-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CWPXXgEr5ukL8W9/WDpbYfULUwcv+iBw/9tKv8+Rq+SpqRT9J8JODRTL/A8l/MYw DH6PylXEplA7r+4c4idMMQ== 0001014733-02-000024.txt : 20020715 0001014733-02-000024.hdr.sgml : 20020715 20020715150556 ACCESSION NUMBER: 0001014733-02-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 ITEM INFORMATION: Other events FILED AS OF DATE: 20020715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POINT 360 CENTRAL INDEX KEY: 0001014733 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 954272619 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21917 FILM NUMBER: 02702857 BUSINESS ADDRESS: STREET 1: 7083 HOLLYWOOD BLVD SUITE 200 STREET 2: SUITE 200 CITY: HOLLYWOOD STATE: CA ZIP: 90028 BUSINESS PHONE: 3239577990 MAIL ADDRESS: STREET 1: 7083 HOLLYWOOD BLVD SUITE 200 STREET 2: SUITE 200 CITY: HOLLYWOOD STATE: CA ZIP: 90028 FORMER COMPANY: FORMER CONFORMED NAME: VDI MEDIA DATE OF NAME CHANGE: 19960516 FORMER COMPANY: FORMER CONFORMED NAME: VDI MULTIMEDIA DATE OF NAME CHANGE: 19991115 8-K 1 f8k2002-2.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 3, 2002 ------------------------------- POINT.360 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-21917 95-4272619 - ------------------------------- ---------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 7083 Hollywood Boulevard, Suite 200, Hollywood, CA 90028 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (323) 957-7990 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. OTHER EVENTS. On July 3, 2002, Point.360 (the "Company") entered into an Option Agreement ("Agreement") with Alliance Atlantis Communications Inc. ("Alliance") whereby the Company acquired an option to purchase all of the issued and outstanding shares of Tattersall Casablanca Sound Inc., Calibre Digital Design Inc. and Salter Street Digital Limited, wholly-owned subsidiaries of Alliance ("Subsidiaries"). The Company may exercise the option to purchase the Subsidiaries at any time prior to December 31, 2002. In consideration for the Agreement, the Company granted Alliance a warrant to purchase 500,000 shares of the Company's common stock at $2.00 per share. The warrant is exercisable on the earlier of (i) the date on which the Company purchases the Subsidiaries, or (ii) the date on which the Company allows the option to expire. The warrant expires on July 3, 2007, or July 3, 2005 if the Company does not exercise its option to acquire the Subsidiaries. 2 Item 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 10.1 Option Agreement dated July 3, 2002 between the Company and Alliance. 10.2 Warrant for the Purchase of 500,000 Shares of Common Stock of Point.360. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Point.360 ---------------------------------- (Registrant) Date: July 15, 2002 By: /s/ Alan R. Steel ---------------------------------- Alan R. Steel Executive Vice President, Finance and Administration, Chief Financial Officer 3 EX-10 3 ptsx-warrant.txt THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAW, AND, AS SUCH, MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS, OR IN RELIANCE UPON AN OPINION OF COUNSEL, IN FORM AND CONTENT REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED. VOID AFTER 5:00 P.M. PACIFIC TIME, JULY 3, 2007 WARRANT For the Purchase of 500,000 Shares of Common Stock of POINT.360 1. WARRANT. FOR VALUE RECEIVED, Alliance Atlantis Communications Inc., a corporation organized under the laws of Canada ("AACI"), or its registered assigns (each, a "Holder"), is entitled, at any time or from time to time on or after the Commencement Date, and at or before 5:00 P.M., Pacific Time, on the Expiration Date, but not thereafter, to purchase and receive, in whole or in part, up to Five Hundred Thousand (500,000) shares of common stock, no par value ("Common Stock"), of Point.360, a California corporation (the "Company"). This Warrant is initially exercisable at $2.00 per share of Common Stock purchased; provided, however, that upon the occurrence of any of the events specified in Section 5 hereof, the rights granted by this Warrant, including the exercise price and the number of shares of Common Stock to be received upon such exercise, shall be adjusted as therein specified. This Warrant shall automatically terminate upon the occurrence of a Termination Event. Terms not otherwise defined in this Warrant shall have the meanings attributed to them in Section 6 below. 2. EXERCISE. 2.1 EXERCISE FORM. In order to exercise this Warrant, the exercise form attached hereto must be duly completed, executed and delivered to the Company, together with this Warrant and payment of the Exercise Price for the Securities being purchased. 2.2 LEGEND. Each certificate evidencing Securities purchased under this Warrant shall bear a legend restricting transfer thereof except in compliance with the terms hereof. 2.3 CONVERSION RIGHT. 