EMPLOYMENTAGREEMENT

business is competitive with a substantial portion of the Company’s business, or a substantial portion of whose business is substantially in distribution of DVDs or its successors to the home market or on-demand programming; or (iv) result in Executive joining any boards of for-profit companies without the prior approval of the Board, such approval not to be unreasonably withheld, other than China MediaExpress Holdings, Inc., Masterbeat, and Content Capital Partners, LLC, which shall be deemed to be approved as of the date hereof. Executive shall also render services, on a non-permanent basis, at such other places within or outside the United States as the Supervising Authority may reasonably direct from time to time. Executive shall be subject to and comply with the written policies and procedures generally applicable (and provided) to senior executives of the Company to the extent such policies and procedures are not inconsistent with any term of this Agreement (including any negatively implied term).

3.                                      Compensation.

(a)                                  Base Salary.  During the Employment Period, the Company shall pay Executive a base salary at a rate not less than $300,000 per annum, payable in accordance with the Company’s then effective payroll practices.  The Board shall review Executive’s base salary annually during the Employment Period and, in its sole discretion, may increase (but not decrease) such base salary from time to time.  The annual base salary payable to Executive under this Section 3(a), as the same may be increased from time to time, shall hereinafter be referred to as the “Salary.”  In addition, for services performed from January 8, 2010, through the Effective Date, the Company shall make a lump sum cash payment to Executive of an amount equal to the amount Executive would have received during such period had this Agreement been in effect since January 8, 2010, but only to the extent such amounts have not previously been paid to Executive.  This lump sum payment shall be made within 10 days following the Effective Date.

(b)                                 Annual Bonus.  In addition to the Salary, for each fiscal year of the Company that begins or ends during the Employment Period, Executive shall have an annual cash bonus opportunity of fifty percent (50%) of Base Salary (the “Bonus”), which shall be payable if 100% of the Performance Targets (as defined below) are achieved; provided that if actual performance of the Company for such period exceeds or is less than 100% of the Performance Targets (but is at least 85% of the Performance Targets), the amount of the Bonus shall be adjusted positively or negatively, respectively, by mathematical interpolation, as reasonably determined in good faith by the Board or compensation committee.  For purposes of this Agreement, the “Performance Targets” for the fiscal years during the Initial Term shall be the achievement of earnings before interest, taxes, depreciation and amortization (the “EBIDTA Targets”) in amounts equal to (i) $10.3 million, for fiscal  year ending March 31, 2011, (ii) $17.6 million, for fiscal year ending March 31, 2012, and (iii) $21.1 million, for fiscal year ending March 31, 2013, in each case as confirmed by the Company’s audited financials for each such fiscal year; provided, however, that in the event of any material acquisition of a company or business by the Company, the Performance Targets shall be reasonably adjusted by the Company and Executive to take into account any changes to the EBITDA Targets or other material changes relating to such acquisition that should reasonably result in a change to the applicable Performance Targets.  Any Bonus that becomes payable pursuant to this Section 3(b) shall be paid to Executive as soon as reasonably practicable following the Company’s determination of whether the Performance Targets for the applicable fiscal year have been achieved and its calculation of the Bonus for such applicable fiscal year which, in each case, shall be no later than the earlier of (x) 10 days following the completion of the audit for the applicable fiscal year and (y) the date that is 75 days following the end of each such applicable fiscal year.  Notwithstanding anything to the contrary contained in this Agreement or any applicable bonus plan, program or arrangement, but except as provided in Section 4, Executive shall be entitled to receive any such Bonus only if Executive is employed on the last business day of the fiscal year to which the Bonus relates.

(c)                                  Benefits.  During the Employment Period, Executive (and any dependents and beneficiaries of Executive to the extent provided therein) shall be entitled to participate in any and all employee benefit plans, programs or arrangements (as amended from time to time) sponsored by the Company for its senior executives or employees at a level commensurate with Executive’s position and no less favorable to Executive than those applicable to such senior executives or employees, including, without limitation, life and disability insurance (“Benefits”).  Executive shall be entitled to four weeks of vacation, with up to two weeks of carryover accumulation, which shall accrue on the Effective Date and each January 1 thereafter occurring during the Employment Period.  During the Employment Period, Executive shall be entitled to all other fringe benefits as are from time to time made generally available to senior executives or employees of the Company.

(d)                                 Equity Compensation.  During the Employment Period, Executive shall be entitled to participate in any and all equity or other employee benefit plans that are generally available to senior executives, as distinguished from general management, of the Company on a basis commensurate with Executive’s position and no less favorable to Executive than those applicable to such senior executives.  Except as otherwise provided in this Agreement, Executive’s participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan and applicable award agreement.

