-----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, AkiPhjssHyTChbN5v67kZbu7tMIxkW87NJH0olf2NTAezv34hMxqkAcUxqhnWUMv Wie5A0T9gWjjne0FzZ1YTQ== 0001014733-02-000037.txt : 20021015 0001014733-02-000037.hdr.sgml : 20021014 20021011192314 ACCESSION NUMBER: 0001014733-02-000037 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20021031 ITEM INFORMATION: Resignations of registrant's directors FILED AS OF DATE: 20021015 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: 02788059 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 f8k2002-5.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) October 2, 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 October 2, 2002, R. Luke Stefanko resigned in all capacities as an officer, director and employee of Point.360 (the "Company"). Concurrently, Haig S. Bagerdjian, the Company's Chairman of the Board, was appointed to positions of President and Chief Executive Officer. In connection with his resignation, Mr. Stefanko entered into three separate agreements with the Company: 1. A Resignation and General Release Agreement pursuant to which he resigned all positions held, together with mutual releases. Mr. Stefanko's existing employment contract will be terminated. 2. A Consulting Agreement with the Company to consult a specified number of hours per month for two years. Mr. Stefanko will be paid $10,000 per month through December 2002 and at an hourly rate thereafter. As further consideration, his existing stock options will be extended to the end of the consulting period. 3. A Noncompetition Agreement which prohibits Mr. Stefanko from competing with the Company for one year except for specified activities. Mr. Stefanko cannot solicit Company employees for three years. Concurrent with the above agreements, Mr. Bagerdjian purchased 1,436,179 shares of Point.360 common stock owned by Mr. Stefanko, representing approximately 16% of the outstanding common stock of Point.360. Mr. Bagerdjian beneficially owns approximately 25% of the common stock of Point.360. Mr. Bagerdjian is not a party to any agreement or other arrangement regarding the voting, disposition or acquisition of any other shares of the common stock of Point.360. 2 Item 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 10.1 Resignation and General Release Agreement dated October 2, 2002 between R. Luke Stefanko and the Company. 10.2 Consulting Agreement dated October 2, 2002 between R. Luke Stefanko and the Company. 10.3 Noncompetition Agreement dated October 2, 2002 between R. Luke Stefanko and the Company. 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: October 11, 2002 By: /s/ Alan R. Steel ---------------------------------- Alan R. Steel Executive Vice President, Finance and Administration, Chief Financial Officer 3 EX-10 3 rlsgenrelease.txt Exhibit 10.1 RESIGNATION AND GENERAL RELEASE AGREEMENT This Resignation and General Release Agreement (AGREEMENT), is dated as of this 2nd day of October, 2002 by and between R. Luke Stefanko, an individual (LUKE), and Point.360, a California corporation (COMPANY). In consideration of the covenants undertaken and the releases contained in this Agreement, Luke and the Company agree as follows: 1. Luke shall resign in all capacities as an officer, director and as an employee of the Company and each of its subsidiaries and affiliates, such resignations to be effective as of the end of business on the date hereof. 2. Luke shall use his best efforts to facilitate the transition of existing relationships managed by him to the Company. Luke shall return to the Company, and shall not take or copy in any form or manner, lists of customers, prices, marketing plans and similar confidential and proprietary materials or information. Luke represents to the Company that all documents pertaining to the Company, but exclusive of personal items, in his possession whether located on the Company's premises, at his home or elsewhere, have been returned to the Company and that he has not retained copies in any form. This representation applies to all forms of written materials, including but not limited to schematics, diagrams, formulations, tapes, descriptions of inventions and products, operator manuals, maintenance manuals, training manuals, software manuals, software code, technical memoranda, financial information, marketing plans, identities of customers and vendors, contract terms and information obtained in confidence from customers and vendors. Luke hereby acknowledges that all of the aforesaid information and materials constitute TRADE SECRETS of the Company and are confidential and he reaffirms his obligation not to disclose any confidential or trade secret information to any third party and not to use the information for any purpose whatsoever except as expressly authorized in writing by an authorized representative of the Company. 3. Luke, on behalf of himself, his descendants, dependents, heirs, executors, administrators, assigns, and successors, and each of them, hereby covenants not to sue and fully releases and discharges the Company, its directors, officers, agents, attorneys, advisors, insurers, employees, stockholders, representatives, assigns and successors, past and present, and each of them (hereinafter together and collectively referred to as COMPANY RELEASEES) with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys' fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which Luke now owns or holds or has at any time heretofore owned or held as against said Company Releasees, arising out of or in any way connected with his employment or other relationships with the Company or his resignation from employment or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Company Releasees, or any of them, committed or omitted prior to the date of this Agreement. Notwithstanding the foregoing, this Release shall not apply to the Company's obligations under the Agreement pursuant to which the Company purchased Woodholly Productions. 