FORM OF NONCOMPETITION AGREEMENT
Exhibit
C
This
NONCOMPETITION AGREEMENT (this “Agreement”),
dated
as of [_______], 2007, is by and between DG FastChannel, Inc., a Delaware
Corporation (the “Purchaser”),
and
New 360, a California corporation (the “PPB
Sub”).
All
capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Merger Agreement (as defined below).
WHEREAS,
the Purchaser is a party to that certain Agreement and Plan of Merger and
Reorganization, dated as of April 16, 2007, by and among the Purchaser,
POINT.360, a California corporation (the “Company”),
and
the PPB Sub, a wholly-owned subsidiary of the Company (as amended or
supplemented, the “Merger
Agreement”),
pursuant to which, among other things, the Purchaser shall acquire the ADS
Business of the Company;
WHEREAS,
the PPB Sub is a party to that certain Contribution Agreement, dated as of
April
16, 2007, by and among the PPB Sub, the Purchaser and the Company, pursuant
to
which, among other things, the PPB Sub acquired the non-ADS Business of the
Company; and
WHEREAS,
in order to protect the goodwill related to the ADS Business, and as a condition
of consummating the transactions contemplated by the Merger Agreement on the
Acceptance Date, the parties hereto are executing this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
in
this Agreement and in the Merger Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
SECTION
1. CONFIDENTIALITY.
(a) The
PPB
Sub has had access to and contributed to information and materials of a highly
sensitive nature (including Confidential Information, as defined below) of
the
ADS Business. The PPB Sub agrees that on or prior to the fifth (5th) anniversary
of the Acceptance Date, unless the PPB Sub first secures the written consent
of
an authorized representative of the Purchaser, the PPB Sub shall not use for
itself or anyone else, or disclose to others, any Confidential Information,
except as may be necessary for the PPB Sub to carry out its duties under any
agreement with the Purchaser (if applicable) or except to the extent such use
or
disclosure is required by law or order of any Governmental Entity (in which
event the PPB Sub shall, to the extent practicable, inform the Purchaser in
advance of any such required disclosure, shall cooperate with the Purchaser
in
all reasonable ways in obtaining a protective order or other protection in
respect of such required disclosure, and shall limit such disclosure to the
extent reasonably possible while still complying with such requirement). The
PPB
Sub shall use reasonable care to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss and theft.
(b) “Confidential
Information”
as
used
herein, means all highly-sensitive information (whether or not specifically
identified as confidential) of the ADS Business, in any form or medium, that
at
or prior to the Acceptance Date was disclosed to the PPB Sub, as the case may
be, or that relates to the ADS Business, including, without limitation: (i)
internal business information (including, without limitation, information
relating to the strategic plans and practices, business, accounting, financial
or marketing plans, practices or programs, training practices and programs,
salaries, bonuses, incentive plans and other compensation and benefits
information and accounting and business methods); (ii) identities of, individual
requirements of, specific contractual arrangements with, and information about,
the ADS Business, its customers and their confidential information; (iii)
industry research compiled by, or on behalf of the ADS Business, including,
without limitation, identities of potential target companies, management teams
and transaction sources; (iv) compilations of data and analyses, processes,
methods, track and performance records, data and databases relating thereto;
provided,
however,
that
“Confidential
Information”
shall
not include any information that has become generally known to and widely
available for use within the industry other than as a result of a disclosure
by
the PPB Sub in violation of this Agreement.
SECTION
2. NONCOMPETITION.
(a) During
the period that shall commence as of the Effective Time and shall terminate
on
the fifth (5th) anniversary of the Acceptance Date (such period being referred
to as the “Restricted
Period”),
the
PPB Sub shall not (i) enter into the ADS Business, (ii) engage in any business
which is the same as or substantially similar to or is or would be competitive
with the ADS Business, or (iii) directly or indirectly (including without
limitation, through any Affiliate of the PPB Sub), own, manage, operate, control
or otherwise engage or participate in, or serve as an owner, partner, principal,
advisor, director, employee, officer or consultant of any company or other
enterprise or proprietorship that engages in any business within the Business
Area (as defined below) which is the same as or substantially similar to or
is
or would be competitive with the ADS Business.
(b) Notwithstanding
the foregoing provisions of Section
2(a)
and the
restrictions set forth therein, the PPB Sub may own securities in any publicly
held corporation that is covered by the restrictions set forth in Section
2(a),
but
only to the extent that the PPB Sub does not own, of record or beneficially,
more than five percent (5%) of the outstanding shares of capital stock of such
corporation.
(c) “Affiliate”
as
used
herein, means, with respect to any entity, any entity directly or indirectly
controlling, controlled by or under direct or indirect common control with
such
other entity.
(d) “Business
Area”
as
used
herein, means any county in California, including the following counties:
Alameda, Alpine, Xxxxxx, Butte, Calaveras, Colusa, Contra Costa, Del Norte,
El
Dorado, Fresno, Xxxxx, Humboldt, Imperial, Inyo, Xxxx, Kings, Lake, Lassen,
Los
Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey,
Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San Xxxxxx, San
Bernardino, San Diego, San Francisco, San Xxxxxxx, San Xxxx Obispo, San Mateo,
Santa Xxxxxxx, Santa Xxxxx, Santa Xxxx, Xxxxxx, Sierra, Siskiyou, Xxxxxx,
Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo
and
Yuba; or in any county, state, country or other jurisdiction in the balance
of
the United States of America and the dependent territories of the United States
of America and in every other country in the world.