2.3.1 DETERMINATION OF AMOUNt. In lieu of the payment of the Exercise Price in cash, the Holder shall have the right (but not the obligation) to convert this Warrant, in whole or in part, directly into shares of Common Stock ("Conversion Right"). Upon exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price) that number of shares of Common Stock equal to the quotient obtained by dividing (x) the "Value" (as defined below) at the time the Conversion Right is exercised of the portion of the Warrant being converted by (y) the Market Price. The "Value" of the portion of the Warrant being converted shall equal the remainder derived from subtracting (a) the Exercise Price multiplied by the number of shares of Common Stock covered by the portion of the Warrant being converted from (b) the Market Price of the Common Stock multiplied by the number of shares of Common Stock being converted. As used herein, the term "Market Price" at any date shall be deemed to be the last reported sale price of the Common Stock on such date, or, in case no such reported sale takes place on such day, the average of the last reported sale prices for the immediately preceding three trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or if any such exchange on which the Common Stock is listed is not its principal trading market, the last reported sale price as furnished by the National Association of Securities Dealers, Inc. ("NASD") through the Nasdaq National Market or SmallCap Market, or, if applicable, the OTC Bulletin Board or BBX, or if the Common Stock is not listed or admitted to trading on any of the foregoing markets, or similar organization, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. 2.3.2 EXERCISE OF CONVERSION RIGHT. Provided that no Termination Event has occurred, the Conversion Right may be exercised by the Holder on any business day on or after the Commencement Date and not later than the Expiration Date by delivering the Warrant with a duly executed exercise form attached hereto with the conversion section completed to the Company, exercising the Conversion Right and specifying the total number of shares of Common Stock the Holder will purchase pursuant to such conversion. 3. TRANSFER. 3.1 RESTRICTIONS ON TRANSFER OF WARRANT. The Holder agrees that it will not sell, transfer, assign or hypothecate this Warrant to anyone except pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and qualification under applicable state securities laws, or in reliance upon an opinion of counsel, in form and content reasonably satisfactory to the Company and its counsel, that such registration and qualification are not required. Notwithstanding the foregoing, provided that such transfer is otherwise effected in accordance with applicable securities laws, the Holder may assign and transfer this Warrant to any corporation, partnership, limited liability company or other entity principally owned and controlled, directly or indirectly, by AACI. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with this Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall immediately transfer this Warrant on the books of the Company and shall execute and deliver a new Warrant or Warrants of like tenor to the appropriate assignee or assignees expressly evidencing the right to purchase the aggregate number of shares of Common Stock purchasable hereunder or such portion of such number as shall be contemplated by any such assignment. 3.2 RESTRICTIONS ON TRANSFER OF SECURITIES. The Holder will not sell, transfer, assign or hypothecate any of the Securities unless and until (i) it shall have notified the Company of the proposed transfer or disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel, in form and content reasonably satisfactory to the Company and its counsel, to the effect that (A) appropriate action necessary for compliance with the Securities Act provisions relating to sale of an unregistered security has been taken, or (B) exemptions from the registration requirements of the Securities Act and qualification requirements of applicable state securities laws are available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of the Securities shall terminate as to any particular Security when (1) such Security shall have been sold in compliance with Rule 144 under the Securities Act, or (2) a letter shall have been issued to the Holder at its request by the staff of the Securities and Exchange Commission, or a ruling shall have been issued to the holder at its request by such Commission, stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such Security is transferred without registration under the Securities Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required, or (3) such Security shall have been registered under the Securities Act and sold by the Holder in accordance with such registration. 4. NEW WARRANTS TO BE ISSUED. 4.1 PARTIAL EXERCISE OR TRANSFER. Subject to the restrictions in Section 3 hereof, this Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax, the Company shall cause to be delivered to the Holder without charge a new Warrant of like tenor to this Warrant in the name of the Holder evidencing the right of the Holder to purchase the aggregate number of shares of Common Stock purchasable hereunder as to which this Warrant has not been exercised or assigned. 4.2 LOST CERTIFICATE. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and of reasonably satisfactory indemnification, the Company shall execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company. 5. ADJUSTMENTS. 5.1 STRUCTURAL ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES. The Exercise Price and the number of shares of Common Stock underlying this Warrant shall be subject to adjustment from time to time as hereinafter set forth: 5.1.1 STOCK DIVIDENDS - RECAPITALIZATION, RECLASSIFICATION, SPLIT-UPS. If, after the Commencement Date, the number of outstanding shares of Common Stock is increased by a stock dividend on the Common Stock payable in shares of Common Stock or by a split-up, recapitalization or reclassification of shares of Common Stock or other similar event, then, on the effective date thereof, the number of shares of Common Stock issuable on exercise of this Warrant shall be increased in proportion to such increase in outstanding shares. 