Document:

Exhibit 10.16

Exhibit 10.16

AMH HOLDINGS II, INC.

STOCK OPTION AWARD AGREEMENT

This Stock Option Award Agreement (this “Agreement”), dated May 30, 2008, is made between AMH
Holdings II, Inc. (the “Company”) and                      (the “Optionee”). All capitalized terms used
herein that are not defined herein shall have the respective meanings given to such terms in the
AMH Holdings II, Inc. 2004 Stock Option Plan (the “Plan”).

W I T N E S S E T H:

1. Grant of Option. Pursuant to the provisions of the Plan, the Company hereby grants
to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms
and conditions herein set forth, the right and option to purchase from the Company all or any part
of an aggregate of XX shares of the Class B, Series II (Non-Voting) Common Stock of the Company,
$0.01 par value per share (“Stock”), at a per share purchase price equal to $1.00 (the “Option”),
such Option to be exercisable as hereinafter provided; provided, however, that if and when the
Investcorp Investors (defined as set forth in Schedule II attached hereto) shall have
exercised their right to convert all, but not less than all, of the shares of preferred stock of
the Company into common stock of the Company (the “Conversion”), then the number of shares of Stock
set forth in this Section 1 shall be adjusted by the Committee as provided in Schedule I
attached hereto, in accordance with Section 10(b) of the Plan. The Option shall not be treated as
an “incentive stock option,” as defined in Section 422 of the Code.

2. Terms and Conditions. It is understood and agreed that the Option evidenced hereby
is subject to the following terms and conditions:

(a) Expiration Date. The Option shall expire ten (10) years after the date indicated
above.

(b) Exercise of Option. (i) Subject to the other terms of this Agreement and the
Plan, the Option may become exercisable with respect to the shares of Stock set forth in Section 1
of this Agreement to the extent provided in Schedule I and Schedule II attached
hereto.

(ii) Any exercise of all or any part of the Option shall be accompanied by Notice to
the Company specifying the number of shares of Stock as to which the Option is being
exercised and shall only be effective upon delivery to the Company of (x) the consideration
required pursuant to Section 2(c) below and (y) an executed joinder to the Stockholders
Agreement (as defined below) pursuant to Section 6.5 therein. Upon the valid exercise of
all or any part of the Option, a certificate (or certificates) for the number of shares of
Stock with respect to which the Option is exercised shall be issued in the name of the
Optionee, subject to the other terms and conditions of this Agreement and the Plan.
Notation of any partial exercise shall be made by the Company on Schedule III
attached hereto.

 

 

 

(c) Consideration. At the time of any exercise of the Option, the purchase price of
the shares of Stock as to which the Option shall be exercised shall be paid to the Company (i) in
United States dollars by personal check, bank draft or money order; (ii) if permitted by applicable
law and approved by the Committee, with Common Stock already owned by the Optionee, and purchased
or held for the requisite period of time as necessary to avoid a charge to the Company’s or any
Affiliate’s earnings for financial reporting purposes, having a total Fair Market Value on the date
of such exercise of the Option equal to such purchase price of the shares of Stock for which the
Option is so exercised; or (iii) a combination of the consideration provided for in the foregoing
clauses (i) through (ii).

(d) Exercise Upon Death, Disability or Termination of Employment. The Option shall
terminate upon the termination, for any reason, of the Optionee’s employment with the Company or an
Affiliate, and no shares of Stock may thereafter be purchased under the Option except as follows:

(i) In the event of the death of the Optionee while an employee of the Company or an
Affiliate, the Option, to the extent the Option would be exercisable in accordance with
Section 2(b) hereof as of the date of his death, may be exercised after his death by his
designated beneficiary, his heir, the legal representative of the Optionee’s estate or by
the legatee of the Optionee under his last will for a period of one (1) year from the date
of his death or until the expiration of the stated period of the Option, whichever period is
the shorter.

(ii) If the Optionee’s employment with the Company or an Affiliate shall terminate by
reason of Disability, the Option, to the extent exercisable in accordance with Section 2(b)
hereof as of the date of such termination of employment, may be exercised after such
termination but may not be exercised after the expiration of the period of one (1) year from
the date of such termination of employment or of the stated period of the Option, whichever
period is the shorter.