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SECTION
3. NONSOLICITATION.
During
the relevant Restricted Period, the PPB Sub shall not, without the prior written
consent of the Purchaser, directly or indirectly through another Person (i)
seek
to employ or recruit any employee of the Purchaser (or its Affiliates) (each
an
“Employee”
and
together, the “Employees”),
unless such Employee (x) resigns voluntarily (without any direct or
indirect solicitation or other inducement from the PPB Sub or any of its
Affiliates), (y) is terminated by the Purchaser after the Effective Time or
(z) seeks employment on an unsolicited basis, or in response to general
advertising conducted in the ordinary course of the business of the PPB Sub
consistent with past practice and which is not specifically directed towards
Employees; (ii) induce or attempt to induce any officer or director of the
Purchaser to leave the employ of the Purchaser; (iii) call on, solicit, or
service any customer, supplier, licensee, licensor or other business relation
or
prospective client of the ADS Business with respect to the products and/or
services of the ADS Business; or (iv) induce or attempt to induce any customer,
supplier, licensee, licensor or other business relation of the Purchaser to
cease doing business with the Purchaser.
SECTION
4. REASONABLENESS
AND ENFORCEABILITY OF COVENANTS.
(a) The
parties expressly agree that the character, duration and geographical scope
of
this Agreement are reasonable in light of the circumstances as they exist on
the
date upon which this Agreement has been executed, including, but not limited
to,
the PPB Sub’s material economic interest in the Transactions.
(b) If
any
court determines that any of the covenants and agreements contained herein,
or
any part thereof, is unenforceable because of the character, duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable to the maximum extent permitted
by applicable law.
(c) The
PPB
Sub acknowledges that (i) it has received a true, correct and complete copy
of
the Merger Agreement and (ii) the restrictive covenants and the other agreements
contained herein are an essential part of this Agreement and no reasonable
person would enter into the Merger Agreement without the benefit of the
restrictive covenants herein.
SECTION
5. MISCELLANEOUS.
(a) Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally (notice deemed given upon receipt),
telecopied (notice deemed given upon confirmation of receipt) or sent by a
nationally recognized overnight courier service, such as Federal Express (notice
deemed given upon receipt of proof of delivery), to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if
to the
Purchaser, to:
DG
FastChannel, Inc.
000
X.
Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Chief Financial Officer
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
3
with
a
copy to:
Xxxxxx
& Xxxxxxx LLP
000
Xxxxxxxx Xxxxxx XX, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. X’Xxxxx
Xxxx X.
Xxxxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
(ii) if
to the
PPB Sub, to:
0000
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
with
a
copy to:
Xxxx
& Xxxxx PC
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx Xxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
(b) Counterparts;
Facsimile.
This
Agreement may be executed manually or by facsimile by the parties hereto, in
any
number of counterparts, each of which shall be considered one and the same
agreement and shall become effective when a counterpart hereof shall have been
signed by each party and delivered to the other party.
(c) Governing
Law; Consent to Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California, without giving effect to conflicts of laws principles
that would result in the application of the law of any other state.
(d) Injunctive
Relief.
The
Purchaser and the PPB Sub hereby agree that the remedy at law for any breach
of
this Agreement is and will be inadequate, and in the event of a breach or
threatened breach by the PPB Sub of this Agreement, the Purchaser shall be
entitled to seek an injunction restraining the PPB Sub from the conduct that
would constitute a breach of this Agreement. Nothing herein contained shall
be
construed as prohibiting the Purchaser from pursuing any other remedies
available to it for such breach or threatened breach, including, without
limitation, the recovery of damages from the PPB Sub.
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(e) Assignment.
This
Agreement shall not be assigned by any party hereto (whether by operation of
law
or otherwise) without the prior written consent of the other party. Subject
to
the preceding sentence, but without relieving any party hereto of any obligation
hereunder, this Agreement will be binding upon, inure to the benefit of and
be
enforceable by the parties and their respective successors and
assigns.
(f) Amendments;
Waiver.
This
Agreement may be amended or modified only by a written instrument signed by
each
of the parties hereto. Any party may waive any provision of this Agreement
or
compliance therewith; provided
that
such waiver is set forth in an instrument in writing signed by the party to
be
bound thereby. Any waiver or failure to insist on strict compliance with any
agreement or obligation contained herein shall not operate as a waiver of,
or
estoppel with respect to, any subsequent or other failure.
(g) Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
by
the Merger Agreement are not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by the Merger Agreement are fulfilled to the extent
possible.
(h) WAIVER
OF JURY TRIAL.
EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF
SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 5(h).
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first written above.
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DG
FASTCHANNEL, INC.
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| By: | ||
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Name:
Xxxxx
X. Xxxxxxxx
Title:
Chairman
of the Board and
Chief Executive Officer
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| By: | ||
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Name:
Xxxx X. Bagerdjian
Title:
Chairman, President and CEO
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