5.1.2 AGGREGATION OF SHARES. If, after the Commencement Date, the number of outstanding shares of Common Stock is decreased by a reverse split, consolidation, combination or reclassification of shares of Common Stock or other similar event, then, upon the effective date thereof, the number of shares of Common Stock issuable on exercise of this Warrant shall be decreased in proportion to such decrease in outstanding shares. 5.1.3 ADJUSTMENTS IN EXERCISE PRICE. Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted as provided in this Section 5.1, the Exercise Price shall be adjusted (to the nearest cent) by multiplying such Exercise Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of this Warrant immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter. 5.1.4 REPLACEMENT OF SECURITIES UPON REORGANIZATION, ETC. In case of any split up, recapitalization or reclassification of the outstanding shares of Common Stock other than as covered by Section 5.1.1 or 5.1.2 hereof or which solely affects the par value of such shares of Common Stock, or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any split up, recapitalization or reclassification of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Warrant shall have the right thereafter (until the expiration of the right of exercise of this Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such split-up, reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or other transfer, by a Holder of the number of shares of Common Stock of the Company obtainable upon exercise of this Warrant immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Section 5.1.1 or 5.1.2, then such adjustment shall be made pursuant to Sections 5.1.1, 5.1.2, 5.1.3 and this Section 5.1.4. The provisions of this Section 5.1.4 shall similarly apply to successive split-ups, reclassifications, reorganizations, mergers or consolidations, sales or other transfers. 5.2 CHANGES IN FORM OF WARRANT. This form of Warrant need not be changed because of any change pursuant to this Section, and Warrants issued after such change may state the same Exercise Price and the same number of shares of Common Stock and Warrants as are stated in the Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Warrants reflecting a required or permissive change shall not be deemed to waive any rights to a prior adjustment or the computation thereof. 5.3 ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required to issue certificates representing fractions of shares of Common Stock upon the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock or other securities, properties or rights. 6. DEFINITIONS. For the purposes of this Warrant, the following terms shall have the meanings set forth below: "OPTION AGREEMENT" means the Option Agreement, dated as of July 3, 2002, between AACI and the Company pursuant to which AACI is granting to the Company an option to purchase all of the outstanding capital stock of (i) Tattersall Casablanca Sound Inc., (ii) Calibre Digital Design Inc. and (iii) Salter Street Digital Limited (collectively, the "Optioned Companies"). "OPTION" shall have the meaning attributed to such term in the Option Agreement. "COMMENCEMENT DATE" shall mean the earlier of (i) the date upon which the Option expires (other than as a result of a Termination Event), or (ii) the date of the closing of the purchase of the Optioned Companies by the Company under the Option. "EXPIRATION DATE" shall mean July 3, 2007, provided, however, that if the Company does not purchase the Optioned Companies by its exercise of the Option, such date shall thereupon be decreased to the date which is three years from the Commencement Date. "EXERCISE PRICE" shall mean the initial exercise price or the adjusted exercise price, depending on the context, of a share of Common Stock issuable upon exercise of this Warrant. "SECURITIES" shall mean the shares of Common Stock or other securities issuable upon exercise of this Warrant. "TERMINATION EVENT" shall mean (i) a material breach of the Option Agreement by AACI which breach remains outstanding 15 days after notice from PTSX to AACI, or (ii) the expiration of the Option pursuant to section 3.2.1 of the Option Agreement because of a judgment, decree, order, law or regulation that prevents the closing of the purchase, if such judgment, decree, order, law or regulation is either (a) instituted against AACI or the Optioned Companies, or (b) is based on any Canadian law, order or regulation. A judgment, decree, order, law or regulation instituted against the Company or based on any U.S. law, order or regulation that prevents the closing of the purchase of the Optioned Companies under the Option shall not, however, constitute a Termination Event. 7. RESERVATION OF SHARES. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon exercise of this Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. 8. CERTAIN NOTICE REQUIREMENTS. 8.1 NOTICE OF CHANGE IN EXERCISE PRICE. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 5 hereof, send notice to the Holder of such event and change ("Price Notice"). