PROXY AND RIGHT OF FIRST REFUSAL AGREEMENT
This
Proxy and Right of First Refusal Agreement (this “Agreement”)
is
entered into as of January 18, 2007, by and between Xxxxx Xxxxxxxx
(“Xx.
Xxxxxxxx”)
and
Xxxx X. Bagerdjian (“Mr.
Bagerdjian”).
RECITALS
A. As
of the
date of this Agreement, (i) each of Xx. Xxxxxxxx and Mr. Bagerdjian is the
beneficial owner of shares of the common stock of Point.360, a California
corporation (“Point.360”),
and
(ii) Mr. Bagerdjian is the Chairman of the Board and Chief Executive Officer
of
Point.360. Outstanding shares of the capital stock of Point.360 are referred
to
in this Agreement as “Shares.”
B. Xx.
Xxxxxxxx and Mr. Bagerdjian desire to enter into this Agreement pursuant to
which, for a term of eighteen months, (i) Xx. Xxxxxxxx will deliver to Mr.
Bagerdjian an irrevocable proxy to vote the Shares that she beneficially owns
in
the event that Point.360’s shareholders vote upon a proposal regarding a change
of control (as defined below) regarding Point.360, and (ii) Mr. Bagerdjian
and
Xx. Xxxxxxxx will each give the other party a right of first refusal to purchase
any Shares that he or she proposes to sell or otherwise transfer other than
on
the open market. Xx. Xxxxxxxx and Mr. Bagerdjian believe that this Agreement
is
in their respective best interests and in the best interests of Point.360 and
its shareholders.
NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged,
Xx.
Xxxxxxxx and Mr. Bagerdjian hereby agree as follows:
ARTICLE
1
IRREVOCABLE
PROXY
1.1 Grant
of Irrevocable Proxy.
Xx.
Xxxxxxxx hereby grants and delivers to Mr. Bagerdjian an irrevocable proxy
(the
“Proxy”)
with
respect to any and all Shares that are beneficially owned by Xx. Xxxxxxxx,
whether owned as of the date of this Agreement or subsequently acquired by
Xx.
Xxxxxxxx. Xx. Xxxxxxxx agrees not to give a proxy regarding the matters covered
by the Proxy to any other person during the term of the Proxy. The Proxy is
coupled with an interest and is irrevocable during the term of the Proxy
specified below in Section 1.5. The Proxy is given in order to secure and to
carry out the obligations of Xx. Xxxxxxxx under this Agreement, and Mr.
Bagerdjian is authorized to file a copy of this Agreement with the Secretary
of
Point.360.
1.2 Matters
Covered by the Proxy and Powers of Mr. Bagerdjian Under the
Proxy.
(a) The
Proxy
given by Xx. Xxxxxxxx pursuant to Section 1.1 is valid only with respect to
a
vote, consent, waiver, or other action by Point.360’s shareholders on a proposal
regarding a proposed “Change of Control.” For purposes of this Agreement, a
“Change
of Control”
means
any proposed transaction or series of related transactions as a result of
which:
1
(i) Any
person or group of persons, as the term “group” is defined for purposes of this
Agreement in Section 13(d) of the Securities Exchange Act of 1934 (the
“Exchange
Act”)
and
the rules and regulations thereunder, will acquire beneficial ownership of
securities of Point.360, or of any entity resulting from a merger to which
Point.360 is a party and is not the surviving party, representing at least
twenty percent of the combined voting power of the then-outstanding securities
of Point.360 (provided that the terms “beneficial ownership” and “beneficial
owner” shall be defined for purposes of this Agreement in accordance with Rule
13d-3 under the Exchange Act);
(ii) Point.360
will sell or otherwise transfer all or substantially all of its assets to any
person or group of persons; or
(iii)
Point.360
will consummate any merger, reorganization or consolidation to which it is
a
party (regardless as to whether it is the surviving entity) unless persons
who
were beneficial owners of the outstanding voting securities of Point.360
immediately prior to the consummation of the transaction will beneficially
own
(immediately after the consummation of the transaction) more than eighty percent
of the combined voting power of the then-outstanding securities of the person
surviving or resulting from the merger, reorganization or
consolidation.
(b) As
proxy
for Xx. Xxxxxxxx with respect to a proposed shareholder vote, consent, waiver
or
other action regarding a Change of Control, Mr. Bagerdjian is fully authorized,
in the name, place and stead of Xx. Xxxxxxxx, to attend any and all meetings
of
the shareholders of Point.360 and to represent, vote, execute consents, execute
waivers, and otherwise act on behalf of Xx. Xxxxxxxx with respect to the Shares
covered by the Proxy in the same manner and with the same effect as if Xx.
