EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of the 1st day of July, 1998 (the "Effective Date"), by
and between IMAGE ENTERTAINMENT INC., a California corporation
("Image"), and DAVID BORSHELL, an individual ("Executive").

                            RECITALS

          WHEREAS, the Board of Directors of Image has determined
that because of Executive's substantial experience with respect
to sales and marketing, management and other aspects of the
business of Image, business relationships in connection with the
business of Image, and Executive's familiarity with the clientele
served by Image, 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:

1.   TERM OF AGREEMENT.

     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
     June 30, 2000 (the "Term"); provided, however, that unless
     Image or Executive gives written notice of its or his
     intention not to extend the Term by January 1, 2000 or any
     subsequent anniversary thereof, then the Term of this
     Agreement shall automatically be extended for an additional
     one (1) year commencing on the July 1 immediately
     thereafter, but shall not in any case be extended beyond
     June 30, 2005.  The capitalized word "Term" as used in other
     paragraphs of this Agreement (except Paragraph 3(a)) shall
     include any extensions pursuant to the preceding sentence.

2.   ENGAGEMENT.

     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 Executive's Services to Image for the Term.
     Executive shall report directly to the President, or, if
     none, to the Chief Executive Officer of Image and initially
     shall have the title of "SENIOR VICE PRESIDENT, SALES,
     MARKETING & OPERATIONS."

     (a)  Extent of Services and Duties.  Executive shall perform
          such duties, compatible with Executive's position as an
          "Executive Officer" (as defined below) and as the
          Executive's senior officer or the Board of Directors of
          Image may reasonably direct.  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 officer or director of
          Image or any entity controlled by Image or in which it
          has a substantial direct or indirect interest (any such
          entity or entities together with Image, the "Company"),
          without additional compensation; provided that
          Executive is included on any such entity's directors
          and officers insurance policy (if any).  For purposes
          of this Agreement "Executive Officer" shall include any
          person similarly designated as an "Executive Officer"
          in that person's Employment Agreement with Image.

     (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 the Company or that otherwise interferes in
          any significant respect with the 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.

3.   COMPENSATION.

     (a)  Base Salary.  During the Term of this Agreement, Image
          hereby agrees to pay Executive for all Services to be
          rendered hereunder a base salary ("Base Salary") at the
          following rates.

          Period                                                    Annual Rate

          Year ending on the first anniversary of the date hereof   $180,000 per year
          Year ending on the second anniversary of the date hereof  $189,000 per year

          In the event the Term is extended pursuant to Paragraph
          1, the Base Salary for each such extension shall be (i)
          the Base Salary for the year ending on the expiration
          date of the Term prior to the extension plus (ii) an
          amount equal to five percent (5%) of the Base Salary.

          The Base Salary will be payable in equal biweekly
          installments or as otherwise provided in accordance
          with the regular executive officer compensation pay
          schedule and procedures in effect from time to time for
          Image, subject to Paragraph 7 (Withholding/Deductions).

     (b)  Bonus Compensation.  Executive shall be entitled to
          participate in a bonus plan available generally to, on
          terms not substantially less favorable than, and with
          bonus opportunities not materially disproportionate in
          the aggregate to the distinctions made for fiscal year
          1999 in respect of similarly situated Executive
          Officers of the Company (other than plans, terms or
          opportunities available only to the Chief Executive
          Officer or President).  The level of bonus opportunity
          and form of payment shall be determined annually by the
          Board or its Compensation Committee and may be
          expressed as a multiple of base salary based on
          performance of the Company relative to a specified
          target.

          For fiscal year 1999, the cash bonus shall be
          determined based on a formula utilizing earnings before
          interest, taxes, depreciation and amortization
          ("EBITDA") as the applicable performance criterion.
          The specific performance targets for fiscal 1999 are
          (and for future years will be) confidential business
          information and provided to Executive on that basis by
          the Chief Executive Officer upon request.  The specific
          cash bonus payable to Executive for fiscal year 1999
          shall be determined by multiplying (i) the percentage
          determined by dividing Image's actual EBITDA by the
          target EBITDA (the "Performance Factor") by (ii) the
          amount equal to 60% of Executive's Base Salary.  In
          order for a bonus award to be paid under the bonus
          program in fiscal year 1999, the Performance Factor
          must reach a minimum of 40%.  The amount of bonus shall
          be capped by a Performance Factor of 125%.

