Continuous Service is terminated for any reason, except (i) as
otherwise provided in this Agreement or the Plan; (ii) as otherwise determined by the Plan
Administrator in its sole discretion, which determination need not be uniform as to all
Participants; (iii) the Stock Units subject to this Award (including any dividend equivalent Stock
Units pursuant to Section 5(b) below) shall be fully vested upon the death or Disability of the
Participant and (iv) the Stock Units subject to this Award shall become fully vested upon a Change
in Control.

4. Settlement of Stock Unit Award.

(a) Settlement of Units for Stock. The Company shall deliver to the Participant one
share of Common Stock for each vested Stock Unit subject of this Award on the
appropriate Delivery Date (as defined in Section 4(b)). The Company shall not have any
obligation to settle this Award for cash.

 

 

 

(b) Delivery of Common Stock. Shares of Common Stock shall be delivered on the
delivery date(s) (each a “Delivery Date”) specified in the Notice of Grant. Once a share of Common
Stock is delivered with respect to a vested Stock Unit, such vested Stock Unit shall terminate and
the Company shall have no further obligation to deliver shares of Common Stock or any other
property for such vested Stock Unit.

5. No Rights as Shareholder until Delivery; Dividend Equivalents.

(a) The Participant shall not have any rights, benefits or entitlements with respect to any
Common Stock subject to this Agreement unless and until the Common Stock has been delivered to the
Participant. On or after delivery of the Common Stock, the Participant shall have, with respect to
the Common Stock delivered, all of the rights of an equity interest holder of the Company,
including the right to vote the Common Stock and the right to receive all dividends, if any, as may
be declared on the Common Stock from time to time.

(b) As soon as administratively practicable after the payment of any cash dividend or other
distribution by the Company, this Award shall be credited with additional Stock Units in an amount
equal to the dividends paid on a number of shares equal to (x) the number of Stock Units subject to
this Award as of the record date for such distribution, divided by (y) the Fair Market Value of a
share of Common Stock as of the applicable crediting date. These dividend equivalent Stock Units
shall vest at the same time as the Stock Units subject to this Award for which the dividend
equivalent Stock Units were paid.

6. Tax Provisions.

(a) Tax Consequences. Participant has reviewed with Participant’s own tax advisors
the federal, state, local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. Participant understands that
Participant (and not the Company) shall be responsible for any tax liability that may arise as a
result of the transactions contemplated by this Agreement.

(b) Withholding Obligations. At the time the Award is granted, or at any time
thereafter as requested by the Company, Participant hereby authorizes withholding from payroll and
any other amounts payable to Participant, including shares of Common Stock deliverable pursuant to
this Award, and otherwise agrees to make adequate provision for, any sums required to satisfy the
minimum federal, state, local and foreign tax withholding obligations of the Company or a
Affiliate, if any, which arise in connection with the Award.

The Company, in its sole discretion, and in compliance with any applicable legal conditions or
restrictions, may withhold from fully vested shares of Common Stock otherwise deliverable to
Participant upon the vesting of the Award a number of whole shares of Common Stock having a Fair
Market Value, as determined by the Company as of the date the Participant recognizes income with
respect to those shares of Common Stock, not in excess of the amount of minimum tax required to be
withheld by law (or such lower amount as may be necessary to
avoid adverse financial accounting treatment). Any adverse consequences to Participant
arising in connection with such Common Stock withholding procedure shall be the Participant’s sole
responsibility.

 

 

 

In addition, the Company, in its sole discretion, may establish a procedure whereby the
Participant may make an irrevocable election to direct a broker (determined by the Company) to sell
sufficient shares of Common Stock from the Award to cover the tax withholding obligations of the
Company or any Affiliate and deliver such proceeds to the Company.

Unless the tax withholding obligations of the Company or any Affiliate are satisfied, the
Company shall have no obligation to issue a certificate for such shares of Common Stock.

(c) Section 409A Amendments. The Company agrees to cooperate with Participant to
amend this Agreement to the extent either the Company or Participant deems necessary to avoid
imposition of any additional tax or income recognition prior to actual payment to Participant under
Code Section 409A and any temporary or final Treasury Regulations and Internal Revenue Service
guidance thereunder, but only to the extent such amendment would not have an adverse effect on the
Company and would not provide Participant with any additional rights, in each case as determined by
the Company, in its sole discretion.

7. Consideration. With respect to the value of the shares of Common Stock to be
delivered pursuant to the Award, such shares of Common Stock are granted in consideration for the
services Participant shall provide to the Company during the vesting period.

8. Transferability. The Stock Units granted under this Agreement are not transferable
otherwise than by will or under the applicable laws of descent and distribution. In addition, the
Stock Units shall not be assigned, negotiated, pledged or hypothecated in any way (whether by
operation of law or otherwise), and the Stock Units shall not be subject to execution, attachment
or similar process.

