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
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R. Luke Stefanko
By: /s/ Haig S. Bagerdjian
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Haig S. Bagerdjian
Chairman of the Board
By: /s/ Alan Steel
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Alan Steel
Chief Financial Officer