(iii) If the Optionee voluntarily terminates his employment with the Company or an
Affiliate, or the Company or such Affiliate terminates the Optionee’s employment without
“Cause” (within the meaning of the employment agreement between Associated Materials
Incorporated, an indirect wholly-owned subsidiary of the Company, and the Optionee (the
“Employment Agreement”), or, if no such employment agreement is in effect, as determined by
the Committee in its discretion), the Option, to the extent exercisable in accordance with
Section 2(b) hereof as of the date of such termination, may thereafter be exercised but may
not be exercised after the expiration of the period of three (3) months from the date of
such termination of employment or of the stated period of the Option, whichever period is
the shorter.

(iv) If the Optionee dies after termination of his employment with the Company and/or
an Affiliate under paragraph (ii) or (iii) of this Section 2(d) above during the one (1)
year or three (3) month period following such termination specified in such paragraphs, the
Option, to the extent the Option would have been exercisable in accordance with such
applicable paragraph (ii) or (iii) as of the date of the Optionee’s death, may be exercised
after his death by his designated beneficiary, his heir, the legal
representative of his estate or by the legatee of the Optionee under his last will
until the expiration of the period of one (1) year from the date of his death or of the
stated period of the Option, whichever period is the shorter.

 

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(v) If the Optionee’s employment is terminated by the Company or an Affiliate for
Cause, the Option shall automatically, without any further action required by the Company,
terminate on the date of such termination of employment and no shares of Stock may
thereafter be purchased under the Option.

(e) Nontransferability. The Option shall not be transferable by the Optionee except
that the Optionee may transfer the Option to (a) his or her spouse, child, estate, personal
representative, heir or successor, (b) a trust for the benefit of the Optionee or his or her
spouse, child or heir, or (c) a partnership or limited liability company the partners or members of
which consist solely of the Optionee and/or his or her spouse, child, heir, and/or successor (each,
a “Permitted Transferee”) and the Option is exercisable, during the Optionee’s lifetime, only by
him or her or a Permitted Transferee, or, in the event of the Optionee’s death or Disability, his
or her executor, guardian or legal representative. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred (except as aforesaid),
pledged or hypothecated in any way (whether by operation of law or otherwise), and shall not be
subject to execution, attachment or similar process. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of
any attachment or similar process upon the Option that would otherwise effect a change in the
ownership of the Option, shall terminate the Option; provided, however, that, in the case of the
involuntary levy of any attachment or similar involuntary process upon the Option, the Optionee
shall have thirty (30) days after notice thereof to cure such levy or process before the Option
terminates. This Agreement shall be binding on and enforceable against any person who is a
Permitted Transferee of the Option.

(f) Withholding Taxes. At the time of receipt of Stock upon the exercise of all or
any part of the Option, the Optionee shall be required to pay to the Company in cash (or make other
arrangements, in accordance with Section 9 of the Plan, for the satisfaction of) any taxes of any
kind required by law to be withheld with respect to such Stock. In no event shall Stock be
delivered to the Optionee until the Optionee has paid to the Company in cash, or made arrangements
satisfactory to the Company regarding the payment of, the amount of any taxes of any kind required
by law to be withheld with respect to the Stock subject to the Option, and the Company shall have
the right to deduct any such taxes from any payment of any kind otherwise due to the Optionee.

(g) No Rights as Stockholder. Neither the Optionee nor any other person shall become
the beneficial owner of the shares of Stock subject to the Option, nor have any rights to dividends
or other rights as a stockholder with respect to any such shares, until the Optionee has exercised
the Option in accordance with the provisions hereof and of the Plan.

(h) No Right to Continued Employment. Neither the Option nor any terms contained in
this Agreement shall confer upon the Optionee any express or implied right to be retained in the
service of the Company or an Affiliate for any period or at all, nor restrict in any way the right
of the Company or any Affiliate, which right is hereby expressly reserved, to
terminate his employment at any time with or without cause. The Optionee acknowledges and
agrees that any right to exercise the Option is earned only by continuing as an employee of the
Company and the Affiliates, or satisfaction of any other applicable terms and conditions contained
in this Agreement and the Plan, and not through the act of being hired, being granted the Option or
acquiring shares of Stock hereunder.

 

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(i) Inconsistency with Plan. Notwithstanding any provision herein to the contrary,
the Option provides the Optionee with no greater rights or claims than are specifically provided
for under the Plan. If and to the extent that any provision contained in this Agreement conflicts
with the Plan, the Plan shall govern.

