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Exhibit 10.3    
  

 
 

AMENDMENT NUMBER SEVEN TO
  LOAN AND SECURITY AGREEMENT    
  

        THIS AMENDMENT NUMBER SEVEN TO LOAN AND SECURITY AGREEMENT (this "Amendment"), is effective as of
September 30, 2002, between FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 2450
Colorado Avenue, Suite 3000 West, Santa Monica, California 90404, and IMAGE ENTERTAINMENT, INC., a California corporation ("Borrower"), with its
chief executive office located at 9333 Oso Avenue, Chatsworth, California 91311, with reference to the following facts: 

        WHEREAS, Borrower has requested that Foothill amend that certain Loan and Security Agreement dated as of December 28, 1998, between
Foothill and Borrower (as amended, restated or otherwise modified from time to time, the "Agreement") as set forth herein; and 

        WHEREAS, Foothill is willing to so amend the Agreement in accordance with the terms and conditions hereof. 

        NOW, THEREFORE, in consideration of the above recitals and the mutual promises contained herein, Foothill and Borrower hereby agree as
follows: 

 SECTION 1. DEFINED TERMS.  

        Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Agreement. 

 SECTION 2. AMENDMENTS TO THE AGREEMENT.  

        (a)    Section 1 of the Agreement is hereby amended by adding the following definitions in alphabetical order: 

        "Seventh Amendment" means that certain Amendment Number Seven to Loan and Security Agreement, dated as of September 30, 2002,
between Foothill and Borrower. 

        "Seventh Amendment Effective Date" means the date on which all of the conditions precedent set forth in Section 4 hereof shall have
been satisfied. 

        "Seventh Amendment Fee" has the meaning set forth in Section 2.10(g). 

        (b)    Section 2.10 of the Loan Agreement is hereby amended by deleting the word "and" at the end of clause (e),
by deleting the period at the end of clause (f) and replacing it with ", and", and by adding the following new clause (g): 

        "(g)    Seventh Amendment Fee. An amendment fee in the amount of $10,000 (the "Seventh Amendment Fee"), which amendment fee
shall be fully earned and non-refundable on the Seventh Amendment Effective Date, and shall be charged to Borrower's Loan Account on such date." 

        (c)    Section 7.7(c) of the Agreement is hereby amended and restated in its entirety as follows: 

        "(c)    Make
any payments on any Indebtedness owing to any third person that has been subordinated to the Obligations; provided,
however, that Borrower may make payments on such Indebtedness if Foothill has agreed thereto pursuant to the terms and conditions of the agreement evidencing such subordination." 

 SECTION 3. REPRESENTATIONS AND WARRANTIES.  

        Borrower hereby represents and warrants to Foothill that (a) the execution, delivery and performance of this Amendment and of the Agreement, as amended by
this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in 

contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or
bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected, and (b) this Amendment and the Agreement, as amended by this
Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in according with its terms. 

 SECTION 4. CONDITIONS PRECEDENT TO AMENDMENT.  

        The satisfaction of each of the following, unless waived or deferred by Foothill in its sole discretion, shall constitute conditions precedent to the
effectiveness of this Amendment: 

        (a)  The
representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects
on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date); 

        (b)  No
Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date
hereof, nor shall result from the consummation of the transactions contemplated herein; 

        (c)  No
injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall
have been issued and remain in force by any governmental authority against Borrower or Foothill; 

        (d)  All
other documents, agreements, instruments, and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed
or recorded and shall be in form and substance satisfactory to Foothill and its counsel; 

        (e)  Foothill
shall have received the Seventh Amendment Fee in full in immediately available funds, which Seventh Amendment Fee shall be paid by Borrower to Foothill by being
charged to Borrower's Loan Account on the Seventh Amendment Effective Date; 

        (f)    Foothill
shall have received the reaffirmation and consent attached hereto as Exhibit A, duly executed and
delivered by an authorized officer of Guarantor, and the same shall be in full force and effect; and 

        (g)  The
outstanding balance of all Capital Expenditure Loans as of October 1, 2002 shall have been paid in full in immediately available funds. 

 SECTION 5. FURTHER ASSURANCES.  