4. The Company, on behalf of itself, its administrators, assigns, and successors, and each of them (hereinafter collectively referred to as the COMPANY RELEASORS) hereby covenants not to sue and fully releases and discharges Luke and his agents, attorneys, advisors, insurers, representatives, assigns and successors, heirs, executors and administrators past and present, and each of them (hereinafter collectively referred to as RELEASEES), with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys' fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which any Company Releasor now owns or holds or has at any time heretofore owned or held as against said Releasees and each of them, arising out of or in any way connected with the Company's employment of Luke or Company's other relationships with Releasees, Luke's resignation from employment, or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, committed or omitted prior to the date of this Agreement. Notwithstanding the foregoing, this Release shall not apply to (i) Luke's obligation to repay the Company by December 31, 2002 all remaining principal and interest on Luke's note to the Company dated August 28, 2000 (the STEFANKO NOTE), in the principal amount of $850,000; (ii) the obligations of Luke and any other Releasee under this Agreement, or the Consulting Agreement or Noncompetition Agreement executed in connection herewith or (iii) any conduct of Luke or any other Releasee constituting fraud, intentional misconduct or gross negligence against the Company or its subsidiaries or with respect to Luke's performance of his duties while an officer and/or employee of the Company and its subsidiaries. 5. It is the intention of the parties in executing this instrument that the same shall be effective as a bar to each and every claim, demand and cause of action hereinabove specified. In furtherance of this intention, each party hereby expressly WAIVES any and all rights and benefits conferred upon such party by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly consents that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those related to unknown and unsuspected claims, demands and causes of action, if any, as well as those relating to any other claims, demands and causes of action hereinabove specified. SECTION 1542 provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASES, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." 6. Each party acknowledges that such party may hereafter discover claims or facts in addition to or different from those which such party now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected this Agreement. Nevertheless, such party hereby waives any right, claim or cause of action that might arise as a result of such different or additional claims or facts. Each party acknowledges that such party understands the significance and consequences of such release and such specific waiver of SECTION 1542. 7. Luke acknowledges that by reason of his positions with the Company he had access to lists of customers, prices, marketing plans, and similar confidential or proprietary materials or information respecting the Company's business affairs. Luke represents that he will hold all information confidential and that he will not use such confidential information and relationships for any competitive business (which term herein includes a partnership, firm, corporation or any other entity) without the prior written consent of Company, subject to the terms and provisions of that certain Non-Competition Agreement entered into simultaneously with the execution of this Agreement by Luke and the Company. Each of the parties to this Agreement acknowledges that it or he is not aware of any claims against the other party hereto, except for the Company's rights under the Stefanko Note. 8. Each of the parties hereto agrees that the terms and conditions of this Agreement shall remain confidential as between the parties and shall not be disclosed to any other person except for their respective attorneys, tax advisors, bankers or other professional advisors or except as otherwise required by law and legal process or in the event of public disclosure of such matters by the Company. Without limiting the generality of the foregoing, neither of the parties hereto will respond to or in any way participate in or contribute to any public discussion, notice or other publicity concerning, or in any way relating to, execution of this Agreement or the events (including any negotiations) which led to its execution. Without limiting the generality of the foregoing, each of the parties hereto specifically agrees that such party shall not disclose information regarding this Agreement to any current or former employee of the Company; provided, however, that the Company shall disclose information regarding this Agreement to those employees of the Company who are currently aware of this Agreement, and any current or future employees of the Company who may need to be involved, in the course of their employment, in enforcing claims under this Agreement or in otherwise administering this Agreement. 