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by two officers of the Company. 8.2 TRANSMITTAL OF NOTICES. All notices, requests, consents and other communications under this Warrant shall be in writing and shall be deemed to have been duly made on the date of delivery if delivered personally or sent by overnight courier, with acknowledgment of receipt by the party to which notice is given, or on the fifth day after mailing if mailed to the party to whom notice is to be given, by registered or certified mail, return receipt requested, postage prepaid and properly addressed as follows: (i) if to the Holder, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to its principal executive office. 9. MISCELLANEOUS. 9.1 HEADINGS. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Warrant. 9.2 ENTIRE AGREEMENT. This Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. 9.3 BINDING EFFECT. Subject to Section 3, this Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Warrant or any provisions herein contained. 9.4 GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without giving effect to conflicts of laws principles. 9.5 Waiver, Etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as of the 2nd day of July, 2002. POINT.360 By: __________________________________ Name --------------------------- Title --------------------------- Form to be used to exercise Warrant: Point.360 - --------------------------- - --------------------------- Date: _____________________, 200___ The undersigned her eby elects irrevocably to exercise the within Warrant and to purchase ________ shares of Common Stock of Point.360 and hereby makes payment of $____________ (at the rate of $_________ per share of Common Stock) in payment of the Exercise Price pursuant thereto. Please issue the Common Stock as to which this Warrant is exercised in accordance with the instructions given below. or The undersigned hereby elects irrevocably to convert its right to purchase ____________ shares of Common Stock purchasable under the within Warrant into __________ shares of Common Stock of Point.360 (based on a "Market Price" of $________ per share of Common Stock). Please issue the Common Stock in accordance with the instructions given below. -------------------------------------- Signature NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant in every particular without alteration or enlargement or any change whatsoever. INSTRUCTIONS FOR REGISTRATION OF SECURITIES Name ________________________________________________________ (Print in Block Letters) Address ________________________________________________________ Form to be used to assign Warrant: ASSIGNMENT (To be executed by the registered Holder to effect a transfer of the within Warrant): FOR VALUE RECEIVED, ________________________________ does hereby sell, assign and transfer unto _________________________________ the right to purchase _____________________ shares of Common Stock of Point.360 ("Company") evidenced by the within Warrant and does hereby authorize the Company to transfer such right on the books of the Company. Dated:____________________, 200___ ----------------------------------- Signature - ----------------------------- Signature Guaranteed NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange. EX-10 4 ptsx-option.txt OPTION AGREEMENT This Agreement is made this 3rd day of July, 2002 BETWEEN: ALLIANCE ATLANTIS COMMUNICATIONS INC., a corporation incorporated under the laws of Canada ("AACI") - and - POINT.360, a corporation incorporated under the laws of California ("PTSX") RECITALS: A. AACI, either itself or through its wholly-owned subsidiaries, owns all of the issued and outstanding shares of Tattersall Casablanca Sound Inc. ("TCSI") and Calibre Digital Design Inc. ("CDI"), corporations governed by the laws of the Province of Ontario and Salter Street Digital Limited ("SSDL"), a corporation currently governed by the laws of the Province of Nova Scotia (SSDL, TCSI and CDI are referred to the "Optioned Companies"). B. AACI wishes to grant to PTSX an option to purchase all of the issued and outstanding shares of the Optioned Companies. NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: ARTICLE 1 INTERPRETATION 1.1 DEFINITIONS In this Agreement: "AGREEMENT" means this option agreement, as it may be amended or supplemented from time to time as provided herein; "BUSINESS" means, with respect to the Optioned Companies, the business of providing standard definition and high definition on-line video editing, DVD authoring, sound and picture editing, sound mixing and design video post-production, descriptive video, video and audio compression, quality control, duplication, transcripts, computer generated imaging and other post-production services and related services; "NON-DISCLOSURE AGREEMENT" means the non-disclosure agreement entered into by the parties, dated as of June 6, 2002; "OPTION DOCUMENTS" means this Agreement, the Warrant, the Registration Rights Agreement and the Services Agreement; "PERSON" means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trustee, trust, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; "REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement entered into between the parties as of the date hereof; "SERVICES AGREEMENT" means the services agreement entered into between the parties as of the date hereof; "SHARE PURCHASE AGREEMENT" means the share purchase agreement substantially in the form agreed to by the parties, such draft dated for reference July 3, 2002; "WARRANT" means the warrant in favour of AACI dated the date hereof; and "WARRANT SHARES" means the common shares of PTSX issuable upon exercise of the Warrant. 