(e)                                  Expense Reimbursement.  During the Employment Period, the Company will pay or reimburse Executive in accordance with the Company’s written expense reimbursement policies and procedures (i) for business class travel over three hours, temporary housing, auto and other reasonable out of pocket expenses incurred in association with Executive’s commute to and from his home in New York and Los Angeles, as well as for working in Los Angeles and (ii) the Company shall reimburse Executive in accordance with the Company’s policies and procedures for all proper expenses incurred by Executive in the performance of Executive’s duties hereunder, regardless of where incurred.

(f)                                    Application of Section 409A of the Code to Reimbursements.  Any amounts payable under Section 3(e) and Section 19 shall be made as promptly as is reasonably practicable, in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv), and paid no later than the last day of Executive’s taxable year following the taxable year in which Executive incurred the expenses.  The amounts provided under Section 3(e) and Section 19 during any taxable year of Executive’s will not affect such amounts provided in any other taxable year of Executive’s, and Executive’s right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.

4.                                      Termination.

(a)                                  At-Will Employment.  The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law.  Executive acknowledges and agrees that nothing in this Agreement shall confer upon Executive any right with respect to continuation of employment by the Company, nor shall it interfere in any way with Executive’s right or the Company’s right to terminate Executive’s employment at any time, with or without Cause, as defined in Section 10, or with or without Good Reason, as defined in Section 10, subject to Executive’s right to receive certain payments upon termination as set forth in this Section 4.  Any termination of Executive’s employment under this Agreement (other than in the event of Executive’s death), shall be communicated by a written Notice of Termination addressed to the other party to this Agreement.  A “Notice of Termination” shall mean a notice stating that Executive’s employment with the Company has been or will be terminated and the specific provisions of this Section 4 under which such termination is being effected.

(b)                                 Death; Disability; Termination for Cause; Resignation Without Good Reason or

Expiration of Employment Period.  Executive’s employment with the Company shall terminate pursuant to this Section 4(b):  (i) upon Executive’s death or Disability, as defined in Section 10, (ii) upon Executive’s voluntary termination of Executive’s employment without Good Reason, (iii) upon a termination of Executive’s employment by the Company for Cause, or (iv) upon the expiration of the Employment Period.  Upon a Termination of Employment pursuant to this Section 4(b), the Employment Period shall terminate and Executive (or Executive’s estate) shall receive (A) any unpaid Salary and unused vacation accrued through the Termination Date, as defined in Section 10, (B) to the extent not previously paid, any Bonus earned and unpaid as of the Termination Date for any previously completed fiscal year, which shall be paid on the tenth day after the Termination Date (or, if such day is not a business day, the next business day after such day), (C) all Benefits determined in accordance with the Company’s applicable Benefit plans then in effect, and (D) reimbursement of expenses pursuant to Section 3 incurred through the Termination Date.

(c)                                  Termination Without Cause; Resignation for Good Reason.  Executive’s employment with the Company shall terminate pursuant to this Section 4(c):  (i) upon a termination of Executive’s employment by the Company without Cause or (ii) upon Executive’s termination of Executive’s employment for Good Reason.  Upon a Termination of Employment pursuant to this Section 4(c), the Employment Period shall terminate and Executive (or Executive’s estate) shall be entitled to:

(i)                                     any unpaid Salary and unused vacation accrued through the Termination Date and, to the extent not previously paid, any Bonus earned and unpaid as of the Termination Date for any previously completed fiscal year, which shall be paid on the tenth day after the Termination Date (or, if such day is not a business day, the next business day after such day);

(ii)                                  all Benefits determined in accordance with the Company’s applicable Benefit plans then in effect and reimbursement of expenses pursuant to Section 3 incurred through the Termination Date;

(iii)                               payment of an amount equal to 12 months of Executive’s annual Salary as in effect immediately prior to the Termination Date (but without taking into account any reduction in Salary giving rise to a termination of employment by Executive for Good Reason);

(iv)                              payment of a pro rata portion, based on the number of days elapsed in the fiscal year of termination through and including the date of termination, of the Bonus Executive would have been entitled to receive for the year of termination but for termination of his employment.  If termination of Executive’s employment occurs during the first six months of a fiscal year, the Bonus Executive would have been entitled to receive for the year of termination shall be deemed to be equal the average of the Bonuses Executive received for the two previous fiscal years (or the actual bonus for the previous fiscal year if termination occurs during the first six months of the second full fiscal year following the Effective Date).  If termination of Executive’s employment occurs during the second six months of a fiscal year (or at any time during the first full fiscal year following the Effective Date), the Company’s performance during the portion of such fiscal year preceding termination of Executive’s employment shall be annualized, and the Bonus Executive would have received for such fiscal year shall be deemed to be the Bonus Executive would have earned if the annualized performance had been the actual performance for such fiscal year; and