9. Each party hereto warrants and represents that such party has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof. 10. Luke and the Company each acknowledge that any employment or contractual relationship between them has terminated, and that they have no further employment or contractual relationship except as may arise out of this Agreement, or the Noncompetition Agreement or Consulting Agreement executed in connection herewith, or after the date of this Agreement. Notwithstanding the foregoing, the parties agree that Luke and the Company intend to enter into a consulting agreement in substantially the form attached hereto as EXHIBIT A. In addition, the Company shall continue to provide Luke his current health care coverage and auto insurance coverage through December 31, 2002. 11. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable. 12. This Agreement shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of California. 13. This Agreement may be executed in counterparts. 14. Any dispute or controversy between Luke and the Company or any Company Releasee in any way arising out of, related to, or connected with this Agreement or the subject matter hereof, shall be resolved through final and binding arbitration in Los Angeles, California, pursuant to ss.ss. 1282-1284.2 of the California Civil Procedure Code (the CCP). The arbitration shall be before a single arbitrator of the American Arbitration Association (unless, pursuant to applicable federal employment law, rules or regulations a panel is required, in which case such arbitration shall be before a panel mutually agreeable to the parties thereto) who shall be mutually agreeable to the parties thereto, and the arbitration shall be governed by the rules applicable thereto promulgated by the American Arbitration Association. Notwithstanding anything in the aforementioned sections of the CCP to the contrary, the parties shall be permitted to conduct unlimited discovery (as if the subject matter of the arbitration were pending before a superior court of the State of California in a civil action which was not classified as a limited civil case) in accordance with Chapter 2 of the CCP commencing with ss. 1985, and Article 3 of the CCP commencing with ss. 2016 of Chapter 3 of Title 3 of Part IV. By this Agreement the parties have provided, in accord with CCP ss. 1283.1, that CCP ss. 1283.05 is applicable to this Agreement, except that the limitations on depositions set forth in CCP ss. 1283.05, subdivision (e) do not apply to discovery in the event of an arbitrated dispute under this Agreement. 15. If any party hereto brings an action or proceeding hereunder to enforce the terms hereof, the prevailing party shall be entitled to recover from the other party all of such prevailing party's attorneys' fees, costs and expenses incurred in such action or proceeding. 16. In entering this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them. 17. The Company shall promptly reimburse Luke for his reasonable attorney's fees incurred in connection with Luke's resignation and consulting arrangements, up to a maximum of $5,000. 18. All parties agree to cooperate fully and to execute any and all supplementary documents and to take all additional actions that may be necessary or appropriate to give full force to the basic terms and intent of this Agreement and which are not inconsistent with its terms. 19. Neither this Agreement nor any rights or obligations hereunder are assignable except by an agreement in writing signed by each of the parties hereto. This Agreement shall be binding upon and inure to the benefit of each party and its or his successors and such permitted assigns. 20. The waiver by any party of a breach of any provision of this Agreement by any other party shall not operate or be construed as a waiver of any subsequent breach by such party. 21. Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter. I have read the foregoing Agreement and I accept and agree to the provisions it contains and hereby execute it voluntarily with full understanding of its consequences. EXECUTED as of this 2nd day of October 2002 in Los Angeles County, California. /s/ R. Luke Stefanko ------------------- R. Luke Stefanko EXECUTED as of this 2nd day of October 2002 in Los Angeles, California. POINT.360 By: /s/ Haig S. Bagerdjian ------------------- Haig S. Bagerdjian Chairman of the Board By: /s/ Alan Steel ------------------- Alan Steel Chief Financial Officer ENDORSEMENT I, R. Luke Stefanko, had decided to sign the Agreement prior to the expiration of the 21-day period required by certain laws. EXECUTED as of this 2nd day of October 2002, in Los Angeles County, California. /s/ R. Luke Stefanko ------------------- R. Luke Stefanko EXHIBIT A CONSULTING AGREEMENT See Exhibit 10.2 to this Form 8-K. EX-10 4 rlsconsult.txt Exhibit 10.2 CONSULTING AGREEMENT This Consulting Agreement (this AGREEMENT), dated as of October 2, 2002, is entered into by and between Point.360, a California corporation (the COMPANY), and R. Luke Stefanko (the CONSULTANT). WHEREAS, the Consultant resigned, as of the end of business on the date hereof, from all positions he held with the Company, including his positions as an officer and director of the Company; and WHEREAS, the Company