1.2 CAPITALIZED TERMS All capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Share Purchase Agreement. 1.3 HEADINGS The inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. 1.4 GENDER AND NUMBER In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. 1.5 CURRENCY Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in United States currency. 1.6 ENTIRE AGREEMENT This Agreement and the Option Documents constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and the Option Documents. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement and the Option Documents. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by any party to this Agreement and the Option Documents or its directors, officers, employees or agents, to any other party to this Agreement and the Option Documents or its directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement and the Option Documents, and none of the parties to this Agreement or the Option Documents has been induced to enter into this Agreement or the Option Documents or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 1.7 WAIVER, AMENDMENT Except as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 1.8 GOVERNING LAW This Agreement shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated, in all respects, as an Ontario contract. Any proceeding initiated by PTSX against AACI involving a dispute under this Agreement shall be conducted in Toronto, Ontario, Canada, and any proceeding initiated by AACI against PTSX involving a dispute under this Agreement shall be conducted in Los Angeles, California, United States. ARTICLE 2 OPTION 2.1 GRANT OF OPTION Subject to the terms of this Agreement, AACI hereby grants to PTSX the sole and exclusive right and option (the "OPTION") to purchase all (but not less than all) of the issued and outstanding shares of the Optioned Companies (the "OPTIONED SHARES") at the Purchase Price. 2.2 OPTION CONSIDERATION In consideration of the grant of the Option, PTSX hereby issues to AACI the Warrant. AACI shall be entitled to the registration of the Warrant Shares for resale under the United States Securities Act of 1933, as amended, (the "SECURITIES ACT") in accordance with the terms of the Registration Rights Agreement. 2.3 EXERCISE OF OPTION 2.3.1 OPTION PERIOD PTSX may exercise the Option at any time until 3:00 p.m. (Toronto time) on December 31, 2002 (the "OPTION PERIOD"), after which the Option shall be void and neither party shall have any further obligation to the other. 2.3.2 OPTION NOTICE In order to exercise the Option, PTSX shall deliver written notice (the "Option Notice") to AACI at or prior to the expiry of the Option Period advising AACI of its election to exercise the Option. The Option Notice shall constitute the irrevocable election of PTSX to purchase, and the irrevocable election of AACI to sell, all (but not less than all) of the Optioned Shares substantially on the terms of the Share Purchase Agreement. The purchase and sale shall be completed within 30 days after AACI's receipt of the Option Notice (the "CLOSING PERIOD"), and in any event, no later than January 31, 2003. 2.3.3 PURCHASE PRICE The exercise price of the Option shall be satisfied by PTSX paying the purchase price for the Optioned Companies of the Stated Price, subject to adjustment in accordance with and as more particularly set out in the Share Purchase Agreement. 2.4 DISCLOSURE LETTER Concurrently with the execution and delivery of this Agreement, AACI has provided to PTSX a draft Disclosure Letter dated June 28, 2002. Within 30 days from the date of this Agreement, AACI shall deliver to PTSX a completed form of Disclosure Letter (the "Original Disclosure Letter"), dated as of June 28, 2002. 2.5 TERMINATION This Agreement shall expire on the later of December 31, 2002 or the Closing Date (as such Closing Date may be extended pursuant to section 3.2.1), unless the parties hereto agree otherwise in writing. Upon any such expiry, all obligations of each of the parties to each other shall terminate, other than those set out in the Non-Disclosure Agreement, the Warrant and the Registration Rights Agreement. 2.6 SERVICES AGREEMENT Concurrently herewith, the parties are entering into the Services Agreement. ARTICLE 3 CLOSING 3.1 UPDATED DISCLOSURE LETTERS 3.1.1 Solely for the purpose of determining whether it should exercise the Option, PTSX may, from time to time prior to the exercise of the Option (but in any event no more than three times during the term of this Agreement), request that AACI provide PTSX with a draft Disclosure Letter updating the Original Disclosure Letter attached pursuant to section 2.4 (an "UPDATED DISCLOSURE LETTER"). AACI shall use reasonable commercial efforts to provide PTSX with an Updated Disclosure Letter as soon as possible after the date of such request, but no later than within 15 days after PTSX's written request therefor. Any Updated Disclosure Letter delivered hereunder shall be dated as of the date of PTSX's request. 