          In years following fiscal 1999, annual cash bonuses
          under this program may be based on different business
          criteria or models and Performance Factors and Base
          Salary multiples may change (in the individual case or
          for all similarly situated officers) as determined
          annually by the Board of Directors or the Compensation
          Committee of Image.  Image anticipates that bonus
          entitlements will be determined on or before the end of
          the first quarter of the applicable fiscal year and
          that any bonuses payable shall be paid, provided the
          Executive is then employed by the Company, no later
          than the end of the quarter following each fiscal year.

4.   OPTIONS AND OTHER STOCK-BASED AWARDS.

     In addition to Base Salary and Bonus Compensation, Image may
     grant stock options and other stock-based awards to
     Executive, in such form and amounts, and at such time or
     times, as Image's Board of Directors (or, if applicable, the
     administrators of Image's stock option plans and (subject to
     shareholder approval) the 1998 Incentive Plan (the "1998
     Plan")) shall determine.  If this Agreement is terminated
     early "Without Cause" under Subparagraph 12(b) or upon or
     following a "Change in Control" under Paragraph 13(d), all
     unvested options granted to Executive will immediately vest.
     The vesting of other stock-based awards will depend upon the
     provisions of the Executive's award agreement and the plan
     (if any) under which the Awards are granted. Unless this
     Agreement is terminated early for Cause under Subparagraph
     12(a), all options granted to Executive prior to July 1,
     1998 shall be exercisable after employment ceases for the
     longest period permissible under the applicable stock option
     plan, to the extent the option was vested as of the date of
     termination, and all options or rights granted on or after
     July 1, 1998 shall be exercisable as provided in the
     applicable award or grant.

     Image recognizes hereby that Executive is entitled, subject
     to shareholder approval of the 1998 Plan, to a grant of
     12,090 Restricted Stock Units, in substantially the Form of
     Performance Restricted Stock Unit Award attached hereto as
     Exhibit A.

5.   FRINGE BENEFITS.

     Image agrees to provide Executive with fringe benefits
     including but not limited to the medical, dental, life and
     short and long-term disability insurance, expense allowance
     and vacation time described below:

          (a)  Medical, Dental, Life & Short and Long-Term
               Disability Insurance.  Image shall purchase (or,
               if applicable, maintain) during the Term medical,
               dental, life and short and long-term disability
               insurance for Executive, and provide coverage
               under the medical and dental policies for
               Executive's direct dependent beneficiaries (e.g.,
               spouse and minor children), on terms no less
               favorable than the terms and conditions in effect
               as of the date hereof and at all times at least
               equal to that received by any other Executive
               Officer (collectively, "Insurance").

          (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, on terms and at all times at least equal
               to that received by any other Executive Officer,
               provided Executive shall first present an itemized
               account of such expenditures together with
               supporting vouchers.

          (c)  Vacation Time.  Executive is entitled to 4 weeks
               of paid vacation time per year of the Term, but
               may accrue no more than 8 weeks vacation during
               the Term.  Any unused vacation time as of June 30,
               1998 will continue to be available throughout the
               Term and will not be subject to any offset,
               reduction or deduction until such time as the then
               accrued vacation time available under the
               foregoing sentence has been used.

6.   SEVERANCE.

     Upon expiration of the Term, Executive shall be entitled to
     receive:

     (a)  Base Salary continuation for a period of 6 months; and

     (b)  any Bonus Compensation payable but not previously paid
          for any prior completed fiscal year, if Executive has
          remained employed for the period contemplated by
          Subparagraph 3(b); plus a prorated portion of Bonus
          Compensation, if any, otherwise payable pursuant to
          Subparagraph 3(b) for 6 months or any partial fiscal
          year that has occurred prior to the expiration of the
          Term, whichever is greater, payable only if and when
          the amount thereof is determined in accordance with the
          terms of the bonus opportunity or entitlement; and

     (c)  Insurance continuation for a period of 6 months.