desires to hire the Consultant and the Consultant desires to serve the Company on a part-time basis to assist in the transition to new management upon the terms and provisions set forth herein; NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Company and the Consultant hereby agree as follows: 1. Consulting Relationship. Beginning as of the date of this Agreement and continuing through December 31, 2002, the Consultant shall be available to provide to the Company, on a part-time basis, but in no event greater than 20 hours per month, the following consulting services (the SERVICES): (i) managing the day to day operations of the Company; (ii) overseeing the Company's sales; (iii) developing a five year plan for the Company; (iv) attending facilities meetings to assist in the transition to new management; and (iv) any other consulting services as the Company shall determine. The Services shall be rendered by Consultant primarily in Hollywood, California and at such times and, if required in particular circumstances, such other locations as reasonably requested by the Company. Beginning January 1, 2003 and continuing as long as this Agreement is in effect, the Consultant shall be available to provide the Services to the Company on an as-needed basis, upon reasonable request from the Company from time to time, but in no event greater than 10 hours per month. 2. Fees. In consideration of the Services to be rendered hereunder, the Company shall pay to the Consultant $10,000 per month beginning as of the date hereof and continuing through December 31, 2002, payable on the 15th day of each month. In addition, while this Agreement is in effect, the Company will allow the Consultant's current option grants, as set forth in the attached Exhibit A, to continue to vest and become exercisable, with such options terminating upon the second anniversary of the date of this Agreement, or earlier in accordance with Section 4(b) below or Section 1 of the Noncompetition Agreement between the Company and the Consultant, entered into as of the date hereof and attached hereto as EXHIBIT B For all Services Consultant provides to the Company after January 1, 2003 while this Agreement is in effect, the Company shall pay the Consultant a consulting fee of $150 per hour. 3. Expenses. The Company shall reimburse the Consultant within 30 days following receipt of appropriate documentation for necessary and reasonable out-of-pocket business expenses incurred by the Consultant in the performance of the Services; provided, however, that the Consultant shall not be authorized to incur on behalf of the Company any expenses in excess of $1,000 without the prior consent of the Company. 4. Term and Termination. The Consultant shall serve as a consultant to the Company and shall render the Services to the Company for a period commencing on October 3, 2002 and terminating October 2, 2004, unless earlier terminated by either party hereto as set forth in this Section 4. This Agreement and the Consultant's rights and obligations hereunder shall, under any of the following circumstances, terminate in advance of the time specified in this Section 4, and the Consultant shall have the right to receive only his Fees that shall be accrued hereunder through the effective date of such termination and shall have no right to receive any further compensation hereunder from and after the time of such termination: (a) Death. This Agreement and the Consultant's duties hereunder shall terminate immediately upon the Consultant's death. (b) Termination by the Company. In the event that the Consultant shall become either physically or mentally incapacitated so as to be incapable of performing his duties as required hereunder, and if such incapacity shall continue for a period of 40 consecutive days, the Company may, at its option, terminate this Agreement and the Consultant's duties hereunder by written notice to the Consultant at that time or at any time thereafter while such incapacity continues. The Company may terminate this Agreement for Cause (as hereinafter defined) at any time upon written notice to the Consultant. "Cause" as used in this Agreement means that (i) the Consultant, after reasonable notice and warning, has failed to perform his assigned duties, (ii) the Consultant has materially breached any of the terms or conditions of this Agreement, or (iii) the Consultant has been charged with a felony or with any intentionally fraudulent act that materially damages, or may materially damage, the business or reputation of the Company. (c) Termination by the Consultant. The Consultant may terminate this Agreement at any time upon written notice to the Company if the Company shall have materially breached any of the provisions of this Agreement. 