3.1.2 If an Updated Disclosure Letter differs materially from the final Disclosure Letter that AACI proposes to attach to the Share Purchase Agreement at the time that the Share Purchase Agreement is executed and delivered, PTSX shall have the right to rescind the exercise of the Option and neither party shall have any liability to the other, whether in tort or in contract or otherwise, in respect of the Option and this Agreement and this Agreement shall be deemed to have been terminated. 3.2 RESTRICTIONS ON CLOSING 3.2.1 If the closing of the purchase and sale pursuant to the Option cannot be consummated during the Closing Period by reason of any applicable judgment, decree, order, law or regulation that is in effect during the Closing Period, the Closing Period shall commence on the date on which such restriction on consummation has expired or been terminated; provided that, in no event shall any Closing Date be more than 60 days after the date of the Option Notice (the "DROP DEAD DATE"), and if the Closing Date shall not have occurred by the Drop Dead Date due to that judgment, decree, order law or regulation, the exercise of the Option effected on the date of the Option Notice shall be deemed to have expired and neither party shall have any liability to the other, whether in tort or in contract or otherwise, in respect of the Option and this Agreement for the failure to complete the purchase and sale of the Optioned Shares and this Agreement shall be deemed to have been terminated. 3.2.2 If the restriction on the consummation of the purchase and sale is due to any condition or action relating to AACI, the Optioned Companies or any matter under Canadian law, AACI shall use its reasonable commercial efforts to cause such restriction to be removed, at AACI's sole cost and expense, prior to the Drop Dead Date. 3.2.3 If the restriction on the consummation of the purchase and sale is due to any condition or action relating to PTSX or any matter under United States law, PTSX shall use its reasonable commercial efforts to cause such restriction to be removed, at PTSX's sole cost and expense, prior to the Drop Dead Date. ARTICLE 4 BUSINESS AND AFFAIRS OF THE OPTIONED COMPANIES 4.1 BUSINESS AND AFFAIRS OF THE OPTIONED COMPANIES Prior to the expiry of the Option Period, AACI shall cause each of the Optioned Companies to: 4.1.1 operate the Business only in the ordinary course, consistent with past practice and, to the extent consistent with such operation, use reasonable efforts to preserve its business organization, including the services of its officers and employees, and its business relationships with customers, suppliers and others having business dealings with it; 4.1.2 maintain all its material assets, whether owned or leased, in good condition and repair and maintain insurance upon all its assets comparable in amount, scope and coverage to that in effect on the date of this Agreement; 4.1.3 maintain its books, records and accounts in the ordinary course on a basis consistent with past practice; and 4.1.4 cause senior management of the Optioned Companies or AACI to consult with senior management of PTSX with respect to major business decisions regarding the Optioned Companies. 4.2 NEGATIVE COVENANTS 4.2.1 Prior to the expiry of the Option Period, AACI shall not, voluntarily or involuntarily, sell, transfer, assign, pledge or hypothecate any shares of the Optional Companies, or any interest therein, or enter into or contract or agreement with respect to the foregoing, or permit or suffer to exist any lien, claim, encumbrance or charge of any kind or character with respect to any shares of the Optioned Companies, except (a) in connection with AACI's credit facilities or other debt instruments (and which may be removed prior to Closing), (b) in connection with any internal reorganization, or (c) in accordance with this Agreement. 4.2.2 Except as expressly provided in this Agreement or with the prior written consent of PTSX, prior to the expiry of the Option Period, AACI shall ensure that none of the Optioned Companies: 4.2.2.1 amends its articles, by-laws, constating documents or other organizational documents, except for SSDL, which may be exported from the jurisdiction of the Province of Nova Scotia and continued into either Canada or the Province of Ontario, in AACI's sole discretion, in which event the Option shall pertain to the shares of such continued company; 4.2.2.2 amalgamates, merges or consolidates with, or acquires all or substantially all the shares or assets of, any Person; 4.2.2.3 transfers, leases, licenses, sells or otherwise disposes of any of its material assets, other than inventory in the ordinary course of the Business, consistent with past practice; or 4.2.2.4 issues or sells any shares of capital stock or any securities exchangeable for or convertible into shares of capital stock or any right to subscribe for or purchase any shares of any of the Optioned Companies, except as contemplated by the Share Purchase Agreement, in which case the Option shall apply to all such additional shares. 