THIS EMPLOYMENT AGREEMENT (“
Agreement ”) is made and entered into as of
March 31, 2009 (the “ Effective Date ”), by
and between IMAGE ENTERTAINMENT INC., a California corporation
(“ Image ”), and Derek Eiberg, an individual
(“ Executive ”).
WHEREAS, the Board of Directors of Image
(“ Board ”) has determined that it is in the
best interests of Image to secure the services of Executive and to
provide Executive with the compensation and benefits set forth
herein; and
WHEREAS, Executive desires to render to Image,
on an exclusive basis, Executive’s professional services with
respect to Executive’s experience and abilities, and Image
desires to secure, on an exclusive basis, Executive’s
services, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein, the parties hereto agree
as follows:
Except as otherwise expressly set forth herein,
this Agreement shall remain in full force and effect for the period
commencing as of the date hereof and ending on March 31, 2011
(the “ Term ”), subject to exercise of the
Renewal Option Periods set forth in Section 5 below. “
Term ” shall include any extensions agreed upon in
accordance with Section 5 below.
Subject to the terms and conditions contained
herein, Image hereby engages the services of Executive (the “
Services ”) and Executive hereby accepts such
engagement and agrees to render such Services to Image for the
Term. Executive shall report directly to Image’s President
and shall have the title of Chief Operating Officer.
(a) Extent of Services and Duties .
Executive shall perform such duties compatible with
Executive’s position as Image’s President and/or Board
of Directors may reasonably require. In rendering Services to
Image, Executive shall use Executive’s best efforts and
ability to maintain, further and promote the interests and welfare
of Image. At the request of Image, Executive shall serve as an
executive officer or director of Image or any entity controlled by
Image or in which it has a substantial direct or indirect interest,
without additional compensation, provided that Executive is
included on any such entity’s directors and officers
insurance policy (if any) or is otherwise fully indemnified by
Image for all such additional duties to the full extent provided by
law.
(b) Exclusive Engagement .
Executive hereby acknowledges and agrees that the engagement of
Executive by Image under this Agreement is exclusive and that
during the Term hereof Executive shall not, directly or indirectly,
whether for compensation or otherwise, engage in any business that
is competitive with the business of Image or that otherwise
interferes in any significant respect with Executive’s
exclusive commitment and duties under this Agreement, or render any
services of a business, commercial or professional nature to any
other person or organization that is a competitor of Image or in a
business similar to that of Image, without the prior written
consent of Image. Notwithstanding the foregoing, Executive may make
and manage personal business investments of his choice and serve in
any capacity with any civic, educational or charitable organization
without seeking or obtaining approval by the Board, provided that
such activities and services do not substantially interfere or
conflict with the performance of duties hereunder or create any
conflict of interest with such duties.
(a) Base Salary . During the Term
of this Agreement, Image hereby agrees to pay Executive an annual
base salary of $300,000.00 (“ Base Salary ”).
The Base Salary will be payable in equal biweekly installments or
as otherwise provided in accordance with the regular compensation
pay schedules and procedures in effect from time to time for Image,
subject to all applicable withholding and deductions. There shall
be deducted from all compensation payable to Executive hereunder
such sums, including without limitation, social security, income
tax withholding and unemployment insurance, as Image is by law
obligated to deduct and additionally as Executive may duly
authorize. Any increases in Executive’s Base Salary during
the Term of the Agreement shall be within the sole discretion of
Image’s President and/or Board of Directors.
(b) Bonus Compensation and Stock
Options . Image’s Board of Directors intends to create a
bonus compensation plan and stock option plan for the benefit of
certain of Image’s executives. To the extent that a bonus
compensation plan and/or a stock option plan is finalized, such
plans will be overseen at the direction of Image’s Board. Any
bonus compensation and any award of stock options is not
guaranteed. Rather they will be awarded at the discretion of the
Board and will be based on corporate profitability and
Executive’s performance, jointly.
(a) Insurance Benefits. Image will
provide Executive with premium coverage for health and dental
insurance for Executive, Executive’s spouse and
Executive’s dependent minor children, life and accidental
death/dismemberment insurance for Executive, and short and
long-term disability insurance for Executive.
(b) Business/Travel Expenses .
Executive shall be reimbursed in full for all reasonable and actual
out-of-pocket business and travel expenses incurred in the
performance of Executive’s Services in accordance with
Image’s policies for the reimbursement of such business and
travel expenses.
