GUARANTY OF ACCOUNT
This GUARANTY OF ACCOUNT ("Agreement") is entered into as of the _____
day of December, 2001, by and among Prudential Securities Incorporated
("Prudential"), Xxxx X. Bagerdjian ("Guarantor") and R. Xxxx Xxxxxxxx
("Client").
RECITALS
A. Client has a margin account with Prudential, account number
OEO-343473 (the "Guaranteed Account"). Client is currently indebted to
Prudential under the Guaranteed Account in the amount of $932,343.26. Currently
held in the Guaranteed Account are 1,594,166 shares of the Common Stock of
Point.360. Point.360 Common Stock ("Point.360 Stock") closed at $0.68 per share
on December 4, 2001.
B. Guarantor is willing to guaranty Client's indebtedness to Prudential
under the Guaranteed Account, on the terms set forth in this Agreement.
ACCORDINGLY, based on the foregoing and the mutual covenants set forth
below, the parties hereby agree as follows:
AGREEMENT
1. Opening of New Account. Guarantor will open a new account with Prudential
("Guarantor's Account"), and will deposit into such account 30,000 shares of the
Common Stock of Syncor International Corporation ("Syncor"). Syncor Common Stock
("Syncor Stock") closed at $26.90 per share on December 4, 2001.
2. Transfers to Guarantor's Account. Immediately following the execution of this
Agreement, Client will transfer from the Guaranteed Account to the Guarantor's
Account, 25,000 shares of Point.360 Stock. In addition, so long as the guaranty
established pursuant to this Agreement is in effect, each month Client will
transfer from the Guaranteed Account to the Guarantor's Account, an additional
number of shares of Point.360 Stock, based on the following formula (or the
maximum number of shares allowed by law, whichever is less):
N = (D x 1%) / P
where N is the number of shares transferable for a particular month; D is the
amount of Client's indebtedness (principal and interest) to Prudential under the
Guaranteed Account outstanding at the end of such month; and P is the average
last trade price of a share of Point.360 Stock measured over the last ten
consecutive trading days of such month. The monthly transfers will be effected
within seven days after the end of each month. The transfers provided for this
Section 2 shall be authorized by Client and Guarantor by written instruction to
Prudential, and Prudential hereby consents to such transfers; provided, however,
that Prudential shall have no duty or obligation whatsoever of any kind or
character for monitoring or complying with the formula set forth above. The
transfers provided for in this Section 2 shall not require any payment from
Guarantor to Client.
3. Guaranty. Guarantor hereby guarantees Client's indebtedness to Prudential
under the Guaranteed Account, on the terms set forth in this Agreement;
provided, however, that (i) Guarantor's liability to Prudential under this
Agreement shall not exceed the value of, and shall be satisfied solely from, the
securities and any cash held in Guarantor's Account; and (ii) if the securities
and any cash held in Guarantor's Account are insufficient to satisfy Client's
indebtedness to Prudential under the Guaranteed Account, Guarantor shall not be
liable to Prudential for any deficiency.
4. Sales of Securities by Prudential. Subject to Section 5 of this Agreement,
Prudential shall have the right, from time to time, to sell any and all
securities held in the Guarantor's Account, to satisfy Client's indebtedness to
Prudential under the Guaranteed Account.
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5. Limitations on Right of Sale. Prudential shall not sell securities held in
either the Guaranteed Account or the Guarantor's Account so long as, or if sales
by Prudential have commenced, Prudential shall cease selling securities from
either account as soon as, the price of Point.360 Stock is greater than or equal
to $0.60 per share and the price of Syncor Stock is greater than or equal to
$26.50 per share. If the price of Point.360 Stock falls below $0.60 per share,
or if the price of Syncor Stock falls below $26.50 per share, no sales of
securities from either the Guaranteed Account or the Guarantor's Account will be
made by Prudential if, (a) after notice to Guarantor as provided in Section 6,
Guarantor deposits sufficient additional cash or securities in the Guarantor's
Account such that the resulting value of cash and securities in Guarantor's
Account is at least equal to what the value would have been prior to the deposit
of additional cash or securities if the price of Point.360 Stock was $0.60 per
share and the price of Syncor Stock was $26.50 per share, or (b) the value of
cash and securities in Guarantor's Account is at least equal to what the value
would be if the price of Point.360 Stock was $0.60 per share and the price of
Syncor Stock was $26.50 per share. Any sales of securities by Prudential from
either the Guaranteed Account or the Guarantor's Account must be made in the
following order: first, all securities held in the Guaranteed Account must be
sold; second, all Point.360 Stock held in Guarantor's Account must be sold; and
last, Syncor Stock held in Guarantor's Account may be sold. Share prices
referenced in this Agreement refer to actual sales prices, and not bid or ask
prices.