4.3 FINANCIAL REPORTING AACI shall provide to PTSX in respect of the Optioned Companies: 4.3.1 quarterly financial statements within 60 days after each of the end of June 30, 2002 and September 30, 2002; and 4.3.2 monthly operating statements within 30 days after the end of each calendar month, ending with the month ending November 30, 2002; all consistent in form and content with the financial statements previously provided to PTSX. 4.4 ACCESS AND CONFIDENTIALITY During the Option Period, AACI shall provide and shall cause each of Optioned Companies to provide, access to and shall permit PTSX, through its representatives, to make such investigation of the Business, properties, assets and records of the Optioned Companies (the "Due Diligence Materials") and of their respective financial and legal conditions as PTSX deems necessary or advisable, acting reasonably, to familiarize itself with the Due Diligence Materials and other matters. Without limiting the generality of the foregoing, during the Option Period, AACI shall permit PTSX and its representatives, without interference to the ordinary conduct of the Optioned Companies and within normal business hours, to have reasonable access to the premises of the Optioned Companies. In accordance with the terms of the Non-Disclosure Agreement, during the Option Period PTSX shall and shall cause its representatives to, keep confidential all information disclosed to it by AACI or their agents relating to the Optioned Companies, except as otherwise agreed in writing by AACI. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH PARTY Each of the parties represents, warrants and covenants to the other that, in respect of each of the Option Documents to which it is a party: 5.1.1 it has the full right, power, legal capacity and authority to enter into, and perform its obligations under, each of the Option Documents; 5.1.2 each of the Option Documents has been duly executed and delivered by it and is a valid and binding obligation of it, enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies; 5.1.3 all necessary corporate and other actions have been taken by it to authorize the execution and delivery of the Option Documents and the performance of its obligations pursuant to the Option Documents; and 5.1.4 it is not subject to any conflicting obligation or any disability which shall or might prevent it from, or materially interfere with, the execution and performance of each of the Option Documents and none of the entering into of each of the Option Documents or the performance by it of any of its other obligations under each of the Option Documents shall contravene, breach or result in any default under the articles, by-laws, constating documents or other organizational documents or resolutions of the shareholders and directors of it or under any mortgage, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment or decree of law to which it is a party or by which it may be bound. 5.2 PTSX REPRESENTATIONS, WARRANTIES, AND COVENANTS PTSX represents, warrants and covenants to AACI that: 5.2.1 it has taken all necessary corporate and other action to authorize and reserve and to permit it to issue, the Warrant Shares, at all times from the date hereof until the obligation to deliver common shares in the capital of PTSX upon the exercise of the Warrant in accordance with its terms; 5.2.2 it has reserved for issuance, upon exercise of the Warrant in accordance with its terms, shares of common stock in the capital of PTSX necessary for PTSX to fulfil its obligations under the Warrants; 5.2.3 the shares of common stock in the capital of PTSX to be issued upon due exercise of the Warrant shall be duly and validly issued, fully paid and nonassessable, and shall be delivered free and clear of all liens, claims, charges and encumbrances of any kind or nature whatsoever, including any preemptive rights of any stockholder of PTSX; 5.2.4 the authorized capital of PTSX consists of (i) 50 million shares of no par value common stock, of which 9,014,232 have been duly issued and are outstanding as fully paid and non-assessable shares in the capital of PTSX, and (ii) 5,000,000 shares of preferred stock of which none are issued and outstanding. All of PTSX's outstanding shares have been duly and validly issued and are outstanding as fully paid and non-assessable shares of PTSX. Except for options to purchase an aggregate of 2,863,752 shares of common stock, which options have been granted under PTSX's 1996 Incentive Plan and the 2000 Non-Qualified Stock Option Plan, no options, warrants or other rights to purchase shares or other securities of PTSX and no securities or obligations convertible into or exchangeable for shares or other securities of PTSX are outstanding; 5.2.5 since May 15, 2002, being the filing date of PTSX's most recent quarterly report on Form 10-Q, there has not been any material change in the financial condition, operations, or prospects of PTSX other than changes in the ordinary and usual course of business, none of which has been (individually or collectively) materially adverse; 5.2.6 there is no suit, action, litigation, investigation, claim, complaint, grievance or proceeding, including appeals and applications for review, in progress, or, to the knowledge of PTSX, pending or threatened against PTSX before any Governmental Authority, commission, board, bureau, agency or arbitration panel which, if determined adversely to PTSX, would, individually or collectively, (a) have a Material Adverse Effect on PTSX, (b) prevent PTSX from delivering the Option Notice; or (c) prevent PTSX from fulfilling all of its obligations set out in this Agreement or arising from this Agreement, and PTSX has no knowledge of any existing ground on which any such action, suit, litigation or proceeding might be commenced with any reasonable likelihood of success; and 5.2.7 all reports and other documents ("SEC Reports") filed by the Purchaser with the Securities and Exchange Commission subsequent to January 1, 