Sample Business Contracts

Non-Qualified Stock Option Agreement - Image Entertainment Inc. and Stuart Segall

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                   IMAGE ENTERTAINMENT, INC.

                      ELIGIBLE DIRECTOR


          THIS AGREEMENT dated as of the 22d day of July,
1998, between Image Entertainment, Inc., a California
corporation (the "Corporation"), and Stuart Segall (the

                     W I T N E S S E T H

          WHEREAS, the Corporation has adopted (subject to
shareholder approval) a 1998 Incentive Plan (the "Plan").

          WHEREAS, pursuant to Section 1.3 of the Plan, the
Corporation has granted an option (this "Option") to the
Director upon the terms and conditions evidenced hereby, as
contemplated by the Plan.  This Option is not intended as
and shall not be deemed to be an incentive stock option
within the meaning of Section 422 of the Code.

          NOW, THEREFORE, in consideration of the services
rendered and to be rendered by the Director, the Corporation
and the Director agree to the terms and conditions set forth
herein, as contemplated by the terms of the Plan.

          1.   Option Grant.  This Agreement evidences the
grant to the Director, as of  July 22, 1998 (the "Option
Date"), of an Option to purchase an aggregate of 15,000
shares of Common Stock (the "Shares"), subject to the terms
and conditions and to adjustment as set forth herein or in
or pursuant to the Plan and the 1994 Eligible Directors
Stock Option Plan, as amended (the "1994 Plan").

          2.   Exercise Price.  This Option entitles the
Director to purchase (subject to the terms of Sections 3
through 5 below), all or any part of the shares at a price
per share of $7.94.

          3.   Option Exercisability and Term.  This Option
shall first become and remain exercisable as to 7,500 shares
on January 13, 1999 and as to an additional 3,750 shares on
each of July 13, 1999 and January 13, 2000, subject to
shareholder approval of the Plan, to adjustments under  the
Plan and Section 3.4 of the 1994 Plan, and to the
acceleration provisions under Section 3.5 of the 1994 Plan.
This Option shall terminate on July 12, 2008,  unless
earlier terminated in accordance with the terms of Section 4

          4.   Service and Effect of Termination of Service
or Other Event.  The Director agrees to serve as a director
in accordance with the provisions of the Corporation's
Articles of Incorporation, Bylaws and applicable law.  If
the Director's services as a member of the Board shall
terminate or in the other circumstances addressed in Article
3 of the 1994 Plan, this Option shall terminate at the times
and to the extent set forth therein, to the same extent as
if this Option had been granted under the 1994 Plan.

          5.   General Terms.  This Option and this
Agreement are subject to, and the Corporation and the
Director agree to be bound by, the provisions of the 1994
Plan that apply to annual option grants and to the
provisions of the Plan that are applicable to discretionary
option grants thereunder.  Such provisions are incorporated
herein by this reference.  The Director acknowledges
receiving a copy of the Plan and the 1994 Plan and reading
their applicable provisions.

          6.   Nontransferability. This Option shall be non-
transferable as provided in Section 3.2 of the 1994 Plan.

          7.   Shareholder Approval.  This Option is subject
to shareholder approval of the 1998 Plan and shall be
rescinded if shareholder approval of the 1998 Plan is not
obtained by December 31, 1998.

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

(a California corporation)

By  /s/ Martin W. Greenwald
Title President

Optionee Director: Stuart Segall

/s/ Stuart Segall

c/o Image Entertainment, Inc.

9333 Oso Ave.
Chatsworth, CA  91311
  (City, State, Zip Code)


                       SPOUSAL CONSENT

          In consideration of the execution of the foregoing
Stock Option Agreement by Image Entertainment, Inc., I,
Wendy Segall, the spouse of the Director
therein named, do hereby agree to be bound by all of the
terms and provisions thereof and of the Plans referred to

DATED:  8/23/98

                                   /s/ Wendy Segall
                                 (Signature of Spouse)