(v)                                 for the period beginning on the date of termination and ending on the date which is twelve (12) full months following the date of termination (or, if earlier, the date on which Executive accepts employment with another employer that provides comparable benefits in terms of cost and scope of coverage), the Company shall pay for and provide Executive and his eligible dependents and beneficiaries (to the extent provided therein) who were covered under the Company’s health plans as of

the date of Executive’s termination with healthcare benefits which are substantially the same as the benefits provided to Executive and such dependents and beneficiaries immediately prior to the date of termination, including, if necessary, paying the costs associated with continuation coverage pursuant to COBRA (provided that Executive shall be solely responsible for all matters relating to his continuation of coverage pursuant to COBRA, including, without limitation, his election of such coverage).

Notwithstanding any provision to the contrary in this Agreement, no amount shall be paid pursuant to Section 4(c) above (except for the amounts payable under Sections 4(c)(i) and (ii)) unless, on or prior to the 60th day following the date of Executive’s Termination of Employment, an effective mutual waiver and release of claims agreement (the “Release”) in substantially the form attached hereto as Exhibit A has been executed and remains effective on such date and any applicable revocation period thereunder has expired; provided that any failure of the Company to execute the Release shall not reduce or eliminate its obligations hereunder.  Subject to Section 4(e)(i), the amounts described in Sections 4(c)(iii) and (iv) shall be paid in a single lump sum on the next payroll date immediately following the expiration of such 60-day period.

(d)                                 No Duty to Mitigate.  In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment; provided, however, that any loans, advances or other amounts owed by Executive to the Company may be offset by the Company against amounts payable to Executive under this Section 4.

(e)                                  Section 409A.

(i)                                     Payment Delay.  Notwithstanding anything herein to the contrary, to the extent any payments to Executive pursuant to this Agreement are non-qualified deferred compensation subject to Section 409A of the Code, then (A) to the extent required by Section 409A of the Code, no amount shall be payable unless Executive’s termination of employment constitutes a Separation from Service and (B) if Executive, at the time of his Separation from Service, is determined by the Company to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, such that delayed commencement of any portion of the termination benefits payable to Executive pursuant to this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code (any such delayed commencement, a “Payment Delay”), then such portion of the payments to be made to Executive shall not be provided to Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of Executive’s Separation from Service, (B) the date of Executive’s death or (C) such earlier date as is permitted under Section 409A.  Upon the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to a Payment Delay shall be paid in a lump sum with interest on the foregoing at the applicable federal rate for instruments of less than one year, to Executive within 30 days following such expiration, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.  The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

(ii)                                  Exceptions to Payment Delay.  Notwithstanding Section 4(e)(i), to the maximum extent permitted by applicable law, amounts payable to Executive pursuant to Section 4(c) shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9) (with respect to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (with respect to short-term deferrals).  Accordingly, the severance payments provided for in Section 4(c) are not intended to provide for any

deferral of compensation subject to Section 409A of the Code to the extent (A) the severance payments payable pursuant to Section 4(c), by their terms and determined as of the date of Executive’s Termination of Employment, may not be made later than the 15th day of the third calendar month following the later of (1) the end of the Company’s fiscal year in which Executive’s Termination of Employment occurs or (2) the end of the calendar year in which Executive’s Termination of Employment occurs, or (B) such severance payments do not exceed an amount equal to two times the lesser of (1) the amount of Executive’s annualized compensation based upon Executive’s annual rate of pay for the calendar year immediately preceding the calendar year in which Executive’s Termination of Employment occurs (adjusted for any increase during the calendar year in which such Termination of Employment occurs that would be expected to continue indefinitely had Executive remained employed with the Company) or (2) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) for the calendar year in which Executive’s Termination of Employment occurs.

(f)                                    Exclusive Remedy.  Except as otherwise expressly required by law or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts hereunder (if any) accruing after the termination of Executive’s employment shall cease upon such termination.  In addition, Executive acknowledges and agrees that he is not entitled to any reimbursement by the Company for any taxes payable by Executive as a result of the payments and benefits received by Executive pursuant to this Section 4 other than as set forth in Section 20.

(g)                                 Effect of Termination on Other Plans and Programs.  In the event that Executive’s employment with the Company is terminated for any reason, Executive shall be entitled to receive all amounts payable and benefits accrued under any otherwise applicable plan, policy, program or practice of the Company in which Executive was a participant immediately prior to the Termination Date in accordance with the terms thereof; provided, that, if Executive’s termination is without Cause or for Good Reason, Executive shall not be entitled to receive any payments or benefits under any such plan, policy, program or practice providing any severance or incentive compensation, and the provisions of Section 4(c) hereof shall supersede the provisions of any such plan, policy, program or practice.