(j) Compliance with Laws, Regulations and Stockholders Agreement. The Option and the
obligation of the Company to sell and deliver shares of Stock hereunder shall be subject in all
respects to (i) all applicable Federal and state laws, rules and regulations; (ii) any
registration, qualification, approvals or other requirements imposed by any government or
regulatory agency or body which the Committee shall, in its sole discretion, determine to be
necessary or applicable; and (iii) the terms, conditions and limitations of the Stockholders
Agreement, dated as of December 22, 2004, by and among the Company, Harvest Partners III, L.P.,
Harvest Partners III Beteiligungsgesellschaft Bürgerlichen Rechts (mit Haftungsbeschränkung),
Harvest Partners IV, L.P., and Harvest Partners IV GmbH & Co. KG (collectively, the “Harvest
Funds”), and AM Holding Limited, AM Equity Limited, AM Investments Limited, Associated Equity
Limited and Associated Investments Limited, and the other parties named therein (as such agreement
may be amended from time to time, the “Stockholders Agreement”). Moreover, the Option may not be
exercised if its exercise, or the receipt of shares of Stock pursuant thereto, would be contrary to
applicable law. If at any time the Company shall determine, in its discretion, that the listing,
registration or qualification of shares of Stock upon any national securities exchange or under any
state or Federal law, or the consent or approval of any governmental regulatory body, is necessary
or desirable, the Company shall not be required to deliver any certificates for shares of Stock to
the Optionee or any other person unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Company.

3. Investment Representation. If at the time of exercise of all or part of the Option
the Stock is not registered under the Securities Act and/or there is no current prospectus in
effect under the Securities Act with respect to the Stock, the Optionee shall execute, prior to the
issuance of any shares of Stock to the Optionee by the Company, an agreement (in such form as the
Committee may specify) in which the Optionee, among other things, represents, warrants and agrees
that the Optionee is purchasing or acquiring the shares acquired under this Agreement for the
Optionee’s own account, for investment only and not with a view to the resale or distribution
thereof, that the Optionee has knowledge and experience in financial and business matters, that the
Optionee is capable of evaluating the merits and risks of owning any shares of Stock purchased or
acquired under this Agreement, that the Optionee is a person who is able to bear the economic risk
of such ownership and that any subsequent offer for sale or distribution of any of such shares
shall be made only pursuant to (i) a registration statement on an appropriate form under the
Securities Act, which registration statement has become effective and is current with
regard to the shares being offered or sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, it being understood that to the extent any such exemption is
claimed, the Optionee shall, prior to any offer for sale or sale of such shares, obtain a prior
favorable written opinion, in form and substance satisfactory to the Committee, from counsel for or
approved by the Committee, as to the applicability of such exemption thereto.

 

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4. Lock-Up Period. In the event and to the extent requested by the managing
underwriter or, if the securities of the Company are not being disposed of in an underwritten
public offering pursuant to an effective registration statement filed with the Securities and
Exchange Commission, if requested by the Company, the Optionee agrees not to offer, pledge, lend,
sell, contract to sell, make any short sale of, grant any option, right or warrant for the purchase
of, enter into any swap, hedging or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of, or otherwise transfer or dispose, directly
or indirectly, of any securities of the Company (each such action, a “Transfer”), other than those
securities included in such registration pursuant to the Stockholders Agreement for the thirty (30)
days prior to and the ninety days (90) days (one hundred and eighty (180) days in the case of the
initial public offering of the common stock of the Company pursuant to an effective registration
statement filed with the Securities Exchange Commission) after the effectiveness of the
registration statement pursuant to which such public offering shall be made (or such shorter period
of time as is sufficient and appropriate, in the opinion of the managing underwriter or, as the
case may be, the Company in order to complete the sale and distribution of the securities included
in such public offering; provided that in no event shall such shorter period of time with respect
to the Optionee be shorter than any such period for any other stockholder of the Company); provided
that the limitations contained in this Section 4 shall not apply to the extent the Optionee is
prohibited by applicable law from so withholding such securities from sale during such period.

5. Company’s Right to Purchase Stock. (a) (i) Upon termination under any
circumstances of the Optionee’s employment with the Company or an Affiliate, the Company shall have
the right, but not the obligation, to purchase any or all of the shares of Stock which have been
purchased by the Optionee, or any person permitted to exercise the Option under Section 2(d)
hereof, pursuant to exercise of the Option (“Option Stock”), and which the Optionee, such other
person, or any permitted donee of such Stock, under Section 6 hereof, then holds by delivering
written notice (the “Repurchase Notice”) to the Optionee and/or such donee of Option Stock or other
person permitted to exercise the Option, as applicable, within sixty (60) calendar days after the
last date on which the Option may be exercised in accordance with Section 2(d) hereof at the
purchase price determined in accordance with subparagraph (ii) or (iii), as applicable, of this
Section 5(a); provided, however, that if any Option Stock has been held by the Optionee or such
donee or other person, as the case may be, for six (6) months or less at any time the Company is
entitled to exercise its right to purchase such Option Stock under this Section 5(a)(i) but for
this proviso, the Company may exercise such right to purchase such Option Stock within sixty (60)
calendar days after such Option Stock has first been held by the Optionee or such donee or other
person for greater than six (6) months.