5. Independent Contractor. The Consultant's relationship with the Company will be that of an independent contractor and not that of an employee of the Company. (a) No Authority to Bind Company. Neither the Consultant, nor any partner, agent or employee of the Consultant, has authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company. (b) No Benefits. The Consultant acknowledges and agrees that the Consultant will not be eligible for any Company employee benefits and, to the extent the Consultant otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement, the Consultant hereby expressly declines to participate in such Company employee benefits. (c) Withholding; Indemnification. The Consultant shall have full responsibility for applicable withholding taxes for all compensation paid to the Consultant under this Agreement, and for compliance with all applicable labor and employment requirements with respect to the Consultant's self-employment, sole proprietorship or other form of business organization. The Consultant agrees to indemnify, defend and hold the Company harmless from any liability for, or assessment of, any claims or penalties with respect to such withholding taxes, labor or employment requirements, including any liability for, or assessment of, withholding taxes imposed on the Company by the relevant taxing authorities with respect to any compensation paid to the Consultant. 6. Corporate Opportunity. The Consultant agrees that the Consultant's right to pursue activities that may be deemed "corporate opportunities" of the Company is subject to the Noncompetition Agreement referred to in Section 2 above (attached hereto as EXHIBIT B) and incorporated into this Agreement by this reference. 7. Confidential Information. While this Agreement is in effect, the parties agree to be bound by the terms and provisions of the Noncompetition Agreement referred to in Section 2 above (attached hereto as EXHIBIT B) with respect to confidential information. 8. Proprietary Rights. All work performed and all materials developed or prepared for the Company by the Consultant in rendering the Services are the property of the Company and all title and interest therein shall vest in the Company and shall be deemed to be works made for hire and made in the course of the services rendered hereunder. To the extent that title to any such works may not, by operation of law, vest in the Company or such works may not be considered works made for hire, all rights, title and interest therein are hereby irrevocably assigned to the Company. The Consultant agrees to give the Company and any person designated by the Company such reasonable assistance, at the Company's expense, as is required to perfect the rights defined in this Section 8. 9. Indemnification. The Consultant agrees to indemnify and hold the Company harmless from and against any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses, including attorneys' fees, arising from a breach of any of the Consultant's representations and warranties herein or attributable to or resulting from the Consultant's gross negligence or willful misconduct in rendering the Services to the Company. The Consultant warrants and represents that the Consultant has full power and authority to enter into and perform this Agreement. The Company agrees to indemnify and hold the Consultant harmless from and against any and all claims, demands, causes of action, losses, damages, liability, costs and expenses, including attorneys fees arising out of the Consultant's services hereunder, other than those arising from the Consultant's breach of any of his representations and warranties hereunder or the Consultant's gross negligence or willful misconduct. 10. Miscellaneous. (a) Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the parties. (b) Sole Agreement. This Agreement constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof. (c) Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, 48 hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, if such notice is addressed to the party to be notified at such party's address or facsimile number as set forth below, or as subsequently modified by written notice. (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, without giving effect to the principles of conflict of laws. (e) Dispute Resolution. Any dispute arising out of or relating to this Agreement shall be decided by binding arbitration by the American Arbitration Association and shall be held in Los Angeles, California. The ruling of the arbitrator shall be final and may be enforced by any party to such arbitration in any court of competent jurisdiction located in Los Angeles, California. (f) Attorneys' Fees. If an arbitration or other legal proceeding is brought to enforce or interpret the provisions of this Agreement or as to the rights or obligations of any party to this Agreement, the prevailing party in such action shall be entitled to recover its reasonable attorneys' fees and costs. (g) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms. (h) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. (i) Effect on Successors in Interest; Assignment. This Agreement shall inure to the benefit of and be binding upon the heirs, administrators, executors, and successors of each of the parties hereto. The services to be rendered under this Agreement are personal to and may not be delegated by the Consultant except to a company wholly owned by the Consultant; provided, however, that the Consultant may assign his rights to payment under this Agreement to any person or entity. The parties have executed this Agreement on the respective dates set forth below. POINT.360 By: /s/ Haig S. Bagerdjian ----------------------- Haig S. Bagerdjian Date: 10/02/02 By: /s/ Alan Steel ----------------------- Alan Steel Date: 10/02/02 Address: Point.360 P.O. Box 1830 Hollywood, CA 90028 Attn: President Fax: (323) 957-2297 R. LUKE STEFANKO By: /s/ R. Luke Stefanko ----------------------- R. Luke Stefanko Address: Date: 10/02/02 EXHIBIT A CURRENT STOCK OPTIONS Number of Shares ---------------- 55,000 179,000 200,000 64,100 200,000 ------- 698,100 EXHIBIT B