        Borrower shall execute and deliver all agreements, documents, and instruments, in form and substance satisfactory to Foothill, and take all actions as Foothill
may reasonably request from time to time fully to consummate the transactions contemplated under this Amendment and the Agreement, as amended by this Amendment. 

 SECTION 6. MISCELLANEOUS.  

        (a)  Upon
the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the
Agreement shall mean and refer to the Agreement as amended by this Amendment. 

        (b)  Upon
the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import
referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. 

        (c)  This
Amendment shall be governed by and construed in accordance with the laws of the State of California. 

        (d)  This
Amendment can only be amended by a writing signed by both Foothill and Borrower. 

        (e)  This
Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver an original
executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. 

        (f)    This
Amendment reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any
other agreement, oral or written, before the date hereof. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. 

	 	 	IMAGE ENTERTAINMENT, INC.,
 a California corporation
	 	 	 	 
	 	 	By:	/s/  JEFF M. FRAMER      

	 	 	Title:	CFO

	 	 	 	 
	 	 	FOOTHILL CAPITAL CORPORATION,

a California corporation
	 	 	 	 
	 	 	By:	/s/  TRENT A. SMART      

	 	 	Title:	Vice President

Exhibit A

 REAFFIRMATION AND CONSENT  

 Dated as of September 30, 2002  

        Reference is made hereby to that certain Amendment Number Seven to Loan and Security Agreement, dated as of the date hereof (the "Amendment"), between Image
Entertainment, Inc., a California corporation ("Borrower") and Foothill Capital Corporation, a California corporation ("Foothill"). Capitalized terms used herein shall have the meanings
ascribed to them in that certain Loan and Security Agreement, dated as of December 28, 1998 (as amended, supplemented, or otherwise modified from time to time, the "Agreement"), between
Borrower and Foothill. The undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent ("Reaffirmation") are
within its corporate powers, have been duly authorized by all necessary corporation action, and are not in contravention or any law, rule, or regulation, or any order, judgment, decree, writ,
injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its
properties may be bound or affected; (b) consents to the amendment of the Agreement by the Amendment; (c) acknowledges and reaffirms all its obligations owing to Foothill under the
Guaranty and each other Loan Document or which it is a party; and (d) agrees that each Loan Document to which it is a party is and shall remain in full force and effect. Although the
undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill shall have no obligation to inform it of such matters in the future
or to seek its acknowledgment or agreement to future amendments or modifications, and nothing herein shall create such a duty. 

        IN
WITNESS WHEREOF, the undersigned has executed this Reaffirmation as of the date first set forth above. 

	 	 	DVDPLANET.COM, INC.,
 a California corporation
	 	 	 	 
	 	 	By:	/s/  JEFF M. FRAMER      

	 	 	Title:	CFO

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Exhibit 10.3

AMENDMENT NUMBER SEVEN TO LOAN AND SECURITY AGREEMENTQuickLinks
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SECOND AMENDMENT TO CREDIT AGREEMENT    
  

        This Second Amendment ("Amendment") to the Credit Agreement
("Agreement") dated as of September 29, 1997, between Image Investors Co., a Delaware corporation
("Lender"), and Image Entertainment, Inc., a California corporation and its subsidiary
("Borrower"), is entered into and effective as of September 30, 2002. 

R E C I T A L S:  

        WHEREAS, Borrower and Lender entered into the Agreement as of September 29, 1997, pursuant to which Lender
loaned Five Million Dollars ($5,000,000) to Borrower, as evidenced by the Convertible Subordinated Promissory Note ("Note") for $5,000,000 dated as of
October 29, 1997; 

        WHEREAS, Borrower and Lender entered into the first amendment to the Agreement as of July 9, 2002 (the
"First Amendment"), pursuant to which the parties agreed to modify the interest rate, extend the term of the Note three (3) years to
October 1, 2005, and amend certain terms and provisions of the Agreement as provided therein, including an agreement by Borrower that it would, subject to the approval of Foothill Capital
Corporation, pay Lender an amount equal to the lesser of Two Million Five Hundred Thousand Dollars ($2,500,000) or seventy-five percent (75%) of Borrower's net cash proceeds from the
occurrence of either or both of the following transactions: (a) Borrower selling and leasing back that certain real property commonly known as 6650 South Spencer, Las Vegas, Nevada, or
(b) each instance of Borrower selling its common stock or other equity securities; 