 

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(ii) If such termination of the Optionee’s employment is by the Company or an
Affiliate other than for Cause, the purchase price to be paid by the Company for any
 shares of Option Stock to be purchased by the Company pursuant to this Section 5(a)
shall be the fair market value of such shares of Option Stock as of the date the Company
purchases such shares in accordance with this Section 5, as determined in good faith by the
Committee (without discount for lack of marketability or minority interest), based upon a
customary appraisal prepared by an independent appraisal company, or such other reasonable
valuation method as the Committee shall select and apply as of the given date.

(iii) If such termination of the Optionee’s employment is by the Company or an
Affiliate for Cause, or is by the Optionee, the purchase price to be paid by the Company for
any shares of Option Stock to be purchased by the Company pursuant to this Section 5(a)
shall be the lesser of: (A) the fair market value (as determined by the Committee in
accordance with subparagraph (ii) of this Section 5(a)) of such shares of Option Stock as of
the date the Company purchases such shares in accordance with this Section 5 and (B) the
purchase price set forth in Section 1 hereof for such shares of Option Stock.

(b) If the Company shall elect to exercise its right to purchase any Option Stock under this
Section 5, the closing of such purchase by the Company shall take place no later than forty-five
(45) days after the exercise of such right, which time in the case of the death of the Optionee may
be extended to provide for probate of the Optionee’s estate. On the date scheduled for such
closing, the price for the shares of Option Stock to be purchased by the Company, determined in
accordance with paragraph (a) of this Section 5, shall be paid by the Company by check or checks to
the record holder of such shares against delivery of a certificate or certificates representing the
purchased shares in proper form for transfer. Notwithstanding the immediately preceding sentence
to the contrary, the Company may pay such price for the shares of Option Stock to be purchased by
the Company, in whole or in part, by offsetting amounts outstanding under any indebtedness or
obligations owed by the Optionee or any other person permitted to exercise the Option under Section
2(d) hereof to the Company or any Affiliate. In connection with such closing, such record holder
shall warrant in writing to the Company good and marketable title to Option Stock, free and clear
of all claims, liens, charges, encumbrances and security interests of any nature whatsoever except
those under this Agreement. Notwithstanding anything to the contrary contained herein, all
repurchases of Option Stock by the Company will be subject to applicable restrictions contained
under Delaware law and in the Company’s and any Affiliate’s debt and equity financing agreements.
If any such restrictions prohibit the Company’s purchase of Option Stock pursuant to this Section 5
which the Company is otherwise entitled to make, the Company may make such purchases as soon as it
is permitted to do so under such restrictions, and all restrictions on the transfer of Option Stock
in effect on the date such Company purchase right arose shall remain in effect until fifteen (15)
days after the end of the period in which the Company is permitted to make such purchases.

 

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(c) None of the shares of Option Stock shall be transferred on the Company’s books nor shall
the Company recognize any such purported Transfer of any such shares or any interest therein unless
and until all applicable provisions of Sections 4, 5 and 6 of this Agreement have been complied
with in all respects. The certificates evidencing shares of Option Stock shall bear the legend
required in the Stockholders Agreement, as well as the legend to the following effect:

“The shares represented by this certificate are subject to certain restrictions against
transfer set forth in a Stockholders Agreement, dated as of December 22, 2004, by and among
AMH Holdings II, Inc. (the “Company”), Harvest Partners III, L.P., Harvest Partners III
Beteiligungsgesellschaft Bürgerlichen Rechts (mit Haftungsbeschränkung), Harvest Partners
IV, L.P., and Harvest Partners IV GmbH & Co. KG, and AM Holding Limited, AM Equity Limited,
AM Investments Limited, Associated Equity Limited and Associated Investments Limited, and
the other parties named therein (as such agreement may be amended from time to time), and a
Stock Option Award Agreement between the stockholder to whom the shares were originally
issued and the Company, dated May  _____, 2008, as may be amended from time to time. Such
 shares are also subject to a call option of the Company as described in Section 5 of such
Stock Option Award Agreement.”

(d) The parties agree  that irreparable damage would occur in the event that any of the
provisions of this Section 5 were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Section 5 and to enforce specifically the terms and provisions of this
Section 5, in addition to any other remedy to which they are entitled at law or in equity.