NONCOMPETITION AGREEMENT See Exhibit 10.3 to this Form 8-K. EX-10 5 rlsnoncompete.txt Exhibit 10.3 NONCOMPETITION AGREEMENT THIS AGREEMENT, effective as of October 2, 2002, is by and between Point.360, a California corporation (the COMPANY), and R. Luke Stefanko (LUKE). WHEREAS, Luke has entered into a Resignation and General Release Agreement dated as of the date hereof with the Company pursuant to which Luke has resigned from all positions with the Company, including his positions as an officer and director of the Company; and WHEREAS, Luke has developed substantial expertise and experience in the business conducted by the Company and has had access to proprietary and confidential business and technical information relating to the business of the Company; and WHEREAS, the Company desires to secure from Luke his agreement not to compete with the Company, not to solicit employees and customers and not to disclose certain information belonging to the Company; NOW, THEREFORE, in consideration of the premises and mutual agreements herein, and for other good and valuable consideration the receipt of which is hereby acknowledged, and intending to be legally bound, the parties agree as follows: A G R E E M E N T 1. Noncompetition. Luke agrees that he shall not: (a) During the one year period ending on October 2, 2003 (the NON-COMPETE PERIOD), within any county, state or country in which the Company transacts business, (i) carry on or be engaged (whether for his own accounts or for the account of any other person or entity), or render services (whether or not for compensation), to any person or entity who or which is directly or indirectly engaged in any type of business that is competitive with the business as presently conducted by the Company (a COMPETING BUSINESS); or (ii) share in the earnings of, or beneficially own or hold any security issued by, or otherwise own or hold any interest in, any person who or which is directly or indirectly engaged in a Competing Business in any county within the State of California or any state or country in which the Company transacts business. Without limiting the generality of the foregoing, Luke shall be deemed to be engaged in a particular business if he is an owner, proprietor, partner, stockholder, officer, employee, independent contractor, director or joint venturer of, or a consultant or lender to, or an investor in any manner in, in any such business (including any such business in which his spouse or children are directly or indirectly engaged). It is expressly understood and agreed that the companies listed on Exhibit A attached hereto, which are likely acquisition targets of Luke, shall also not be deemed to be Competing Businesses for the purposes of this Agreement, to the extent any such companies are actually acquired by Luke. In addition, during the Non-Compete Period, if Luke desires to acquire a Competing Business, Luke shall first offer the opportunity to the Company in writing and, if within twenty (20) business days the Company chooses not to pursue such acquisition, then the acquisition candidate will not thereafter be considered a Competing Business. Notwithstanding the foregoing, nothing herein shall prohibit Luke from making or holding investments in companies whose stock is publicly traded on any national securities exchange or over-the-counter market; provided that: (a) such investment does not give Luke the right to control or influence the policy decisions of any Competing Business and (b) such investment represents an aggregate ownership interest of less than 5% of any such Competing Business; (b) During the one year period ending on October 2, 2003, except as permitted in (a) above, communicate with any customers, employees or suppliers of the Company regarding the Company or its business without the Company's prior approval, or directly or indirectly consult with or render services to any party who is known by Luke to be a former or present customer of the Company regarding the Company or its business; or (c) During the three year period ending on October 2, 2005, directly or indirectly solicit the employment or services of, or cause or attempt to cause to leave the employment or services of the Company any person who or which is employed by, or otherwise engaged to perform services for the Company. In the event that Luke violates any provision of this Paragraph 1, upon 30 days written notice by the Company, all of Luke's options to purchase the Company's common stock shall immediately terminate and be of no further force and effect. 2. Non-disparagement. During the three year period ending October 2, 2005, neither party shall disparage or otherwise harm the reputation of the other party to any third party, including, but not limited to, customers and prospective customers of the Company or Luke, and suppliers and prospective suppliers of the Company or Luke. 3. Consideration. (a) As partial consideration for Luke's agreements as provided in Paragraph 1 above, the Company shall pay Luke $500 in cash. 4. Severable Covenants. The parties acknowledge that the covenants contained in Section 1 hereof are reasonable in geographical and temporal scope and in all other respects. The parties hereto intend that the covenants set forth in Section 1 hereof shall be construed as a series of separate covenants. It is the desire and intent of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, such adjudication shall apply only with respect to the operation of this Agreement in the particular jurisdiction in which such adjudication is made. 5. Injunctive Relief. Luke hereby acknowledges and agrees that any breach of or default under this Agreement will cause damage to the Company in an amount difficult to ascertain. Accordingly, in addition to any other relief to which the Company may be entitled, the Company shall be entitled, without proof of actual damages, to such injunctive relief as may be ordered by any court of competent jurisdiction. 