7.   WITHHOLDING/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 the Executive may duly authorize.

8.   CONFIDENTIALITY.

     In consideration of the payments to be received hereunder,
     Executive agrees as follows:

     (a)  That during the Term of this Agreement he will have
          access to and become acquainted with various "Trade
          Secrets" (as defined below) and proprietary information
          of Image.  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 to the detriment
          of Image or the sole benefit of Executive, 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 Image or
          which relates to the Trade Secrets of Image.  For
          purposes of this Agreement "Trade Secrets" shall
          include, but not be limited to:

               (i)  Financial information, such as Image's
                    earnings, assets, debts, prices, pricing
                    structure, volumes of purchases or sales or
                    other financial data, whether relating to
                    Image 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 Image, the
                    details of which are not generally known:

              (iii) Marketing information, such as details
                    about ongoing or proposed marketing programs
                    or agreements by or on behalf of Image, 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
                    Image, 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)  That all files, records, documents, data information
          and customer lists are special, valuable and unique
          assets of Image and are essential to its continued
          business success, and that under no circumstance during
          the Term hereof or subsequent thereto will he influence
          or attempt to influence any employee of Image to
          terminate his or her employment with Image to work for
          any competitor of Image, nor shall the Executive
          solicit, directly or indirectly, any customers of Image
          or disclose or use for the purpose of such
          solicitation.  without the prior written consent of
          Image, any files, records, document, data, information,
          customer lists or any other proprietary information of
          Image.

     (c)  Executive acknowledges that any violation of the terms
          of this Paragraph 8 will constitute a material breach
          of this Agreement and will cause Image immediate and
          irreparable harm and that the damages which Image will
          suffer may be difficult or impossible to measure.
          Therefore, upon any actual or impending violation of
          this Paragraph 8, Image 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 Image.

9.   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 defending any proceeding
     to the maximum extent permitted by law.  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.

10.  DEATH.

     In the event of Executive's death, this Agreement will
     terminate on the last day of the calendar month of
     Executive's death.  In such event, Executive's personal
     representative, heirs or beneficiaries entitled by will or
     the laws of descent and distribution shall be entitled to
     receive only:

     (a)  Base Salary continuation for a period of 6 months or
          the expiration of the Term, whichever occurs first; and

     (b)  any Bonus Compensation payable but not previously paid
          for any prior completed fiscal year, if Executive has
          remained employed for that year; plus a prorated
          portion of Bonus Compensation, if any, otherwise
          payable pursuant to Subparagraph 3(b) for 6 months or
          any partial fiscal year that has occurred prior to
          death, whichever is greater, payable only if and when
          the amount thereof is determined in accordance with the
          terms of the bonus opportunity or entitlement; and

     (c)  dependent Insurance continuation for a period of 6
          months or the expiration of the Term, whichever occurs
          first.

11.  PERMANENT DISABILITY/SUSPENSION.

     If Executive fails, because of physical or mental illness,
     incapacity or injury ("disability"), and other than in
     connection with an authorized leave of absence, to perform a
     majority of Executive's usual duties for a period of longer
     than 120 consecutive days or an aggregate 150 days in a 12-
     month period, but subject to compliance with applicable law,
     Image's obligation to pay Base Salary will be suspended.  If
     the suspension because of disability is reasonably
     anticipated to exceed 180 consecutive days, or an aggregate
     210 days in a 12-month period, Image may terminate this
     Agreement effective upon 30 days prior written notice to
     Executive.  In such event, Executive shall be entitled to
     receive:

     (a)  Base Salary continuation for a period of 6 months; and

     (b)  any Bonus Compensation payable but not previously paid
          for any prior completed fiscal year, if Executive has
          remained employed for that year; plus a prorated
          portion of Bonus Compensation, if any, otherwise
          payable pursuant to Subparagraph 3(b) for 6 months or
          any partial fiscal year that has occurred prior to the
          suspension of Executive's duties due to disability,
          whichever is greater, payable only if and when the
          amount thereof is determined in accordance with the
          terms of the bonus opportunity or entitlement; and

     (c)  Insurance continuation for a period of 6 months.