6. Restrictions on Transfer of Option Stock. The Optionee shall not Transfer shares
of Option Stock received by the Optionee (or any interest or right in such shares) except: (a) to
the Company, to the extent permitted under the Stockholders Agreement; (b) pursuant to a
registration statement filed pursuant to the Securities Act or, at any time after an initial public
offering of the Company, pursuant to Rule 144 under the Securities Act in an unsolicited brokerage
transaction to the public; or (c) as otherwise permitted under the Stockholders Agreement.

7. Certain Other Representations and Covenants of the Optionee. The Optionee hereby
acknowledges receipt of a copy of the Plan and the Stockholders Agreement, and represents that he
is familiar with the terms and provisions thereof. The Optionee hereby represents and acknowledges
that he has reviewed the Plan, this Agreement and the Stockholders Agreement in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this Agreement and the
Stockholders Agreement, and fully understands all provisions of the Plan, this Agreement and the
Stockholders Agreement. The Optionee hereby agrees to be bound by all of the terms and provisions
of the Plan, this Agreement and the Stockholders Agreement, including the terms and provisions
adopted after the granting of the Option but prior to the complete exercise hereof, subject to the
last paragraph of Section 13 of the Plan as in effect on the date hereof. The Optionee hereby
agrees to accept as binding, conclusive and final all decisions and interpretations of the
Committee or the Board made in good faith upon any questions arising under the Plan, this
Agreement, the Stockholders Agreement or otherwise relating to the Option.

8. Forfeiture. Notwithstanding any other provisions of this Agreement to the
contrary, in the event of a breach by the Optionee of any of the Optionee’s covenants set forth in
the Employment Agreement, or in the event that the Optionee’s employment is terminated by the
Company or an Affiliate for Cause, then the Option shall thereupon automatically terminate and
cease to thereafter be exercisable with respect to any shares of Stock without any further
action required by the Company.

 

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9. Notices. Any Notice or other communication required or permitted hereunder shall
be in writing and in accordance with the Plan, and shall deemed to have been duly given if
delivered in person or by facsimile or sent by nationally-recognized overnight courier or first
class registered or certified mail, return receipt requested, postage prepaid, to the other party
at the following addresses (or at such other address as shall be given in writing by either party
to the other):

If to the Company to:

AMH Holdings II, Inc.

3737 State Road

Cuyahoga Falls, Ohio 44223

Attention: Chief Financial Officer

Facsimile: (330) 922-2312

with copies (which shall not constitute notice) to:

Harvest Partners, Inc.

280 Park Avenue, 33rd Floor

New York, New York 10017

Attention: Ira D. Kleinman

 Christopher D. Whalen

Facsimile: (212) 812-0100

and

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

Attention: John Reiss, Esq.

 Oliver C. Brahmst, Esq.

Facsimile: (212) 354-8113

a copy (which shall not constitute notice) to:

Investcorp Management Services Limited

c/o Investcorp Bank B.S.C.

P.O. Box 5340

Investcorp House

Manama, Bahrain

Attention: Gary S. Long

Facsimile: 011-973-536-541

 

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with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, New York 10166

Attention: William M. Rustum

Facsimile: (212) 351-4035

If to the Optionee to the address set forth below his signature hereon.

10. Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York applicable to contracts executed
and to be performed entirely within such state, without regard to the conflict of law provisions
thereof.

11. Severability. If any of the provisions of this Agreement should be deemed
unenforceable, the remaining provisions shall remain in full force and effect.

12. Modification. Except as otherwise permitted by the Plan, this Agreement may not
be modified or amended, nor may any provision hereof be waived, in any way except in writing signed
by the parties hereto.

13. Counterparts. This Agreement has been executed in two counterparts, each of which
shall constitute one and the same instrument.

[signature page follows]

 

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IN WITNESS WHEREOF, AMH Holdings II, Inc. has caused this Agreement to be executed by a duly
authorized officer and the Optionee has executed this Agreement, both as of the day and year first
written above.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	AMH HOLDINGS II, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	By:	 	 	 
	 

	 	 

	 	 	 	 

Name: Cynthia Sobe
	 	 
	 

	 	 	 	 	 	Title: Vice President, CFO	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

Name:
	 	 
	 

	 	 	 	 	 	Address:	 	 

 

-10-Exhibit 10.1

Exhibit 10.1

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is entered into this 1st day of April, 2009 (“Effective
Date”), by and between EIM Capital Management, Inc. (“Consultant”) and Image Entertainment, Inc.,
(“Image”).