6. Notice to Guarantor. Before Prudential may sell securities from either the
Guaranteed Account or the Guarantor's Account, Prudential shall first provide
Guarantor with at least 24 hours notice, by telephone (or voicemail) to (818)
535-5065 or by facsimile to (000) 000-0000, of its intent to sell securities
unless Guarantor deposits additional cash or securities in Guarantor's Account
as provided in Section 5.
7. Restrictions on Transfers from Guarantor's Account. If and for so long as
either the price of Point.360 Stock is less than $0.70 per share or the price of
Syncor Stock is less than $26.50 per share, Guarantor shall not withdraw or
transfer any cash or securities from Guarantor's Account.
8. Restrictions on Transfers from Guaranteed Account. Client agrees that he
shall not, and Prudential agrees that it shall not permit Client to, withdraw or
transfer any cash or securities from the Guaranteed Account without the prior
written approval of Guarantor, other than transfers permitted by Sections 2 and
5.
9. Restrictions on Additional Indebtedness; Etc. Client agrees that he shall
not, and Prudential agrees that it shall not permit Client to, incur additional
indebtedness under the Guaranteed Account (other than interest on the current
indebtedness) without the prior written approval of Guarantor. Prudential will
permit Client to grant a security interest to Guarantor in Client's assets,
including without limitation all shares of Point.360 Stock owned by Client,
provided that any such security interest in Point.360 Stock owned by Client will
be subordinate to Prudential's interest in such shares. Prudential will not
authorize or consent to Client's grant of any other security interest in the
Point.360 Stock owned by Client, without the prior written approval of
Guarantor.
10. Account Statements. Prudential shall provide Guarantor with copies of all
account statements, notices and other materials that Prudential provides to
Client in connection with the Guaranteed Account, at the same time as such
statements, notices and other materials are provided to Client. Such statements,
notices and other materials shall be provided to Guarantor at: 00000 Xxxxxxxxxx
Xxxxx, Xxx Xxx, Xxxxxxxxxx 00000.
11. Client's Liability to Guarantor. If any cash or securities in Guarantor's
Account, other than shares of Point.360 Stock, are used by Prudential to satisfy
Client's indebtedness to Prudential, Client shall reimburse Guarantor for his
loss. For purposes of valuing Guarantor's loss, the price of any securities
owned by Guarantor which are sold to satisfy Client's indebtedness shall be
valued at the gross sales price.
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12. Client's Obligation for Attorneys' Fees. Client shall reimburse Guarantor
for actual attorneys' fees and costs incurred by Guarantor in connection with
the transactions contemplated by this Agreement and that certain Term Sheet
dated September 21, 2001.
13. Representations and Warranties. Each party represents and warrants that the
execution and delivery by such party of this Agreement do not, and the
performance by such party of his or its obligations hereunder will not, with or
without the giving of notice or the passage of time, or both: (a) violate any
judgment, writ, injunction, or order of any court, arbitrator, or governmental
agency applicable to such party; or (b) conflict with, result in the breach of
any provisions of or the termination of, or constitute a default under, any
agreement to which such party is a party or by which such party is or may be
bound. Each party further represents and warrants that: (a) such party has the
unrestricted right and authority to enter into and perform this Agreement
without obtaining the consent of any other person or entity; and (b) this
Agreement is the legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
14. Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other parties; (b) no waiver that may be given
by a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
15. Assignment. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns,
heirs, and legal representatives.
16. Entire Agreement; Amendments. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, between the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended
orally, but only by an agreement in writing signed by the parties hereto.
17. Governing Law. This Agreement will be governed by the laws of the State of
New York without regard to choice or conflicts of laws principles.
18. Section Headings; Construction. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement unless otherwise specified.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Forms of the word "including" mean
"including without limitation." Any reference to "days" means calendar days and
not business days unless expressly stated otherwise.
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19. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision contained
herein and the Agreement will be construed as if the invalid or unenforceable
provision were omitted. Furthermore, any determination that a provision is
deemed to be invalid or unenforceable in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
20. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
21. Attorneys' Fees. The prevailing party in any suit, arbitration or other
proceeding brought to enforce any provisions of this Agreement, or brought to
resolve any dispute concerning this Agreement, shall be entitled to all costs
and expenses incurred in such proceeding, including actual attorneys' fees at
the rates usually charged by such party's attorneys.