9. General Provisions.

(a) Employment At Will. Nothing in this Agreement or in the Plan shall confer upon
Participant any right to continue in the service of the Company or its Affiliates for any period of
specific duration or interfere with or otherwise restrict in any way the rights of the Company (or
any Affiliate employing or retaining Participant) or of Participant, which rights are hereby
expressly reserved by each, to terminate Participant’s service at any time for any reason, with or
without cause.

(b) Notices. Any notice required to be given under this Agreement shall be in writing
and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered
or certified, postage prepaid and properly addressed to the party entitled to such notice at the
address indicated below such party’s signature line on this Agreement or at such other address as
such party may designate by ten (10) days’ advance written notice under this paragraph to all other
parties to this Agreement.

(c) No Limit on Other Compensation Arrangements. Nothing contained in this Agreement
shall preclude the Company from adopting or continuing in effect other or
additional compensation arrangements, and those arrangements may be either generally
applicable or applicable only in specific cases.

 

 

 

(d) Severability. If any provision of this Agreement is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or would disqualify this Agreement or the
Award under any applicable law, that provision shall be construed or deemed amended to conform to
applicable law (or if that provision cannot be so construed or deemed amended without materially
altering the purpose or intent of this Agreement and the Award, that provision shall be stricken as
to that jurisdiction and the remainder of this Agreement and the Award shall remain in full force
and effect).

(e) No Trust or Fund Created. Neither this Agreement nor the grant of the Award shall
create or be construed to create a trust or separate fund of any kind or a fiduciary relationship
between the Company and the Participant or any other person. The Stock Units subject to this
Agreement represent only the Company’s unfunded and unsecured promise to issue shares of Common
Stock to the Participant in the future. To the extent that the Participant or any other person
acquires a right to receive shares of Common Stock from the Company pursuant to this Agreement,
that right shall be no greater than the right of any unsecured general creditor of the Company.

(f) Cancellation of Award. If any Stock Units subject to this Agreement are
forfeited, then from and after such time, the Participant (and any other person from whom such
Stock Units are forfeited) shall no longer have any rights to such Stock Units or the corresponding
shares of Common Stock. Such Stock Units shall be deemed forfeited in accordance with the
applicable provisions hereof.

(g) Participant Undertaking. Participant hereby agrees to take whatever additional
action and execute whatever additional documents the Company may deem necessary or advisable in
order to carry out or effect one or more of the obligations or restrictions imposed on either
Participant or the shares of Common Stock deliverable pursuant to the provisions of this Agreement.

(h) Amendment, Modification, and Entire Agreement. No provision of this Agreement may
be modified, waived or discharged unless that waiver, modification or discharge is agreed to in
writing and signed by the Participant and the Plan Administrator. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter hereof. This
Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in
conformity with the terms of the Plan. In the event of a conflict between the Plan and this
Agreement, the terms of the Plan shall govern. Participant further acknowledges that as of the
Grant Date, this Agreement and the Plan set forth the entire understanding between Participant and
the Company regarding the acquisition of Stock pursuant to this Award and supersede all prior oral
and written agreements on that subject with the exception of awards from the Company previously
granted and delivered to Participant. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either party which are not
set forth expressly in this Agreement.

 

 

 

(i) Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California without regard to the conflict-of-laws rules thereof or
of any other jurisdiction.

(j) Interpretation. The Participant accepts this Award subject to all the terms and
provisions of this Agreement and the terms and conditions of the Plan. The undersigned Participant
hereby accepts as binding, conclusive and final all decisions or interpretations of the Plan
Administrator upon any questions arising under this Agreement.

(k) Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and upon Participant,
Participant’s assigns and the legal representatives, heirs and legatees of Participant’s estate,
whether or not any such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof. The Company may assign its rights and
obligations under this Agreement, including, but not limited to, the forfeiture provision of
Section 3(b) to any person or entity selected by the Board.

(l) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and the same
instrument.

(m) Headings. Headings are given to the Paragraphs and Subparagraphs of this
Agreement solely as a convenience to facilitate reference. The headings shall not be deemed in any
way material or relevant to the construction or interpretation of this Agreement or any provision
thereof.

10. Representations. Participant acknowledges and agrees that Participant has
reviewed the Agreement in its entirety, has had an opportunity to obtain the advice of counsel
prior to executing and accepting the Award and fully understands all provisions of the Award.

[Remainder of page is intentionally blank]

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first
indicated above.

	 	 	 	 	 
	 	 	Image Entertainment, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

 

	 	 	 	 	 
	 	 	PARTICIPANT
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Address:

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