(h)                                 Return of the Company’s Property.  As soon as reasonably practicable following the termination of his employment in any manner, Executive shall surrender to the Company or destroy, at his option, all lists, books and records of, or in connection with, the Company’s business, and all other property belonging to the Company, it being distinctly understood that all such lists, books and records, and other documents, are the property of the Company.  If Executive elects to destroy such property, Executive shall deliver to the Company a signed statement certifying compliance with this Section 4(g).  Nothing contained in this Section 4(g) or the Proprietary Information Agreement (as defined below) shall prevent Executive from retaining and utilizing copies of benefit plans and programs in which Executive retains an interest, desk calendars, his personal rolodex or files, personal office furnishings or such other personal records and documents as may Executive may reasonably require.

5.                                      Federal and State Withholding.  The Company shall deduct from the amounts payable to Executive pursuant to this Agreement the amount of all federal, state and local taxes required to be withheld by the Company under applicable law.

6.                                      Noncompetition; Nonsolicitation.

(a)                                  General.  Executive acknowledges that in the course of Executive’s employment with the Company, Executive has and will become familiar with trade secrets and other confidential information concerning the Company and that Executive’s services will be of special, unique and extraordinary value to the Company.

(b)                                 Noncompetition.  Executive agrees that during the Employment Period, except as may otherwise be approved by the Board or as set forth in Section 2 above, Executive shall not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member or a partnership or as an owner, investor, member, partner, officer, director, stockholder, investor or employee of or consultant to any other corporation or enterprise or otherwise, compete with the Company or any of its subsidiaries, within the United States and/or any foreign country, in the business of distribution of DVDs or its successors to the home market or on-demand programming as conducted by the Company during Executive’s employment or in planning during Executive’s employment in which Executive was materially involved or had actual knowledge.

(c)                                  Nonsolicitation.  Executive further agrees that during the Employment Period and for a period of one year following Executive’s Termination of Employment, Executive shall not in any manner, directly or indirectly (i) induce or attempt to induce any employee of the Company or any of its subsidiaries (other than John Hyde) to terminate or abandon his or her employment for any purpose whatsoever, or (ii) solicit or encourage any customer of the Company or any of its subsidiaries or independent contractor providing services to the Company or any of its subsidiaries to terminate or diminish its relationship with it.

(d)                                 Nondisparagement.  Executive agrees that Executive shall neither, directly or indirectly, engage in any conduct or make any statement disparaging in any way the Company, its subsidiaries or any of their personnel nor, directly or indirectly, engage in any other conduct or make any other statement that could be reasonably expected to impair the goodwill of the Company or the reputation of the Company, in each case, except to the extent required by law, and then only after consultation with the Company to the extent possible, or to enforce the terms of this Agreement.  The Company and its affiliates agree they will not, directly or indirectly, engage in any conduct or make any statement disparaging or criticizing in any way Executive, or engage in any other conduct or make any other statement that could be reasonably expected to impair the reputation of Executive, in each case, except to the extent required by law, and then only after consultation with Executive to the extent possible, or to enforce the terms of this Agreement.

(e)                                  Exceptions.  Nothing in this Section 6 shall prohibit Executive (i) from being a stockholder in a mutual fund or a diversified investment company, (ii) from being an owner of not more than five percent of the outstanding stock of any class of a corporation, any securities of which are publicly traded, so long as Executive has no active participation in the business of such corporation,  (iii) from providing services to or on behalf of any other business entities in accordance with Section 2, or (iv) from making generalized solicitations for employees through advertisements and hiring any persons through such generalized solicitations.

7.                                      Confidentiality.  Executive and the Company have entered into the Company’s standard employee proprietary information agreement (the “Proprietary Information Agreement”).

8.                                      Enforcement.  The parties hereto agree that the Company may be damaged irreparably in the event that any provision of Section 6 or 7 of this Agreement were not performed in accordance with its terms or were otherwise breached and that money damages may be an inadequate remedy for any such nonperformance or breach.  Accordingly, the Company and its successors and permitted assigns shall be entitled, in addition to other rights and remedies existing in their favor, to seek an injunction or injunctions to prevent any breach or threatened breach of any such provisions and to enforce such provisions specifically (without posting a bond or other security), in each case, as a court of competent jurisdiction may deem necessary or appropriate to restrain Executive.  In addition, in the event of any breach of Section 6(c) by Executive, Executive shall repay to the Company any amounts paid to him pursuant to Sections 4(c)(iii) and (iv) following the date of such breach.