22. Arbitration. Any controversy involving Prudential arising out of or relating
to the Guaranteed Account or the Guarantor's Account or to this Agreement or the
breach of this Agreement shall be settled by arbitration before either the New
York Stock Exchange, Inc. ("NYSE") or the National Association of Securities
Dealers, Inc. ("NASD") or any other self-regulatory organization of which
Prudential is a member as Guarantor may elect and under the then-existing
arbitration procedures of the forum Guarantor has elected. If Guarantor does not
make such election by certified mail addressed to Prudential at Xxx Xxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 within five days after demand by Prudential that
Guarantor make such election, then Prudential may make such election. Judgment
upon any award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything in this Section 22 to the
contrary, any party shall be entitled to bring an action for injunctive relief,
including an action to enjoin any conduct prohibited by this Agreement, in a
court of competent jurisdiction without first submitting to arbitration. Any
controversy that does not involve Prudential (i.e., a controversy solely between
the Client and the Guarantor) shall not be settled by arbitration before the
NYSE, NASD or other self-regulatory organization of which Prudential is a
member.
23. Additional Documentation. The Client and the Guarantor will cooperate in
providing any and all documentation, consistent with this Agreement, which
Prudential deems necessary to the performance of the terms and conditions of
this Agreement, including but not limited to any stock powers required to
facilitate the clearance of stock held in safekeeping.
24. No Abridgement. The Client and the Guarantor understand and acknowledge that
this Agreement supplements any other client agreement(s) with Prudential and in
no way is this Agreement intended to abridge any rights that Prudential might
otherwise have that are consistent with this Agreement; provided that in the
event of a conflict between this Agreement and any other agreement, the
provisions of this Agreement shall control.
25. Certain Limitations. This Agreement does not create any obligation or duty
of Prudential except for what is expressly set forth herein. Furthermore,
nothing in this Agreement shall impose or create any obligation or duties upon
Prudential greater than or in addition to the customary and usual obligations
and duties of Prudential to the Client or Guarantor set out in the client
agreement(s), other than those duties or obligations that are specifically
enumerated herein. Prudential is entitled to charge its normal fees including,
but not limited to, commissions in connection with any transaction done in or
with regard to the Guaranteed Account or the Guarantor's Account. Prudential has
no liability to the Client or the Guarantor with respect to their accounts
except to perform in accordance with the terms of this Agreement, any applicable
laws, rules and regulations, and the terms of any other applicable agreements.
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26. Court Action. If either the Guaranteed Account or the Guarantor's Account
shall be attached, garnished or levied upon under an order of court, or delivery
of the contents of either account shall be stayed or enjoined by an order of
court or any writ, order, judgment or decree made or entered by any court
(collectively, a "Court Action"), then, provided that any such Court Action was
not a result of action taken by Prudential in violation of this Agreement or in
an effort to circumvent the provisions of this Agreement, (a) Prudential is
expressly authorized in its sole discretion and before giving reasonable notice
to the Client or the Guarantor, to obey and comply with said orders, writs,
judgments or decrees so entered or issued, whether with or without jurisdiction,
and (b) Prudential shall incur no liability whatsoever to the Client or the
Guarantor for its compliance with said orders, writs, judgments or decrees even
if they are subsequently reversed, modified, annulled, set aside or vacated.
27. Indemnification. The Client and the Guarantor hereby agree to indemnify and
hold harmless Prudential, its affiliates, officers, agents and employees from
and against any and all claims, causes of action, liabilities, lawsuits, demands
and/or damages including, without limitation, any and all court costs,
reasonable attorneys' fees and other expenses, that may result by reason of
Prudential, its affiliates, officers and/or employees acting on or complying
with any instructions given unilaterally by the Client or the Guarantor pursuant
to the terms of Section 2 of this Agreement. This indemnification shall survive
the termination of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this GUARANTY OF ACCOUNT as of
the date first above written.
Client:
/s/ R. Xxxx Xxxxxxxx
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R. XXXX XXXXXXXX
Guarantor:
/s/ Xxxx X. Bagerdjian
----------------------
XXXX X. BAGERDJIAN
Prudential:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Prudential Securities, Inc.
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Name:
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Title:
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