     Disagreement as to the severity, characterization or
     anticipated duration of a disability or suspension and/or
     the date such disability/suspension commenced shall be
     settled by the majority decision of three neutral
     arbitrators (or licensed physicians, if the parties so
     agree) - one to be selected by each party to the dispute,
     the two thus appointed shall choose the third, and the three
     thus appointed shall constitute the board of arbitration.
     Such board, acting by majority vote within 30 days after
     choosing the third arbitrator, shall resolve such
     disagreement and their decision shall be final and binding
     on Executive, Image and any other person with an interest in
     the matter.

12.  TERMINATION.

     (a)  "Cause."  In the event of "Cause" (as defined below),
          Image may 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, compensation or other
          such rights hereunder, nor shall Executive be entitled
          to receive any Bonus Compensation otherwise payable
          pursuant to Subparagraph 3(b).  For purposes of this
          Agreement "Cause" shall include, but is not limited to:

               (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 willful or
                    negligent 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 or loss to the
                    Company; or (d) conviction of a felony or
                    misdemeanor (other than minor traffic
                    violations or similar offenses that do 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 Image and Executive,
                    whenever executed, provided, however, that
                    bona fide disagreements or disputes as to
                    expense reimbursement shall not be deemed
                    fraud or felonious conduct or Executive's
                    breach of any material provision of this
                    Agreement.

     (b)  "Without Cause."  Notwithstanding anything contained
          herein to the contrary, if this Agreement is terminated
          prior to expiration of the Term for any reason other
          than (i) pursuant to Paragraph 10 or 11, (ii) for Cause
          or (iii) because of voluntary termination (whether or
          not in breach of this Agreement), this Agreement shall
          be deemed to have been terminated "Without Cause", and
          if such termination occurs prior to a Change in
          Control, Executive shall be entitled to receive all of
          the compensation, rights and benefits described in
          Paragraphs 3, 4 and 5 through the expiration of the
          Term and the severance described in Paragraph 6, as if
          this Agreement were in full force.

13.  CHANGE IN CONTROL.

     Notwithstanding anything contained herein to the contrary,
     the terms and conditions of this Paragraph 13 shall control
     upon or following a "Change in Control" (as defined below).

     (a)  Termination.  If (1) this Agreement is terminated prior
          to expiration of the Term for any reason other than (a)
          pursuant to Paragraph 10 (Death) or 11 (Permanent
          Disability/Suspension), (b) for Cause or (c) because of
          a voluntary termination (other than for Good Reason)
          and whether or not in breach of this Agreement, or (2)
          Executive terminates this Agreement for Good Reason
          under Paragraph 13(d), Executive shall be entitled to
          receive all of the compensation, rights and benefits
          described in Paragraphs 3, 4 and 5 for a period of
          one year following the effective date of termination or
          through the expiration of the Term, whichever is
          longer, and the severance described in Paragraph 6, as
          if this Agreement were in full force.  If any other
          Executive Officer's options are acquired pursuant to a
          Change in Control, Executive's options will be acquired
          on the same terms as any other Executive Officer.
          Executive must receive 30 days prior written notice of
          termination regardless of the reason for termination.

     (b)  "Change in Control Prior to Effective Date."  With
          respect to options granted prior to the Effective Date,
          "Change in Control" shall mean and be deemed to have
          occurred on the earliest of the following dates:

               (i)  the date, pursuant to Section 13(d) of the
                    Act and the rules promulgated thereunder, a
                    person shall have acquired beneficial
                    ownership of more than 45% of the Voting
                    Stock;

               (ii) the date the persons who were members of the
                    Board 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 then in office who
                    were in office at the beginning of the
                    24-month period; or

              (iii) the date Image's shareholders shall
                    approve a definitive agreement (a) to merge
                    or consolidate Image with or into another
                    corporation, unless the holders of Image's
                    capital stock immediately before such merger
                    or consolidation will, immediately following
                    such merger or consolidation, hold as a group
                    on a fully-diluted basis the ability to elect
                    at least a majority of the directors of the
                    surviving corporation (assuming cumulative
                    voting, if applicable), or (b) to sell or
                    otherwise dispose of all or substantially all
                    the assets of Image.

