THIS EMPLOYMENT AGREEMENT (“
Agreement ”) is made and entered into as of this 22nd
day of January, 2007, by and between IMAGE ENTERTAINMENT, INC., a
Delaware corporation (“ Image ”), and Jeffrey
Fink, an individual (“ Employee ”).
I.
TERM OF AGREEMENT. Except as otherwise expressly set forth herein,
this Agreement shall remain in full force and effect for an
approximate 14-month term commencing on the date hereof and ending
on March 31, 2008. This Agreement shall automatically renew
for successive one year terms unless either party delivers to the
other party a written notice terminating the Agreement effective
the following April by the later of December 31st or
60 days after the consummation of a Change of Control (as
defined below), if any. The first initial and any subsequent
periods shall collectively be called the “ Term
”.
The parties acknowledge that Employee’s
hope is that in the event of a Change of Control (as defined
below), he will have the opportunity to renegotiate this Agreement
or enter into a new agreement such that he maintains substantially
the same title, duties, responsibilities, authority and reporting
structure, while increasing his Base Salary and extending his
current Term by not less than one year, or receiving a new Term of
not less than two years.
II.
ENGAGEMENT . Subject to the terms and conditions contained
herein, Image hereby engages the services of Employee and Employee
hereby accepts such engagement and agrees to render said to Image
for the Term. Employee shall report directly to Image’s Chief
Operating Officer and shall have the title of “CHIEF
MARKETING OFFICER.”
(a) Services and Duties. Employee
shall perform such duties, compatible with Employee’s
position as a “Chief Marketing Officer” (as defined
below) and as Image’s Executive Officers may reasonably
require from time to time (the “ Duties ”). In
rendering Duties to Image, Employee shall use Employee’s good
faith efforts and ability to maintain, further and promote the
interests and welfare of Image. Employees assigned to the sales,
marketing and acquisition departments, and designated with the
title of Executive Vice President, Senior Vice President or Vice
President, will be direct reports to the Chief Marketing
Officer.
(b) Duty of Loyalty. Employee
hereby acknowledges and agrees that the engagement of Employee by
Image under this Agreement is exclusive and that during the Term
Employee shall not, directly or indirectly, whether for
compensation or otherwise, engage in any business that is
competitive with the business of Image, or render any services of a
business, commercial or professional nature to any other person or
organization that is a competitor of Image or in a business similar
to that of Image, without the prior written consent of the Chief
Operating Officer of Image. Without limiting the generality of the
foregoing, the home entertainment licensing and distribution
business shall constitute a business that is competitive with the
business of Image and an entity engaged in the home entertainment
licensing and distribution business shall be deemed a competitor of
Image .
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(a) Base Salary. The amount of
Employee’s annualized base salary through March 31, 2008
will be $275,000.00 (“ Base Salary ”), or
$22,916.66 per month. Upon the earlier of August 1, 2007, or
30 days after the consummation of a Change of Control,
Employee’s annualized Base Salary shall increase to
$325,000.00. On April 1, 2008, if this Agreement has not been
terminated as provided for herein, Employee will be entitled to a
3.33% increase in his Base Salary. For each subsequent year of the
Term, if this Agreement is not terminated, as provided for herein,
Employee will be entitled to a cumulative 5% increase in his then
Base Salary.
(b) Discretionary Bonus. During the
Term, Employee shall be eligible to receive annual bonus
compensation based on the net income of Image for the year in
question (“ Discretionary Bonus ”). The amount
of such Discretionary Bonus (if any) shall be determined by
Image’s CEO and the Compensation Committee of Image’s
Board of Directors (the “ Committee ”), in their
sole and absolute discretion. Employee shall be treated no less
favorably than the Chief Financial Officer and the Chief Operating
Officer in connection with Employee’s eligibility for a
Discretionary Bonus, and Employee shall not receive less than the
Chief Financial Officer and shall not receive materially less than
the Chief Operating Officer in the event Discretionary Bonuses are
granted.
IV.
OPTIONS AND OTHER STOCK-BASED AWARDS .
(a) In addition to Base Salary and
Discretionary Bonus, Image may grant stock-based awards (the
“ Awards ”) to Employee in such form and
amounts, and at such time or times, as Image’s CEO and Board
of Directors (or, if applicable, Image’s stock option plan
administrators or the Committee) shall determine from time to time;
provided , however , that nothing contained herein
may be construed or interpreted as a right or entitlement to
receive any Awards at anytime during the Term. Employee shall not
receive less than the Chief Financial Officer and shall not receive
materially less than the Chief Operating Officer in the event
Awards are granted.
(b) Notwithstanding the above, upon start
of Employee’s employment, Image will grant Employee 10,000
Restricted Stock Units (“ RSU’s ”),
vesting 3,300 RSU’s on the first anniversary of the date of
the grant, 3,300 RSU’s on the second anniversary of the date
of the grant and 3,400 RSU’s on the third anniversary of the
date of the grant. If Employee’s employment ends prior to any
RSU’s vesting, then all such unvested RSU’s shall be
cancelled and forfeited by Employee. However, upon a Change of
Control, Termination Without Cause, or Resignation by Employee for
Good Cause (in each case as defined below) all unvested RSU’s
will immediately vest.