Xxxxxxxx were personally present at any and all such meetings and voting the
Shares or personally acting on any and all matters regarding a Change of Control
submitted to the shareholders of Point.360 for written approval or consent.
Mr.
Bagerdjian shall not be required to consult with Xx. Xxxxxxxx prior to voting
the Shares or giving a written consent or waiver with respect to the Shares,
and
Mr. Bagerdjian has the absolute right to vote the Shares and to give written
consents and waivers with respect to the Shares in such manner as he determines
in his sole discretion.
(c) Mr.
Bagerdjian is not authorized to exercise the Proxy on any matter that does
not
relate to a Change of Control, and Xx. Xxxxxxxx has the right and power to
grant
a proxy to another person to vote her Shares on any proposal other than a
proposal relating to a Change of Control.
1.3 Delivery
of a Supplemental Proxy with Respect to a Specific Change of Control
Proposal.
In the
event that Point.360’s shareholders are asked to vote, deliver consents or
waivers, or otherwise act with respect to a proposed Change of Control, Xx.
Xxxxxxxx shall deliver to Mr. Bagerdjian a supplemental proxy in the form of
Exhibit A attached hereto, within five days after receipt of Mr. Bagerdjian’s
request, with respect to the specific proposal on which Point.360’s shareholders
have been requested to act, and Mr. Bagerdjian is authorized to file such proxy
with the Secretary of Point.360. Mr. Bagerdjian’s failure to request a
supplemental proxy in the form of Exhibit A from Xx. Xxxxxxxx with respect
to
the specific transaction that is to be acted upon by Point.360’s shareholders
shall not, however, diminish or otherwise alter the Proxy that has been given
by
Xx. Xxxxxxxx to Mr. Bagerdjian pursuant to this Agreement.
2
1.4 Effect
of Various Transactions.
The
Proxy shall continue in full force and effect with respect to any and all Shares
that are acquired by Xx. Xxxxxxxx after the date hereof. References in this
Agreement to “Point.360” and to the “Shares” also refer to any entity that is
Point.360’s successor-in-interest and to any shares of stock or other securities
that are issued to Xx. Xxxxxxxx in exchange or replacement for Point.360’s
capital stock.
1.5 Term
of the Proxy.
Unless
otherwise agreed in writing by Mr. Bagerdjian, the Proxy shall continue in
full
force and effect until July 31, 2008.
ARTICLE
2
RIGHT
OF FIRST REFUSAL
2.1 Restriction
on the Transfer of Shares.
Neither
Mr. Bagerdjian nor Xx. Xxxxxxxx shall at any time prior to July 31, 2008 sell,
whether voluntarily or involuntarily, directly or indirectly, by operation
of
law, or otherwise, any of his or her Shares except after compliance with the
terms and conditions of this Article 2. Any
sale
of Shares (including any agreement to sell Shares) that is made by Mr.
Bagerdjian or Xx. Xxxxxxxx in violation of the provisions of this Agreement
shall be null and void for all purposes and shall confer no rights on the
transferee.
2.2 Right
of First Refusal; Exclusion for Open-Market Sales.
(a) Before
any Shares that are beneficially owned by Mr. Bagerdjian or Xx. Xxxxxxxx may
be
sold prior to July 31, 2008, the Shares shall first be offered to the other
party, who shall have the right to purchase all (but not fewer than all) of
the
Shares that are proposed to be transferred in accordance with the provisions
of
this Article 2 (the “Right
of First Refusal”).
(b) Notwithstanding
anything to the contrary in Section 2.2(a) above, neither Mr. Bagerdjian nor
Xx.
Xxxxxxxx shall have a Right of First Refusal to purchase any Shares that the
other party proposes to sell on the Nasdaq Stock Market in an unsolicited
“brokers’ transaction” within the meaning of Section 4(4) of the Securities Act
of 1933 or in a transaction directly with a “market maker” as that term is
defined in Section 3(a)(38) of the Exchange Act, if such sale is conducted
in
accordance with the terms and conditions of Rule 144 under the Securities Act
of
1933. However, Mr. Bagerdjian or Xx. Xxxxxxxx must provide the other party
with
at least twenty days’ prior written notice of his or her proposed sale of Shares
on the Nasdaq Stock Market, and such notice must describe the number of shares
that he or she proposes to sell on the Nasdaq Stock Market.
2.3 Notice
of the Proposed Transfer.