     (c)  "Change in Control After Effective Date."  For purposes
          of this Agreement and of options and other stock-based
          awards granted after the Effective Date, "Change in
          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) 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., or Messrs. John
                    Kluge, Stuart Subotnick or Martin Greenwald)
                    in connection with a new issuance of Voting
                    Stock (or rights to acquire Voting Stock)
                    after the effective date of the 1998 Plan by
                    Image to the Excluded Person in a transaction
                    that the Committee determines (in advance of
                    the issuance) does not constitute a Change in
                    Control event;

               (ii) approval by the shareholders of Image of a
                    plan of merger, consolidation, or
                    reorganization of Image or sale or other
                    disposition of all or substantially all of
                    Image's assets involving a more than 50%
                    change in ownership (collectively, a
                    "Business Combination"), other than a
                    Business Combination:  (1) (a) 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 (b) 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 in Control
          has occurred, a transaction includes all transactions
          in a series of related transactions, and terms used in
          this definition but not defined are used as defined in
          the 1998 Plan.

     (d)  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) following a Change in Control.  For
          purposes of this Agreement "Good Reason" shall mean any
          of the following events which occurs without
          Executive's express written consent following a Change
          in Control:

               (i)  the assignment of any duties materially
                    inconsistent with Executive's status as an
                    Executive Officer or a substantial reduction
                    in the nature or status of Executive's
                    responsibilities from those in effect
                    immediately prior to a Change in Control
                    other than any such alteration primarily
                    attributable to the fact that Image may no
                    longer be a public company;

               (ii) a reduction by Image in Base Salary;

              (iii) the relocation of Image's principal
                    executive offices to a location more than
                    35 miles from the current locale or Image's
                    requiring Executive to be based anywhere
                    other than Image's principal executive
                    offices except for required travel on Image's
                    business to an extent substantially
                    consistent with Executive's present travel
                    obligations;

               (iv) the failure by Image to continue in effect
                    without material change any compensation or
                    benefit plan in which Executive is entitled
                    to participate, or the failure by Image to
                    continue Executive's participation therein,
                    or the taking of any action by Image which
                    would directly or indirectly materially
                    reduce any of the benefits of such plans
                    enjoyed by Executive immediately before the
                    Change in Control, or the taking of any other
                    action by Image which materially adversely
                    changes the conditions or perquisites of
                    Executive's employment;

               (v)  the failure of Image to obtain a successor's
                    assumption and agreement to perform this
                    Agreement, unless the assumption occurs by
                    operation of law;

               (vi) any purported termination of employment which
                    is not effected pursuant to
                    Subparagraph 13(a), any such purported
                    termination shall not be effective for
                    purposes of this Agreement;

              (vii) the failure of Image to maintain
                    adequate D&O insurance coverage pursuant to
                    the terms of this Agreement, unless such
                    insurance is not available on commercially
                    reasonable terms; or

             (viii) the breach by Image of any material term
                    of this Agreement.

     The rights provided under this Paragraph 13(d) to terminate
     for Good Reason shall not adversely affect any rights of
     Executive whether before or after a Change in Control in
     respect of a breach of this Agreement by Image.

     (e)  Legal Fees and Expenses.  If Executive is terminated
          following a Change in Control and Executive shall incur
          any legal fees or expenses as a result of (i) seeking
          to obtain or enforce any right or benefit provided by
          this Agreement or (ii) a claim of wrongful discharge or
          breach of this Agreement, Image agrees to pay or
          reimburse Executive for such fees and expenses;
          provided, however, that any claims giving rise to such
          fees or expenses must be made in good faith and for
          good cause.  In the event there is a dispute regarding
          Executive's good faith or the merits of Executive's
          claim, and it is determined by the court that the claim
          lacked merit or was made in bad faith, Executive shall
          be limited to recovering only such fees and expenses,
          if any, as the court shall determine.

14.  GENERAL PROVISIONS.

     (a)  Successors and Assigns.  This Agreement is binding upon
          and shall inure to the benefit of the parties hereto,
          and any of their heirs, legatees, devisees, personal
          representatives, assigns and successors in interest of
          every kind and nature whatsoever.  The parties hereto
          agree that Executive's services are personal and that
          this Agreement is executed with respect thereto.
          Executive shall have no right to sell, transfer or
          assign this Agreement in any manner whatsoever.