9.                                      Representations/Covenant.  Executive represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound, (b) Executive is not a party to or bound by any employment agreement, noncompetition agreement or confidentiality agreement with any other person or entity that would interfere with the execution, delivery or performance of this Agreement by Executive, and (c) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.  Executive agrees that he will not disclose to or use on behalf of the Company any proprietary information of a third party without that party’s consent.  The Company represents and warrants to Executive that (i) it is fully authorized by action of its Board (and of any other person or body whose action is required) to enter into this Agreement and to perform its obligations under it and under the programs, plans and arrangements referred to in it; (ii) the execution, delivery and performance of this Agreement by the Company does not violate any applicable law, regulation, order, judgment or decree or any agreement, arrangement, plan or corporate governance document to which it is a party or is bound; and (iii) upon the execution and delivery of this Agreement by the parties, this Agreement shall be a valid and binding obligation of the Company, enforceable against it in accordance with its terms.

10.                               Definitions.

“Cause” means the occurrence of any of the following:  (i) Executive’s conviction of a felony or of any crime involving moral turpitude, dishonesty, fraud, embezzlement, theft or misrepresentation, (ii) gross neglect or gross misconduct by Executive in connection with the performance of Executive’s duties (other than due to Executive’s physical or mental illness), (iii) a material breach by Executive of this Agreement, the Proprietary Information Agreement or the Company’s material policies, rules and regulations referred to in Section 2(b), or (iv) willful engagement in any other conduct that involves a material breach of a fiduciary obligation on the part of Executive as an officer or member of the Board, or that would reasonably be expected to have a material and adverse economic effect upon the Company and its subsidiaries.  The circumstances described in items (ii) through (iv) (but not item (i)) above shall be subject to notice and an opportunity to cure as follows:  If the Board believes events have occurred constituting Cause within the meaning of items (ii) through (iv), the Board shall give written notice to Executive within 180 days after the Board learns of such events, which notice shall set forth in reasonable detail the grounds for its belief and the actions required to cure such failure.  Executive shall then have 30 business days after notice to explain and/or remedy the situation, and Cause shall not exist until such period has expired and the circumstances have not been explained or remedied.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations and other guidance issued thereafter.

“Disability” means the inability of Executive, due to a physical or mental incapacity or disability, to perform the essential functions of Executive’s position, with or without reasonable accommodation, required of Executive for a continuous period of 90 days or any 120 days within any 12-month period.  However, in no event shall a disability be a Disability unless Executive is considered to be disabled under the long-term disability plan of the Company for which Executive is eligible.

“Good Reason” means a termination by Executive of Executive’s employment hereunder if (i) any of the following events occurs without Executive’s express prior written consent; (ii) such event is not fully cured within 30 business days after Executive gives written notice to the Company describing such event and demanding cure; (iii) such cure notice is given within 180 days after Executive learns of the occurrence of such event; and (iv) Termination of Employment occurs within 30 business days after

the expiration of any cure right:  (A) a material diminution in Executive’s Salary; (B) a material diminution in Executive’s authority, duties or responsibilities, including a material adverse change in Executive’s reporting relationships; (C) a material breach of this Agreement by the Company; (D) the Company’s failure to issue to Executive, on or before July 15, 2010, (1) stock options pursuant to the forms of stock option agreements attached hereto as Exhibits B, C and D and (2) shares of restricted stock pursuant to the restricted stock award agreements attached hereto as Exhibits E, F and G; (E) the upon the failure by the Company (or its stockholders as the case may be) to elect or reelect or to appoint or reappoint Executive as Chairman of the Board; provided, however, that failure to reelect or reappoint the Executive as Chairman of the Board shall not constitute Good Reason if Cause exists for the removal of Executive from the Board or from his position as Chairman of the Board or for the failure to nominate or elect Executive to the Board or as Chairman of the Board; or (F) the appointment of a Co-Chairman of the Board].

“Separation from Service” shall mean Executive’s “separation from service” with the Company (as such term is defined in Treasury Regulation Section 1.409A-1(h) and any successor provision thereto), including without limitation due to Executive’s Termination of Employment.

“Termination Date” means the date on which Executive’s Termination of Employment with the Company occurs pursuant to Section 4.

“Termination of Employment” shall mean Executive’s “termination of employment” with the Company (within the meaning of Treasury Regulation Section 1.409A-1(h)(ii) and any successor provision thereto) on the following dates:  (i) if Executive’s employment is terminated by Executive’s death, the date of Executive’s death, and (ii) if Executive’s employment is terminated for any other reason, the latest of the date on which the Notice of Termination is given, the date any applicable cure period expires, the date of termination specified in such notice (which shall not be more than 30 days after the date of such notice) and, if no such notice is given, 30 days after the date of termination of employment.