Each
time that Mr. Bagerdjian or Xx. Xxxxxxxx proposes to sell any Shares prior
to
July 31, 2008 other than on the Nasdaq Stock Market in accordance with Section
2.2(b) above, he or she shall give the other party at least twenty days’ prior
written notice of the proposed transfer (the “Transfer
Notice”).
The
Transfer Notice shall set forth in reasonable detail the terms and conditions
of
the proposed transfer, including, without limitation, (i) the identity of the
proposed transferee (who must in any case be a bona fide transferee with respect
to whom the transfer is permissible under applicable federal and state
securities laws), (ii) the number of Shares proposed to be transferred, (iii)
the purchase price per Share, (iv) the terms of payment, (v) the date of the
proposed transfer, and (vi) a statement by Mr. Bagerdjian or Xx. Xxxxxxxx that
he or she has entered into a legally binding agreement (subject to compliance
with this Agreement) with the proposed transferee with respect to the transfer
of the Shares on the terms described in the Transfer Notice. The selling
shareholder shall be liable to the other party if the Transfer Notice contains
any material misstatements or omissions.
3
2.4 Exercise
of the Right of First Refusal.
Xx.
Xxxxxxxx or Mr. Bagerdjian, as applicable, shall have the right, but not the
obligation, to elect to purchase from the other party all, but not less than
all, of the Shares that Mr. Bagerdjian or Xx. Xxxxxxxx proposes to transfer
and
that are described in the Transfer Notice. Within ten days after receipt of
the
Transfer Notice, Xx. Xxxxxxxx or Mr. Bagerdjian, as applicable, shall notify
the
selling shareholder in writing as to whether she or he has elected to purchase
all of the Shares that are described in the Transfer Notice. Failure to give
a
timely notice shall be deemed an election not to purchase all of such Shares.
Delivery of a timely purchase election shall constitute a binding purchase
agreement between Xx. Xxxxxxxx and Mr. Bagerdjian. Neither Xx. Xxxxxxxx nor
Mr.
Bagerdjian shall be entitled to elect to purchase fewer than all of the Shares
that are the subject of the proposed transfer.
2.5 Purchase
Terms.
(a) Except
as
provided in this Section 2.5 or in Section 2.6 below, the Shares that are the
subject of the proposed transfer shall be purchased by Xx. Xxxxxxxx or Mr.
Bagerdjian, as applicable, on the same payment terms that are described in
the
Transfer Notice delivered by the other party.
(b) If
the
Transfer Notice provides for the use of promissory notes or other non-cash
consideration, Xx. Xxxxxxxx or Mr. Bagerdjian, as applicable, shall be entitled
to specify that the purchase price will be paid in cash in an amount per Share
equal to the average closing price of a share of Point.360’s common stock on the
Nasdaq Stock Market during the five business days immediately preceding the
date
on which the purchase election notice is delivered to the other party pursuant
to Section 2.4 above.
2.6 Closing
of the Purchase.
(a) The
closing of the purchase and sale of the Shares that are the subject of the
exercise of the Right of First Refusal shall occur on a date that is agreed
upon
by Xx. Xxxxxxxx and Mr. Bagerdjian, provided that such date shall be no later
than the thirtieth day after delivery
of the Transfer Notice unless Xx. Xxxxxxxx and Mr. Bagerdjian agree to extend
the closing date.
(b) At
the
closing, Xx. Xxxxxxxx or Mr. Bagerdjian, as applicable, shall deliver to the
other party a check in the amount of the purchase price of the Shares purchased
upon exercise of the Right of First Refusal. However, if the transferee
identified in the Transfer Notice proposes to deliver promissory notes or
another form of non-cash consideration and if Xx. Xxxxxxxx or Mr. Bagerdjian
does not elect pursuant to Section 2.5 above to pay cash for such Shares, then
the purchasing shareholder shall deliver such non-cash consideration to the
other party.
4
(c) Mr.
Bagerdjian or Xx. Xxxxxxxx, as applicable, shall deliver to the other party
the
stock certificate evidencing the Shares that are the subject of the sale, duly
endorsed or accompanied by a duly executed stock assignment separate from
certificate. The selling shareholder shall also execute and deliver any other
assignments and instruments that may be reasonably requested by the other party
in order to complete the purchase and sale of the Shares.
2.7 Transfer
of Shares to the Proposed Transferee.
If Xx.
Xxxxxxxx or Mr. Bagerdjian, as applicable, does not make a timely election
to
purchase all of the Shares that are the subject of the proposed transfer, or
if
such party defaults on his or her election to purchase such Shares, the other
party shall have the right to transfer such Shares to the proposed transferee
who is identified in the Transfer Notice, provided that the transfer must be
completed within sixty days after the date that the Transfer Notice was
delivered pursuant to Section 2.3 above and the Shares must be transferred
on
the terms described in the Transfer Notice. The Shares that are sold by Mr.