     (b)  Entire Understanding; Amendment.  This Agreement and
          the Exhibit hereto constitute the entire understanding
          and agreement between the parties with respect to the
          subject matter hereof and supersede (i) any and all
          prior and preliminary discussions, (ii) any and all
          prior written or oral and any and all contemporaneous
          written or oral agreements, understandings and
          negotiations between the parties, including but not
          limited to prior written or oral employment agreements
          and severance agreements, and (iii) the Employment
          Agreement between Image and Executive dated July 1,
          1994, as amended through July 1, 1997.  There are no
          warranties, representations or other agreements between
          the parties in connection with the subject matter
          hereof except as set forth or referred to herein.  This
          Agreement shall not be modified, amended or altered
          except by an instrument in writing executed by the
          parties hereto.

     (c)  Severability.  In case one or more of the provisions
          contained in this Agreement (or any portion of any such
          provision) shall for any reason be held invalid,
          illegal or unenforceable in any respect, such
          invalidity, illegality or unenforceability shall not
          affect any other provision of this Agreement (or any
          portion of any such provision), but this Agreement
          shall be construed as if such invalid, illegal or
          unenforceable provision (or portion thereof) had never
          been contained herein.

     (d)  Waiver.  The failure by Image, at any time, to require
          performance by Executive of any of the provisions
          hereof, shall not be deemed a waiver of any kind nor
          shall it in any way affect Image's rights thereafter to
          enforce the same.

     (e)  Notices.  All notices, requests, demands and other
          communications provided for by this Agreement shall be
          in writing and shall be deemed to have been given
          24 hours after deposit thereof for mailing at any
          general or branch United States Post Office, enclosed
          in a registered or certified postpaid envelope and
          addressed as follows:

          To Image:  IMAGE ENTERTAINMENT, INC
                     9333 Oso Avenue
                     Chatsworth, CA  91311
                     Attn: General Counsel

          To Executive:DAVID BORSHELL
                     c/o Image Entertainment, Inc.
                     9333 Oso Avenue
                     Chatsworth, CA 91311-6089

          The parties hereto may designate a different place at
          which notice shall be given; provided, however, that
          any such notice of change of address shall be effective
          only upon receipt.

     (f)  Good Faith.  The parties hereto shall perform, fulfill
          and discharge their duties and obligations hereunder in
          a reasonable manner in good faith.

     (g)  Governing Law.  This Agreement and all rights,
          obligations and liabilities arising hereunder shall be
          construed and enforced in accordance with the laws of
          the State of California.

     (h)  Attorneys' Fees.  Subject to Paragraph 13(e), in the
          event it becomes necessary to commence any proceeding
          or action to enforce the provisions of this Agreement,
          the court before whom the same shall be tried may award
          the prevailing party all costs and expenses thereof,
          including without limitation, reasonable attorney's
          fees, the usual, customary and lawfully recoverable
          court costs, and all other expenses in connection
          therewith.

     (i)  Advice of Counsel.  The parties represent and warrant
          that in executing this Agreement, they have each had
          the opportunity to obtain independent financial, legal,
          tax and other appropriate advice, and are not relying
          upon any other party or the attorneys or other agents
          of such other party) for any such advice.

     (j)  Subject Headings and Defined Terms.  Subject headings
          and choice of defined terms are included for
          convenience only and shall not be deemed part of this
          Agreement.

     (k)  Cumulative Rights and Remedies.  The rights and
          remedies provided for in this Agreement shall be
          cumulative; resort to one right or remedy shall not
          preclude resort to another or to any other right or
          remedy provided for by law or in equity.

     IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first above written.

IMAGE ENTERTAINMENT, INC.         EXECUTIVE

By:/s/ Martin W. Greenwald        /s/  David Borshell
   ---------------------------    ------------------------------
   Martin W. Greenwald            David Borshell, an individual

Its: Pres.
     -------------------------

                                   c/o Image Entertainment, Inc.
                                   9333 Oso Avenue
                                   Chatsworth, CA 91311-6089

Source: OneCLE Business Contracts.