1. Term and Termination. The Board of Directors of Image (the “Board”) is retaining Consultant
hereunder. This Agreement shall begin on the Effective Date and shall end July 31, 2009 (the “Term”). The
Compensation Committee of Image’s Board of Directors (the “Compensation Committee”) has the right to extend the
Term by providing Consultant with written notice of a one-month initial extension by June 30, 2009. Further
extensions, if any, shall be on a month to month basis at the discretion of the Compensation Committee, with thirty
(30) days prior written notice to Consultant, and all extensions shall be in accordance with the terms and conditions
set forth in this Agreement. Moreover, Consultant and Image have the right to terminate this Agreement upon thirty
(30) days written notice following a Change in Control, as that term is defined in Exhibit A hereto.

2. Consulting Services. The Board is retaining Consultant hereunder to collaborate with the Board and
management to, among other things, create a conduit and exchange of ideas between management and the Board, reposition
Image to be able to access more — and less expensive — capital, identify opportunities to reduce expenditures in both
selling and in general administration, identify opportunities to create additional revenue and impact top line growth,
and collaborate with the President and the Chief Operating Officer to identify ways to streamline certain of Image’s
operations with a goal toward raising efficiency and lowering overall cost (the “Services”). Consultant will
provide such services on a non-exclusive basis.

a. Consultant shall designate Martin W. Greenwald (“Greenwald”) to perform the Services and Greenwald
shall devote the majority of his business time to the Services.

b. Subject to the fiduciary and other duties Greenwald owes to Image in his role as Chairman of Image’s Board of
Directors, during the Term, Consultant and Greenwald shall have the right to sell his services to persons or entities
other than Image, provided that the sale of such services does not interfere with the performance of Consultant’s or
Greenwald’s duties hereunder and provided such services do not compete or conflict with Image’s business in any way.

3. Compensation.

a. Payment to Consultant. As compensation for the Services, Image shall pay to Consultant a monthly
consulting fee of Thirty-Five Thousand and No/Cents ($35,000.00), payable in accordance with Image’s regular payroll
cycle. Image shall provide Consultant with a 1099 for the compensation paid hereunder.

b. Consultant Responsible for Cost of Administrative Assistant. Consultant shall hire or contract one
administrative assistant to assist with the performance of the Services. Consultant shall be solely responsible for
compensation and expenses for this administrative assistant, whose compensation and expenses total approximately Six
Thousand Dollars and No/Cents ($6,000.00) per month. In addition to assisting with the performance of the Services,
this administrative assistant shall also be available to provide certain administrative support to Image during the
Term and shall continue to provide services as the assistant to the Chairman of the Board in coordinating the
activities of the Board.

i

 

1

 

4. Expenses. Image will reimburse Consultant for out-of-pocket expenses which are supported by proper
receipts and which have been reasonably incurred in connection with the Services, including without limitation
transportation, lodging and meals; provided, however, that any individual expense of $500 or more incurred by
Consultant and any travel expenses of $1,000 or more incurred by Consultant must be pre-approved in writing by the
President of Image. Moreover, as set forth in more detail in Section 3(b) above, Image shall not be responsible for
any wages or other expenses incurred with regard to Consultant’s hiring of an administrative assistant to assist
Consultant in the performance of the Services.

5. Use of Car. Greenwald is currently in possession of a company car from Image, which lease shall expire
on May 31, 2009. Greenwald may continue to use this company car under the current terms and conditions until the lease
expiration date. Following the expiration of the car lease on May 31, 2009, Greenwald shall return the company car to
Image and shall thereafter be fully responsible for his own car. After May 31, 2009, Image shall have no
responsibility whatsoever to Greenwald with regard to providing transportation.

6. Confidential Information. Consultant and Greenwald acknowledge that many aspects of the business and
affairs of Image are confidential and that Consultant and Greenwald have had or will have access to certain commercial
and other confidential and non-public information relating to or concerning Image, its business, vendors, customers
and/or suppliers (the “Confidential Information”). Consultant and Greenwald acknowledge that all Confidential
Information is exclusively owned and controlled by Image.

a. Consultant and Greenwald expressly agree that it and he shall not, directly or indirectly, verbally or
otherwise, either during or after the performance of the Services, disclose, publish, reveal, disseminate, or cause to
be disclosed, published, revealed, or disseminated, without the prior express written consent of the Board any
Confidential Information whatsoever.