2001, when filed, complied as to form and substance in all material respects with the applicable requirements of U.S. securities laws. 5.3 AACI REPRESENTATIONS, WARRANTIES, AND COVENANTS AACI represents, warrants, and covenants to PTSX that: 5.3.1 it owns, directly and indirectly, all of the issued and outstanding shares of the Optioned Companies; 5.3.2 it understands that the offer and sale of the Warrant and the Warrant Shares are intended to be exempt from registration under the Securities Act, pursuant to Section 4(2) of the Securities Act and any applicable state securities or blue sky laws; 5.3.3 the Warrant and the Warrant Shares are or shall be acquired by AACI for its own account and without a view to the resale or distribution thereof or any interest therein in violation of under the Securities Act; 5.3.4 it is an "accredited investor" as such term is defined in Regulation D under the Securities Act; 5.3.5 it has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Warrant and the Warrant Shares and is capable of bearing the economic risks of such investment; 5.3.6 it has been furnished with a copy of, or has access to, and has read the documents and reports filed by PTSX with the Securities and Exchange Commission since January 1, 2000, and has been given the opportunity to ask questions of, and receive answers from, PTSX concerning the terms and conditions of the Warrant and the Warrant Shares and other related matters. PTSX has made available to AACI or its agents all documents and information relating to an investment in the Warrant and the Warrant Shares requested by or on behalf of AACI; 5.3.7 it understands that the Warrant and the Warrant Shares have not been registered under the Securities Act or any state securities laws, and may not be offered, sold, pledged or otherwise transferred, except in compliance with the terms of the Warrant and applicable federal and state securities laws; 5.3.8 it understands that the Warrant and the Warrant Shares shall bear a restrictive legend as set forth on or in the Warrant; and 5.3.9 the Original Disclosure Letter is true and correct as of the date of the Original Disclosure Letter in all material respects. ARTICLE 6 GENERAL MATTERS 6.1 NOTICE Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by courier. Any such notice or other communication shall be deemed to have been received on the business day following the sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below, either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Notice of change of address shall also be governed by this section. Notices and other communications shall be addressed as follows: (a) if to AACI: Alliance Atlantis Communications Inc. 121 Bloor Street East Suite 1500 Toronto, Ontario M4W 3M5 Attention: Paul Laberge Facsimile: 416-966-7517 (b) if to PTSX: Point.360 7083 Hollywood Boulevard Suite 200 Hollywood, CA 90028 Attention: Haig Bagerdjian Facsimile: 323-957-2297 6.2 TIME OF ESSENCE Time is of the essence of this Agreement. 6.3 ASSIGNMENT AND TRANSFER 6.3.1 ASSIGNMENT This Agreement shall enure to the benefit of and be enforceable by each of the parties and their respective permitted successors and assigns. AACI may, in its sole discretion, assign the benefits of this Agreement, in whole or in part and in any manner, to any affiliated or related entities or its lenders, respectively, and agrees to notify PTSX of such assignment. Each party shall remain primarily liable for its obligations hereunder. This Agreement may not be assigned by PTSX without the express written consent of AACI. 6.3.2 TRANSFER OF SHARES PTSX acknowledges and agrees that AACI may, in its sole discretion, transfer or sell any or all of the Optioned Shares to any affiliated or related entity; provided that such affiliated or related entities shall, as a condition to such transfer agree to be bound by all of the terms of this Agreement; and provided further that such transfer shall not relieve AACI of any of its obligations or liability under this Agreement, and that such transfer shall not impair the right of PTSX to exercise the Option. 6.4 COUNTERPARTS This Agreement may be signed in counterparts and each such counterpart shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument. 6.5 ATTORNEYS' FEES If any action at law or equity, including an action for declaratory relief, is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and expenses from the other party, which fees and expenses shall be in addition to any other relief which may be awarded. 6.6 COUNTERPARTS; FACSIMILE SIGNATURES This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties, it being understood that both parties need not sign the same counterpart. If any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. 6.7 REMEDIES In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, PTSX shall be entitled to specific performance of the Option granted by AACI under this Agreement without the showing of economic loss and without any bond or other security being required. AACI agrees that monetary damages would not be adequate compensation for any loss incurred by reason of any breach by AACI of its obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. IN WITNESS WHEREOF the parties hereto have executed this Agreement. ALLIANCE ATLANTIS COMMUNICATIONS INC. By: _________________________________ POINT.360 By: _________________________________ -----END PRIVACY-ENHANCED MESSAGE-----