11.                               Insurance; Indemnification. The Company and each of its subsidiaries shall, to the maximum extent provided under applicable law, indemnify and hold Executive harmless from and against any expenses, including reasonable attorney’s fees, judgments, fines, settlements and other amounts (“Losses”), incurred in connection with any proceeding arising out of, or related to, Executive’s employment by the Company.  The Company shall, or shall cause a subsidiary thereof to, advance to Executive any expenses, including attorney’s fees and costs of settlement, incurred in defending any such proceeding to the maximum extent permitted by applicable law.  Such costs and expenses incurred by Executive in defense of any such proceeding shall be paid by the Company or applicable subsidiary in advance of the final disposition of such proceeding promptly upon receipt by the Company of (a) written request for payment; (b) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (c) an undertaking adequate under applicable law made by or on behalf of Executive to repay the amounts so advanced if it shall ultimately be determined pursuant to any non-appealable judgment or settlement that Executive is not entitled to be indemnified by the Company or any subsidiary thereof. During the Employment Period and continuing until the later of (i) the sixth anniversary of the Termination Date and (ii) the date on which all claims against Executive that would otherwise be covered by such policy (or policies) become fully time-barred, the Company shall maintain customary directors’ and officers’ liability insurance for Executive, providing coverage that is no less favorable to Executive in any material respect (including, but not limited to, with respect to scope, exclusions, amounts and deductibles) than the coverage then being provided to any other present or former officer or director of the Company.

12.                               Notices.  All notices and other communications required or permitted hereunder

shall be in writing and shall be deemed given when (a) delivered personally or by overnight courier to the following address of the other parties hereto (or such other address for such parties as shall be specified by notice given pursuant to this Section) or (b) sent by facsimile to the following facsimile number of the other parties hereto (or such other facsimile number for such parties as shall be specified by notice given pursuant to this Section), with the confirmatory copy delivered by overnight courier to the address of such parties pursuant to this Section 12:

If to the Company, to:

Image Entertainment, Inc.
20525 Nordhoff Street, Suite 200
Chatsworth, CA 91311
Attention:  Chairman of the Board of Directors
Facsimile:  (      )

If to Executive, to:

Ted Green

Facsimile:  (          )

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

Morrison Cohen LLP
909 Third Avenue
New York, NY 10022
Attention:  Jack Levy, Esq.
Facsimile:  (212) 735-8708

13.                               Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

14.                               Entire Agreement; Inconsistencies.  This Agreement, the Proprietary Information Agreement and the Exhibits hereto shall constitute the entire agreement and understanding between the parties with respect to the subject matter hereof and thereof and supersede and preempt any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof or thereof.  In the event of any inconsistency between any provision of this Agreement and any provision of any employee handbook, personnel manual, program, policy, or arrangement of the Company, or any provision of any agreement, plan, or corporate governance document of any of them, the provisions of this Agreement shall control unless Executive otherwise agrees in a signed writing that expressly refers to the provision whose control Executive is waiving.  The Company agrees not to impose any restrictions, enforceable by injunction, on Executive’s post-employment activities, other than those expressly set forth in this Agreement and the Proprietary Information Agreement.

15.                               Successors and Assigns.  This Agreement shall be enforceable by Executive and Executive’s heirs, executors, administrators and legal representatives, and by the Company and its successors and assigns.  Executive may not assign this Agreement and any such assignment shall be null and void. The rights of the Company under this Agreement shall, without the consent of Executive, be assigned by the Company to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company.  The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve the Company of its obligations hereunder.  As used in this Agreement, the “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

16.                               Governing Law; Venue.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California without regard to principles of conflicts of laws.  Any suit brought hereon shall be brought in the state or Federal courts sitting in Los Angeles, California, the parties hereto hereby waiving any claim or defense that such forum is not convenient or proper.  Each party hereby agrees that any such court shall have in personal jurisdiction over it and consents to service of process in any manner authorized by California law.

17.                               Arbitration.

(a)                                  Generally.  Except as otherwise provided in Section 8 hereof or as otherwise required by law, any dispute, claim, question or controversy arising under or relating to this Agreement, Executive’s employment with the Company or the termination thereof (each such dispute, claim, question or controversy, a “Dispute”) shall be resolved by submitting such Dispute to binding arbitration administered by JAMS pursuant to its Employment Arbitration Rules and Procedures and subject to its Employment Arbitration Minimum Standards of Procedural Fairness (collectively, the “Rules”), and pursuant to the procedures set forth in this Section 17.  In the event of any conflict between the Rules and the procedures set forth in this Section 17, the procedures set forth in this Section 17 shall control.  Any such arbitration shall be brought within any otherwise applicable statute of limitations period, and shall be the sole and exclusive means for resolving such Dispute (other than for injunctive relief pursuant to Section 8 or as otherwise required by law).