6. Notices. All notices, requests, and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given: when received, if delivered personally or by fax, or five business days after such notice, request, demand claim or other communication is sent, if sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to the Company, addressed to: Point.360 P.O. Box 1830 Hollywood, CA 90028 Attention: President Fax: (323) 957-2297 With a copy to (which shall not constitute notice): Troy & Gould Professional Corporation 1801 Century Park East, Suite 1600 Los Angeles, CA 90067 Attention: William D. Gould, Esq. Fax: 310-201-4746 If to Luke, addressed to: Point.360 P.O. Box 1830 Hollywood, CA 90028 Attention: R. Luke Stefanko Fax: (323) 957-2297 With a copy to (which shall not constitute notice): Pollet, Richardson & Patel 10900 Wilshire Blvd., Suite 500 Los Angeles, California 90024 Attention: Erick E. Richardson, Jr., Esq. Fax: (310) 208-1154 Either party may change the address to which notices, requests, and other communications which are required or may be given under this Agreement are to be delivered by giving the other party or parties notice in the manner set forth above. 7. Governing Law. The terms and provisions of this Agreement shall be construed in accordance with, and governed by, the internal laws of the State of California without regard to principles of conflict of laws thereof. 8. Further Assurances. Each of the Company and Luke agrees to execute and deliver all further documents, agreements and instruments and to take such further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement. 9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 10. Amendments; Waivers. This Agreement may be amended only by an agreement in writing of each party. No waiver of any provision nor consent to any exception to the terms of this Agreement shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided. 11. Construction. Luke and the Company have each been represented by counsel in connection with the transactions contemplated hereby and have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by Luke and the Company and no presumption or burden of proof shall arise favoring or disfavoring either Luke or the Company by virtue of the authorship of any of the provisions of this Agreement. 12. Headings. The descriptive headings of the sections of this Agreement are for convenience only and do not constitute a part of this Agreement. 13. Assignments. Neither this Agreement nor any rights or obligations hereunder are assignable by either party hereto, and any attempt to assign any such rights or obligations shall be void. 14. Attorney's Fees. If either party hereto brings an action or proceeding hereunder to enforce the terms hereof, the prevailing party shall be entitled to recover from the other party all of such prevailing party's attorneys' fees, costs and expenses incurred in such action or proceeding. 15. Arbitration. Any dispute or controversy between Luke and the Company in any way arising out of, related to, or connected with this Agreement or the subject matter hereof, shall be resolved through final and binding arbitration in Los Angeles, California, pursuant to ss.ss. 1282-1284.2 of the California Civil Procedure Code (the CCP). The arbitration shall be before a single arbitrator of the American Arbitration Association (unless, pursuant to applicable federal employment law, rules or regulations a panel is required, in which case such arbitration shall be before a panel mutually agreeable to the parties thereto) who shall be mutually agreeable to the parties thereto, and the arbitration shall be governed by the rules applicable thereto promulgated by the American Arbitration Association. Notwithstanding anything in the aforementioned sections of the CCP to the contrary, the parties shall be permitted to conduct unlimited discovery (as if the subject matter of the arbitration were pending before a superior court of the State of California in a civil action which was not classified as a limited civil case) in accordance with Chapter 2 of the CCP commencing with ss. 1985, and Article 3 of the CCP commencing with ss. 2016 of Chapter 3 of Title 3 of Part IV. By this Agreement the parties have provided, in accord with CCP ss. 1283.1, that CCP ss. 1283.05 is applicable to this Agreement, except that the limitations on depositions set forth in CCP ss. 1283.05, subdivision (e) do not apply to discovery in the event of an arbitrated dispute under this Agreement. IN WITNESS WHEREOF, each of the parties hereto has or has caused this Noncompetition Agreement to be executed as of the day and year first above written. /s/ R. Luke Stefanko POINT.360 - --------------------------- R. Luke Stefanko By: /s/ Haig S. Bagerdjian ------------------------- Haig S. Bagerdjian Chairman of the Board By: /s/ Alan Steel ------------------------- Alan Steel Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----