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(c) Vacation Time . Executive is
entitled to four (4) weeks of paid vacation time per year of
the Term, but may accrue no more than the maximum cap set forth in
Image’s employee handbook (the “maximum cap”).
Once Executive’s vacation accrual reaches this maximum cap,
Executive will cease accruing paid vacation time unless and until
Executive’s balance of accrued but unused vacation time falls
below the maximum cap.
(d) Car Allowance . Executive shall
receive an annual car allowance of $12,600 gross, paid
bi-weekly.
This Agreement will expire on March 31,
2011, if not terminated earlier pursuant to Sections 9 or 10
below, and unless this Agreement is renewed for one or more one
(1) year terms by the mutual agreement of Image and Executive
at least ninety (90) days in advance of this date of
expiration (by December 31, 2010).
Upon expiration of the Term, provided the
parties have not mutually agreed to extend the Term, Image agrees
to pay to Executive six (6) months of Base Salary (without
vacation accrual), any bonus compensation not previously paid for
any prior period, and six (6) months of medical and dental
insurance continuation under COBRA; provided, however, that such
compensation and benefits will only be provided to Executive upon
Executive’s signature on a waiver and release agreement
substantially in the form set forth in Exhibit C
hereto.
(a) In consideration of the payments to be
received hereunder, Executive agrees that during the Term he will
have access to and become acquainted with various trade secrets and
other confidential and proprietary information of Image and other
affiliated entities (the “ Company ”). Such
trade secrets and other confidential and proprietary information
shall be referred to herein as “ Trade Secrets
,” (as such term is defined below). Except as
Executive’s duties may require or as Image may otherwise
consent to in writing, Executive will not at any time disclose or
use, either directly or indirectly, and either during or subsequent
to the Term hereof, any information, knowledge or data he receives
in confidence or acquires from the Company or which relates to the
Trade Secrets of the Company. For purposes of this Agreement
“ Trade Secrets ” shall include, but not be
limited to:
(i) Financial information, such as the
Company’s earnings, assets, debts, prices, pricing structure,
volumes of purchases or sales or other financial data, whether
relating to the Company generally, or to particular products,
services, geographic areas, or time periods;
(ii) Supply and service information, such
as goods and services, suppliers’ names or addresses, terms
of supply or service contracts, or of particular transactions, or
related information about potential suppliers, to the extent that
such information is not generally known to the public, and to the
extent that the combination of suppliers or use of a particular
supplier, though generally known or available, yields advantages to
the Company, the details of which are not generally
known;
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(iii) Marketing information, such as
details about ongoing or proposed marketing programs or agreements
by or on behalf of the Company, sales forecasts or results of
marketing efforts or information about impending
transactions;
(iv) Licensing or Distribution information,
such as details about ongoing or proposed negotiations or
agreements by or on behalf of the Company, terms and details of
such negotiations or agreements or results of licensing or
distribution efforts or information about impending transactions;
or,
(v) Customer information, such as any
compilation of past, existing or prospective customers,
customers’ proposals or agreements between customers and
status of customers accounts or credit, or related information
about actual or prospective customers.
(b) Executive acknowledges that any
violation of the terms of this Section will constitute a material
breach of this Agreement and will cause the Company immediate and
irreparable harm and that the damages which the Company will suffer
may be difficult or impossible to measure. Therefore, upon any
actual or impending violation of this Section, the Company shall be
entitled to the issuance of a restraining order, preliminary and
permanent injunction, without bond, restraining or enjoining such
violation by Executive or any entity or person acting in concert
with Executive. Such remedy shall be additional to and not in
limitation of any other remedy which may otherwise be available to
the Company.
(a) Executive hereby acknowledges and
agrees that all results and proceeds arising out of or resulting
from services Executive performs for the Company (“ Work
Product ”) shall be deemed works-made-for-hire for the
Company within the meaning of the copyright laws of the United
States, and the Company shall be deemed to be the sole author
thereof in all territories and for all purposes. To the extent any
ownership rights in any Work Product or Trade Secrets might be
deemed to reside in Executive, Executive hereby assigns all such
rights of every kind and character, whether now existing or
hereafter existing, to the Company exclusively, for all purposes,
without conditions or limitations, and without the reservation of
any rights by Executive, in perpetuity and throughout the universe,
in any form or media, whether now known or hereafter discovered or
invented. Executive acknowledges and agrees that the Company has
hereby notified Executive that the assignment provided for herein
shall not apply to any invention that qualifies fully for exemption
from assignment under the provisions of Section 2870 of the
California Labor Code, a copy of which is attached as “
Exhibit A ” hereto.