b. Consultant and Greenwald acknowledge and agree that any disclosure of Confidential Information will cause
irreparable harm to Image and that these damages are not susceptible to measure. In the event of a breach or
threatened breach of this Agreement, Consultant, Greenwald and Image hereby agree that any remedy at law for any breach
or threatened breach of this Agreement will be inadequate and, accordingly, Consultant, Greenwald and Image each hereby
stipulates that Image is entitled to obtain injunctive relief for any such breaches or threatened breaches, without the
need to prove actual damages or for the posting of a bond. The injunctive relief provided for in this Section is in
addition to, and is not in limitation of, any and all other remedies at law or in equity otherwise available to Image.

c. Consultant and Greenwald understand that this Confidential Information provision is a material term of this
Agreement and any breach of this provision shall be considered a material breach.

7. Work for Hire. To the fullest extent permitted under applicable law, all work created pursuant to this
Agreement shall be deemed “works made for hire,” as that term is defined in the United States Copyright Act, and shall
be owned by Image and may be used by Image for any and all purposes. To the extent that a work created pursuant to
this project and contract is not deemed a “work for hire,” to the fullest extent permitted under law, Consultant,
including Greenwald and all of its other employees, consultants, independent contractors, or agents, shall assign, and
does hereby assign, to Image all of Consultant’s rights, title, and interest of any kind in and to all work performed
pursuant to the Agreement, free and clear of liens, encumbrances, and the like. Consultant and Greenwald hereby waive
any claims in any such works based on “moral rights” or a similar theory.

 

2

 

8. Independent Contractor Status. Consultant is retained by Image only for the purposes and to the extent
set forth in this Agreement, and Consultant’s and Greenwald’s relationship to Image shall be that of an independent
contractor. Consultant and Greenwald shall be free to dispose of such portion of Consultant’s and Greenwald’s entire
time, energy and skill during regular business hours, as Consultant and/or Greenwald is not obligated to devote
hereunder to Image, in such manner as Consultant and/or Greenwald see fit, and to such person, firm or entity as
Consultant and/or Greenwald deem advisable subject to the restrictions set forth in Section 2. Neither Consultant nor
Greenwald nor any of Consultant’s other employees, contractors, agents or representatives shall be considered under
this Agreement as having employee status or as being entitled to participate in any plans, arrangements or
distributions by Image pertaining to or in connection with any pension, stock, bond or profit sharing plan or any other
similar fringe benefit for Image’s regular employees.

9. Taxes. Consultant acknowledges that no federal or state withholding taxes, FICA, SDI, or other
employee payroll taxes or deductions are made with respect to compensation paid to Consultant pursuant to this
Agreement. Consultant is responsible for all such taxes, and agrees to report for federal and state income all such
compensation, and to pay all taxes due thereon and to indemnify, defend and hold Image harmless in the event that any
claims made by any taxing authority, by reason of Consultant’s failure to properly pay any and all taxes which are due
in relation to the Services.

10. Notice. All notices permitted or required by this Agreement shall be sent via overnight mail and
addressed as follows:

To Consultant:

EIM Capital Management, Inc.

Attn: Martin W. Greenwald

c/o Theater Group

4820 N. Rancho Drive

Las Vegas, NV 89130

To Image:

Jeff Framer

President

Image Entertainment, Inc.

20525 Nordhoff Street, Suite 200

Chatsworth, CA 91311

With a copy to:

Robert McCloskey

Director and Chairman of the Compensation Committee of the Board of Directors

Image Entertainment, Inc.

20525 Nordhoff Street, Suite 200

Chatsworth, CA 91311

 

3

 

11. General Terms and Conditions.

a. Entire Agreement. This Agreement constitutes the entire agreement between Consultant and Image
concerning the subject matter of this Agreement, and supersedes all prior agreements, representations and
understandings of the parties whether written or oral regarding the subject matter of this Agreement.

b. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of and be binding
upon Image and Consultant and their respective successors and permitted assigns. Except as expressly set forth herein,
this Agreement shall not be assigned, nor shall any duties under this Agreement be delegated by Consultant without the
prior written consent of Image.

c. Governing Law. This Agreement shall be governed by and interpreted under the internal laws of the
State of California.

d. Severability. The invalidity or unenforceability of any particular provision of this Agreement shall
not affect the other provisions, and this Agreement shall be construed in all respects as if any invalid or
unenforceable provision were omitted.

e. Opportunity to Consult With Legal Counsel. Consultant has entered into this Agreement freely and
voluntarily and has either consulted with independent legal counsel or has had the opportunity to do so prior to
execution. Consultant acknowledges that neither it nor Greenwald has relied on any representations regarding the
subject matter of this Agreement other than what is expressly contained in this Agreement.