Bagerdjian or Xx. Xxxxxxxx shall cease to be subject to the Right of First
Refusal, the Proxy and the other provisions of this Agreement from and after
the
date that they are transferred in accordance with the provisions of this
Agreement.
ARTICLE
3
GENERAL
PROVISIONS
3.1 Successors
and Assigns.
Subject
to all other applicable provisions of this Agreement, this Agreement shall
be
binding upon, and shall benefit, the personal representative, estate,
beneficiaries (by will or by the laws of descent and distribution), and other
successors and assigns of Xx. Xxxxxxxx and Mr. Bagerdjian.
3.2 Notices.
All
notices and other communications required or permitted by this Agreement to
be
given by one party to another party shall be delivered in writing, by registered
or certified United States mail (postage prepaid and return receipt requested),
by reputable overnight delivery service, or by facsimile transmission, to the
address for such party on the signature page of this Agreement or such other
address or facsimile number as one party may designate to the other party.
Any
such
notice that is sent in the foregoing manner shall be deemed to have been
delivered upon actual personal delivery or actual receipt by facsimile
transmission or three days after deposit in the United States mail or one day
after delivery to an overnight delivery service.
3.3 Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties relating to the
subject matter of this Agreement and supersedes all prior agreements and
understandings (written or oral) relating to such subject matter.
3.4 Calculation
of Time.
Wherever in this Agreement a period of time is stated in a number of days,
it
shall be deemed to mean calendar days. However, when any period of time so
stated would end upon a Saturday, Sunday or legal holiday, such period shall
be
deemed to end upon the next day following that is not a Saturday, Sunday or
legal holiday.
5
3.5 Amendment
and Termination.
This
Agreement may be amended or terminated only pursuant to a writing executed
by
Xx. Xxxxxxxx and Mr. Bagerdjian.
3.6 Counterparts.
This
Agreement may be executed in two counterparts, and by each party on a separate
counterpart, each of which shall be deemed an original but both of which taken
together shall constitute but one and the same instrument.
This
Agreement may be executed by facsimile.
3.7 Governing
Laws.
This
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of California without giving effect to such
state’s conflict-of-law principles.
IN
WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
as
of the date first written above.
|
XXXX X. BAGERDJIAN
c/o
Point.360
0000
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
|
|
| XXXXX XXXXXXXX | |
| Address: | |
6
EXHIBIT
A
FORM
OF PROXY FOR A SPECIFIC CHANGE OF CONTROL PROPOSAL
The
undersigned (the “Shareholder”)
hereby
irrevocably appoints Xxxx X. Bagerdjian (the “Proxy
Holder”)
as the
Shareholder’s exclusive proxy, with full power of substitution, with respect to
any and all shares of the capital stock of Point.360, a California corporation
(“Point.360”),
that
are now owned by the Shareholder and that are acquired by the Shareholder at
any
time hereafter (the “Shares”).
As
proxy
for the Shareholder, the Proxy Holder is fully authorized, in the name, place
and stead of the Shareholder, to attend the meeting of the shareholders of
Point.360 that has been called for ________________, 200_, including any
adjournment of such meeting, and to represent, vote, execute consents, execute
waivers and otherwise act on behalf of the Shareholder with respect to the
Shares in the same manner and with the same effect as if the Shareholder were
personally present at such meeting and voting the Shares with respect to the
following proposal: _____________________________________. The Proxy Holder
shall not be required to consult with the Shareholder prior to voting the Shares
on the proposal described in the preceding sentence or giving a written consent
or waiver with respect to the Shares regarding such proposal. This Irrevocable
Proxy is coupled with an interest and is irrevocable.
The
Proxy
Holder is authorized to file this Irrevocable Proxy with the Secretary of
Point.360. The Shareholder agrees to perform such further acts and to execute
and deliver such additional documents as are requested by the Proxy Holder
and
as may be reasonably required in order to carry out and give effect to the
provisions and intent of this Irrevocable Proxy.
This
Irrevocable Proxy is given by the Shareholder in accordance with the terms
of,
and in order to secure and to carry out the obligations of the Shareholder
under, a Proxy and Right of First Refusal Agreement dated as of January 18,
2007
that the Shareholder has entered into with the Proxy Holder.
IN
WITNESS WHEREOF, the Shareholder has executed and delivered this Irrevocable
Proxy on ___________, 200_.
| XXXXX XXXXXXXX |
7