(b) All files (hard copy or saved on
Executive’s computer, personal or shared drives), records,
documents, equipment, specifications, electronic mail and other
items relating to the Company’s business, whether prepared by
Executive or others (collectively, “ Company Materials
”), are and shall remain exclusively the property of the
Company. Upon the ending of Executive’s employment with Image
for any reason, and at such earlier time as may be requested by
Image, Executive shall forthwith deliver to Image all Company
Materials and all materials in Executive’s possession,
custody or control and shall not download, delete, transfer or
transmit any Company Materials without Image oversight or approval
beforehand.
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8. INDEMNIFICATION OF
EXECUTIVE.
Image will, to the maximum extent permitted by
law, indemnify and hold Executive harmless against expenses,
including reasonable attorney’s fees, judgments, fines,
settlements and other amounts actually and reasonably incurred in
connection with any proceeding arising by reason of
Executive’s employment by Image. Image shall advance to
Executive any expenses incurred in any proceeding to the maximum
extent permitted by law. Executive will be entitled to utilize
defense legal counsel of his choice, subject to the approval of
Image, which approval will not be unreasonably withheld. Image will
at all times maintain directors’ and officers’
liability insurance (“ D&O Insurance ”), or
have sufficient funds to self-insure, in amounts and on terms at
least as favorable as the D&O Insurance policy in effect on the
date hereof.
Image has the right to terminate
Executive’s employment with or without “ Cause
,” (as defined below).
(a) In the event of “ Cause
” (as defined below), Image has the right to terminate this
Agreement at any time effective upon delivery of written notice to
Executive. In such event, all of Image’s obligations
hereunder will immediately terminate without further liability.
Moreover, Executive shall not be entitled to receive any severance,
fringe benefits, other compensation or other such rights hereunder.
For purposes of this Agreement “ Cause ” shall
be defined as:
(i) Executive’s (a) fraud,
dishonesty or felonious conduct or breach of fiduciary duty; (b)
willful misconduct or gross negligence in the performance of
Executive’s duties hereunder; (c) knowing and/or willful
violation (including conduct in respect of Executive’s
supervisory responsibilities) of any law, rule or regulation or
other wrongful act that causes or is likely to cause harm, loss or
disrepute to the Company; or (d) conviction of a felony or
misdemeanor (other than minor traffic violations, a first time
driving under the influence of alcohol conviction, or an offense
that does not affect the business or reputation of the Company);
or
(ii) Executive’s breach of any
material provision of this Agreement or any other material
agreement between the Company and Executive, whenever executed;
or
(iii) Executive’s failure to comply
with all relevant and material obligations, assumable and
chargeable to an executive of his corporate rank and
responsibilities under the Sarbanes-Oxley Act.
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(b) Image has the right to terminate
Executive’s employment without Cause at any time, with or
without advance notice. Upon a termination without Cause, Image
agrees to pay to Executive the Base Salary Executive would have
earned from the date of termination through the end of the Term
plus six (6) months of Base Salary (without vacation
accrual), any bonus compensation not previously paid for any prior
period, and six (6) months of medical and dental insurance
continuation under COBRA (“ Severance Pay ”);
provided, however, that such Severance Pay will only be provided to
Executive upon Executive’s signature on a waiver and release
agreement substantially in the form set forth in
Exhibit C hereto.
(c) Notwithstanding any other provision in
this Agreement, solely to the extent that a delay in payment is
required in order to avoid the imposition of any tax under
Section 409A of the Internal Revenue Code (the “
Code ”), if a payment obligation under this Agreement
arises on account of Executive’s “separation from
service” (within the meaning of Section 409A of the
Code) while Executive is a “specified employee” (as
determined for purposes of Section 409A(a)(2)(B) of the Code
in good faith by the Compensation Committee of the Board), then
payment of any amount or benefit provided under this Agreement that
is considered to be non-qualified deferred compensation for
purposes of Section 409A of the Code and that is scheduled to
be paid within six (6) months after such separation from
service shall be paid without interest on the first business day
after the date that is six (6) months following
Executive’s separation from service.
10. EXECUTIVE’S RIGHT TO TERMINATE
FOR GOOD REASON.
During the Term, Executive shall be entitled to
terminate Executive’s employment with Image for “
Good Reason ” (as defined below). For purposes of this
Agreement “ Good Reason ” shall mean any of the
following events which occurs without Executive’s express
written consent within a twelve (12) month period following a
“ Change in Control ” (as defined in
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