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(c) For purposes of this Agreement, “
Change of Control ” shall mean and be deemed to have
occurred on the earliest of the following dates or
events:
(i) the
date of an acquisition by any person of beneficial ownership
(within the meaning of Rule 13d-3 under Exchange Act of 1934,
as amended) or a pecuniary interest in more than 45% of the common
stock or voting securities then entitled to vote generally in the
election of directors of Image (“ Voting Stock
”), other than an acquisition by one or more
Excluded Persons (Image, Image Investors Co., Standard Broadcasting
Corporation Ltd., or Messrs. John Kluge, Stuart Subotnick or
Martin Greenwald) in connection with a new issuance of Voting Stock
(or rights to acquire Voting Stock) by Image to the Excluded Person
in a transaction that the Committee determines (in advance of the
issuance) does not constitute a Change of Control event, or in the
event that one or more Excluded Persons take Image from a public
company to a privately held company;
(ii) approval by the shareholders of Image
of a plan of merger, consolidation, or reorganization of Image
involving a more than 50% change in ownership or sale or other
disposition of all or substantially all of Image’s assets
(collectively, a “ Business Combination ”),
other than a Business Combination: (1) (x) in which
substantially all of the holders of Image’s Voting Stock hold
or receive directly or indirectly 50% or more of the voting stock
of the resulting entity or a parent company thereof, and
(y) after which no person (other than any one or more of the
Excluded Persons, as defined above) owns more than 50% of the
voting stock of the resulting entity (or a parent company) who did
not own directly or indirectly at least that amount of Voting Stock
immediately before the Business Combination; or (2) in which
the holders of Image’s capital stock immediately before such
Business Combination will, immediately after such Business
Combination, hold as a group on a fully diluted basis the ability
to elect at least a majority of the directors of the surviving
corporation (or a parent company);
(iii) approval by the Board of Directors
and (if required by law) by shareholders of Image of a plan to
consummate the dissolution or complete liquidation of Image;
or
(iv) the
date the persons who were members of the Board of Directors at the
beginning of any 24-month period shall cease to constitute a
majority of the Board, unless the election, or the nomination for
election by Image’s shareholders, of each new director was
approved by two-thirds of the members of the Board of Directors
then in office who were in office at the beginning of the 24-month
period.
For purposes of
determining whether a Change of Control has occurred, a transaction
includes all transactions in a series of related
transactions.
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V.
FRINGE BENEFITS . Employee acknowledges, understands and agrees he
shall receive the following fringe benefits, on the equivalent
basis as the Chief Financial Officer and the Chief Operating
Officer:
(a) Medical, Dental, Life & Long-Term
Disability Insurance. Image shall purchase (or if applicable,
maintain) during the Term (and pay the premium for): PPO medical,
dental, life and long-term disability insurance for Employee and
Employee’s spouse and dependent children (collectively,
“ Insurance ”).
(b) Business/Travel Expenses.
Employee shall be reimbursed in full for all reasonable and actual
out-of-pocket business (including free participation in
Image’s group business plans for cell phone and BlackBerry
use) and travel expenses (including airline upgrades) incurred in
the performance of the Duties, in accordance with Image’s
travel reimbursement policies, provided Employee shall first
present an itemized account of such expenditures together with
supporting vouchers. For reference purposes, the Chief Operating
Officer and Chief Financial Officer currently travel via coach
class on domestic flights and business class on international
flights.
(c) Vacation Time. Notwithstanding
anything contained in Image’s Employee Handbook, Employee is
entitled to 4 weeks of paid vacation per calendar year.
Vacation time will be capped at eight (8) weeks maximum
accrual at any point in time during the Term. Once Employee has
accrued eight (8) weeks vacation time, he will not accrue
additional time unless he uses some vacation time and his accrued
balance thereby drops below eight (8) weeks.
(d) Employee Handbook to Apply.
Except as expressly set forth herein to the contrary, all of the
terms and conditions of the current version of the Image’s
Employee Handbook will apply, including but not limited to
provisions relative to confidentiality, periodic insider trading
blackout updates, sick days, holidays, leaves of absence and
arbitration of disputes. In that connection, Employee hereby
acknowledges that Employee has been provided with a copy of
Image’s current Employee Handbook and agrees to read and be
bound by the terms of such Employee Handbook as may be in effect
from time to time.
(e) Contribution Plan. Throughout
the Term, Employee shall be entitled to participate in the
then-current Image 401(k) participation plan according to the
guidelines set forth by Image and the plan’s custodian. Image
will match Employee’s contributions to the participation
plan, up to a maximum of 4% of Employee’s Base Salary, at the
rate of $0.50 per dollar contributed by Employee.
(f) Automobile Allowance. Employee
shall receive an amount equal to $10,000.00 annually for an
automobile allowance, which shall be paid to Employee in equal
installments during each pay period.
VI.
WITHHOLDING . There shall be deducted from all compensation
payable to Employee thereunder, such sums, including without
limitation, social security, income tax withholding and
unemployment insurance, as Image is by law obligated to
deduct.
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VII.
CONFIDENTIALITY . In consideration of the payments to be received
hereunder, Employee agrees that:
(a) During the Term Employee will have
access to and become acquainted with confidential and proprietary
information (“ Confidential Information ”) of
Image. Except as the Duties may require or as Image may otherwise
conse
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