        WHEREAS, Borrower has received net case proceeds in the amount of $2,000,000 from a sale of common stock; 

        WHEREAS, the parties have again agreed to modify the terms and provisions of the Agreement as provided herein; 

        WHEREAS, the remaining provisions of the Note and Agreement, as amended by the First Amendment, including without limitation the
conversion ratio provided in Subsection 1.7.1 of the Agreement, will remain as stated in the original Note and Agreement; 

        NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, Borrower and Lender agree as follows: 

A G R E E M E N T:  

        1.    Initial Payment of Principal.    On the date hereof, Borrower is making a prepayment of
principal in the amount of $750,000. Lender acknowledges receipt of a check in such amount. 

        2.    Future Payments of Principal.    Commencing on October 1, 2002, in addition to
the required payment of interest, Borrower will make a quarterly payment of principal in the amount of Three Hundred Fifty Thousand Dollars ($350,000) on each Interest Payment Date through
July 1, 2003, in the amount of Four Hundred Seventy-Five Thousand Dollars ($475,000) on each Interest Payment Date from October 1, 2003 through April 1, 2004 and in
the amount of Four Hundred Twenty-Five Thousand Dollars ($425,000) on the Interest Payment Date occurring on July 1, 2004, in the amount of Six Hundred Twenty-Five
Thousand Dollars ($625,000) on the Interest Payment Date occurring on October 1, 2004, and in the amount of Three Hundred Seventy-Five Thousand Dollars ($375,000) on the Interest
Payment Date occurring on January 1, 2005. Lender acknowledges receipt of two checks in the amount of $350,000 reflecting payment due on October 1, 2002. 

        3.    Additional Payments.    (a) Upon the consummation of the transaction pursuant to
which Borrower intends to sell and lease back its real property commonly known as 6650 South Spencer, Las Vegas, Nevada, Borrower shall prepay an amount of the outstanding loan balance under the
agreement equal to the lesser of $1,000,000 or the net proceeds remaining from the transaction after payment of related sales commissions and expenses and the payoff of the outstanding borrowings
secured by the real property. 

        (b)  Upon
the consummation by the Borrower of any issuance or sale by Borrower of its common stock or other debt or equity securities or other loan transaction, Borrower
shall prepay to Lender an amount equal to the lesser of the net cash proceeds of such financing transaction and the Remaining Extension Amount. The "Remaining Extension Amount" shall initially be
$750,000, and shall be decreased by $100,000 for each regularly scheduled principal payment made pursuant to Section 2 hereof from October 1, 2002 through and including April 1,
2004 and by $50,000 for the regularly scheduled principal payment made pursuant to Section 2 hereof on July 1, 2004, it being understood that the Remaining Extension Amount shall never
be less than zero. 

        (c)  Any
such payment will be applied to the principal balance of the Note and offset, in reverse order commencing with the final payment, the Debtor's obligation to make the
principal payments provided in Section 2 above. 

        4.    Preservation of the Agreement.    Except as specifically modified by the terms of this
Amendment, all the terms, conditions, provisions, covenants, representations, warranties, and agreements contained in the Agreement shall remain in full force and effect. 

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized
officers. 

	 	 	LENDER:
	

 	
 	

 	

 
	 	 	IMAGE INVESTORS CO.
	

 	
 	

 	

 
	 	 	By:	/s/  STUART SUBOTNICK      

	 	 	Name:	Stuart Subotnick
	 	 	Title:	Executive Vice President
	

 	
 	

 	

 
	 	 	BORROWER:
	

 	
 	

 	

 
	 	 	IMAGE ENTERTAINMENT, INC.
	

 	
 	

 	

 
	 	 	By:	/s/  MARTIN W. GREENWALD      

	 	 	Name:	Martin W. Greenwald
	 	 	Title:	President
	 	 	 	 

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SECOND AMENDMENT TO CREDIT AGREEMENT

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