(b)                                 Procedures.  Any arbitration shall be held in Los Angeles, California (except for any arbitration brought by Executive, which shall be held in New York, New York) and conducted before a single neutral arbitrator selected by mutual agreement of the parties hereto within 30 days of the initiation of the arbitration or, if they are unable to agree, by JAMS under its rules.  The arbitrator shall take submissions and hear testimony, if necessary, and shall render a written decision as promptly as practicable.  The arbitrator may grant any legal or equitable remedy or relief that the arbitrator deems just and equitable, to the same extent that remedies or relief could be granted by a state or federal court in the United States.  The decision of the arbitrator shall be final, binding and conclusive on all parties and interested persons.  It is the intention of the parties hereto that they shall be entitled to fair and adequate discovery in accordance with the Federal Rules of Civil Procedure.  The parties hereto shall keep confidential the fact of the arbitration, the dispute being arbitrated, and the decision of the arbitrator.

(c)                                  Enforcement; Costs.  Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction.  All fees and expenses of any arbitration, including, but not limited to, reasonable attorneys’ fees and disbursements of all parties, with respect to a Dispute

under this Agreement shall be borne by the Non-prevailing Party.  The determination of whether a party is to be deemed the “Non-prevailing Party” in any arbitration shall be solely within the province of the arbitrator.  Neither party shall be liable for punitive or exemplary damages.

18.                               Amendment and Waiver.  The provisions of this Agreement may be amended or waived only by the written agreement of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.  If the Company and Executive determine that any payments or benefits payable under this Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, the Company and Executive agree to amend this Agreement, or take such other actions as the Company and Executive deem reasonably necessary or appropriate, to comply with the requirements of Section 409A of the Code, the Treasury Regulations thereunder (or any applicable correction relief) while preserving the economic agreement of the parties.  If any provision of the Agreement would cause such payments or benefits to fail to so comply, such provision shall not be effective and shall be null and void with respect to such payments or benefits, and such provision shall otherwise remain in full force and effect.

19.                               Legal Fees.  The Company shall reimburse Executive for all reasonable attorneys’ fees incurred by Executive in reviewing and negotiating this Agreement and Executive’s equity arrangements (whether or not incentive-based), as well as for any attorneys’ fees incurred by Executive and associated with the diligence and negotiations of the JH fund’s acquisition of the Company on January 8, 2010, plus up to a maximum of $15,000 in the aggregate for Ted Green, John Avagliano and John Hyde for any reasonable related expenses.  Such reimbursement shall be made within 30 days following presentation to the Company of appropriate invoices or other documentation for the amount of such fees and expenses.

20.                               Excise Taxes.

(a)                                  (i) In the event that any payment or benefit received or to be received by Executive pursuant to the terms of this Agreement (the “Contract Payments”) or in connection with Executive’s termination of employment or contingent upon a change in control (as defined under Section 280G of the Code) of the Company pursuant to any plan or arrangement or other agreement with the Company (or any affiliate) (“Other Payments” and, together with the Contract Payments, the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, as determined as provided below, the Company shall pay to Executive, at the time specified in Section 20(b) below, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of all amounts required to be paid upon the payment provided for by this Section 20(a), and any interest, penalties or additions to tax payable by Executive with respect thereto, shall be equal to the total present value of the Excise Taxes imposed upon the Payments; provided, however, that if Executive’s Payment is, when calculated on a net-after-tax basis, less than 110% of the amount of the Payment which could be paid to Executive under Section 280G of the Code without causing the imposition of the Excise Tax, then the Payment shall be limited to the largest amount payable (as described above) without resulting in the imposition of any Excise Tax (such amount, the “Capped Amount”).

(ii)                                  For purposes of determining the Capped Amount, whether any of the Payments will be subject to the Excise Tax and the amounts of such Excise Tax, (A) the total amount of the Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of independent tax counsel selected by the Company’s independent auditors and acceptable to Executive (“Tax Counsel”), a Payment

(in whole or in part) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code, or such “excess parachute payments” (in whole or in part) are not subject to the Excise Tax, (B) the amount of the Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Payments or (2) the amount of “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code (after applying clause (A) hereof), and (C) the value of any noncash benefits or any deferred payment or benefit shall be determined by Tax Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income tax at the highest marginal rates of federal income taxation applicable to individuals in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest effective rates of taxation applicable to individuals as are in effect in the state and locality of Executive’s residence in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates.