f. Amendments; Waivers. This Agreement may be amended, modified or supplemented only by a writing
executed by each of the parties. Either party may in writing waive any provision of this Agreement to the extent such
provision is for the benefit of the waiving party. No waiver by either party of a breach of any provision of this
Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a
remedy for noncompliance or breach by the other party shall be construed as a waiver of any right or remedy with
respect to such noncompliance or breach.

g. Attorneys’ Fees. The prevailing party in any suit or other proceeding brought to enforce, interpret or
apply any provisions of this Agreement, shall be entitled to recover all costs and expenses of the proceeding and
investigation, including all attorneys’ fees.

h. Indemnification. Consultant shall indemnify and hold Image harmless from any and all claims of third
parties resulting (i) solely from acts or omissions of Consultant (and/or Greenwald) which were not authorized by Image
and beyond the scope of Consultant’s (and/or Greenwald’s) authority under this Agreement, and (ii) from Consultant’s
(and/or Greenwald’s) performance of the Services.

i. Construction. The language of this Agreement shall be construed as a whole, according to its fair
meaning, not strictly for or against Consultant or Image, and with no regard whatsoever to the identity or status or
any person or persons who drafted all or any portion of this Agreement.

 

4

 

j. Counterparts. This Agreement may be executed by Image and by Consultant and Greenwald in two or more
counterparts, each of which shall be deemed an original, but all of which shall constitute one instrument.

	 	 	 	 	 	 	 
	“Consultant”	 	“Image”
	
 
	 	 
	 		 	
	By:

	 	/s/ MARTIN W. GREENWALD
	 	By:
	 	/s/ ROBERT MCCLOSKEY
	
 
	 	 
	 	 	 	 
	
 
	 	Martin W. Greenwald for
	 	 	 	Robert McCloskey
	
 
	 	EIM Capital Management, Inc.
	 	 	 	Director and Chairman of the
	
 
	 	 	 	 	 	Compensation Committee of the Board of
	
 
	 	 	 	 	 	Directors for
	
 
	 	 	 	 	 	Image Entertainment, Inc.
	
 
	 	 
	 		 	
	By:

	 	/s/ MARTIN W. GREENWALD
	 		 	
	
 
	 	 
	 		 	
	
 
	 	Martin W. Greenwald for
himself personally
	 	

	 	

 

5

 

Exhibit A

“Change in Control” means the first to occur of any of the following events:

(i) The date on which any one person, or more than one person acting as a group, becomes the beneficial
owner (as that term is used in section 13(d) of the Exchange Act), directly or indirectly, of more than fifty
percent (50%) of the capital stock of Image entitled to vote in the election of directors, other than a group
of two or more persons not (A) acting in concert for the purpose of acquiring, holding or disposing of such
stock or (B) otherwise required to file any form or report with any governmental agency or regulatory authority
having jurisdiction over Image which requires the reporting of any change in control. The acquisition of
additional stock by any person who immediately prior to such acquisition already is the beneficial owner of
more than fifty percent (50%) of the stock of Image entitled to vote in the election of directors is not a
Change in Control.

(ii) During any period of not more than twelve (12) consecutive months during which Image continues in
existence, individuals who, at the beginning of such period, constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with Image to effect a transaction
described in clause (i), (iii) or (iv) of this Exhibit whose appointment to the Board or nomination for
election to the Board was approved by a vote of a majority of the directors then still in office, either were
directors at the beginning of such period or whose appointment or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of the Board.

(iii) The date on which any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve month period ending on the date of the most recent acquisition by such person or
persons) ownership of capital stock of Image possessing thirty percent (30%) or more of the total voting power
of the capital stock of Image entitled to vote in the election of directors.

(iv) The date on which any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve month period ending on the date of the most recent acquisition by such person or
persons) assets from Image that have a total gross fair market value greater than 50% of the total gross fair
market value of all of Image’s assets immediately before the acquisition or acquisitions; provided, however,
transfer of assets which otherwise would satisfy the requirements of this subsection (iv) will not be treated
as a Change in Control if the assets are transferred to:

(A) a shareholder of Image (immediately before the asset transfer) in exchange for or with respect to its
stock;

(B) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly,
by Image;

(C) a person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of
the total value or voting power of all the outstanding stock of Image; or

(D) an entity, at least 50% of the total value or voting power is owned, directly or indirectly by a
person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of the total
value or voting power of all the outstanding stock of Image.

 

6

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