(iii)                               If the Tax Counsel determines that any Excise Tax is payable by Executive and that the criteria for reducing the Payments to the Capped Amount (as described in Section 20(a)(i) above) is met, then the Company shall reduce the Payments by the amount which, based on the Tax Counsel’s determination and calculations, would provide Executive with the Capped Amount, and pay to Executive such reduced Payments; provided that the Company shall first reduce the severance payment under Section 4(c) and shall next reduce the benefits provided under the Company’s incentive equity plan pursuant to which Executive has been awarded equity. If the Tax Counsel determines that an Excise Tax is payable, without reduction pursuant to Section 20(a)(i), above, the Company shall pay the required Gross-Up Payment to, or for the benefit of, in accordance with Section 20(b). If the Tax Counsel determines that no Excise Tax is payable by Executive, it shall, at the same time as it makes such determination, furnish Executive with an opinion that he has substantial authority not to report any Excise Tax on his/her federal, state, local income or other tax return. Any determination by the Tax Counsel as to the amount of the Gross-Up Payment shall be binding upon the Company and Executive absent a contrary determination by the Internal Revenue Service or a court of competent jurisdiction; provided, however, that no such determination shall eliminate or reduce the Company’s obligation to provide any Gross-Up Payment that shall be due as a result of such contrary determination.

(b)                                 The Gross-Up Payments provided for in Section 20(a) hereof shall be made upon the earlier of (i) the payment to Executive of any Contract Payment or Other Payment or (ii) the imposition upon Executive or payment by Executive of any Excise Tax.

(c)                                  Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30 day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i)                                     give the Company any information reasonably requested by the Company relating to such claim;

(ii)                                  take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting

legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably satisfactory to Executive;

(iii)                               cooperate with the Company in good faith in order to effectively contest such claim; and

(iv)                              permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including, but not limited to, additional interest and penalties and related legal, consulting or other similar fees) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.

(d)                                 The Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or other tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that if Executive is required to extend the statute of limitations to enable the Company to contest such claim, Executive may limit this extension solely to such contested amount. The Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. In addition, no position may be taken nor any final resolution be agreed to by the Company without Executive’s consent if such position or resolution could reasonably be expected to adversely affect Executive (including any other tax position of Executive unrelated to the matters covered hereby).

(e)                                  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Company or the Tax Counsel hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies and Executive thereafter is required to pay to the Internal Revenue Service an additional amount in respect of any Excise Tax, the Company or the Tax Counsel shall determine the amount of the Underpayment that has occurred and any such Underpayment shall promptly be paid by the Company to or for the benefit of Executive.

(f)                                    If, after the receipt by Executive of the Gross-Up Payment or an amount advanced by the Company in connection with the contest of an Excise Tax claim, Executive becomes entitled to receive any refund with respect to such claim, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company in connection with an Excise Tax claim, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest the denial of

such refund prior to the expiration of 30 days after such determination, such advance shall be forgiven and shall not be required to be repaid.

(g)                                 Notwithstanding the foregoing provisions of this Section 20:

(i)                                     In no event shall the Company’s liability for Gross-Up Payments to Executive under this Section 20 exceed the amount of the “tax gross-up payment” on any Payment permitted under Treasury Regulation Section 1.409A-3(i)(1)(v); and

(ii)                                  In no event shall the Company’s liability for any Gross-Up Payments to Executive under this Section 20, taken together with any gross-up payments payable to Producers Sales Organization pursuant to the Consulting Agreement (the “Consulting Agreement”) with the Company and John Hyde of even date herewith and any gross-up payments payable to John Avagliano pursuant to his Employment Agreement (the “Avagliano Employment Agreement”) with the Company of even date herewith (the “Aggregate Gross-Up Payments”), exceed $1,000,000 (the “Maximum Amount”) in the aggregate.  In the event that the Aggregate Gross-Up Payments would exceed $1,000,000, Executive’s Gross-Up Payment under this Section 20 shall not exceed an amount equal to (A) the Maximum Amount, multiplied by (B) a fraction, the numerator of which is equal to the Gross-Up Payment that would be payable to Executive pursuant to this Section 20 (without regard to the application of this Section 20(g)(ii)), and the denominator of which is the aggregate Gross-Up Payments that would be payable to Executive pursuant to this Section 20 and Producers Sales Organization pursuant to the Consulting Agreement and John Avagliano pursuant to the Avagliano Employment Agreement (without regard to the application of this Section 20(g)(ii) or any comparable provision in such other Agreements).