STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (this AGREEMENT) entered into as of October 2,
2002, by and between Xxxx X. Bagerdjian (the BUYER), and R. Xxxx Xxxxxxxx (the
SELLER).
WHEREAS, the Seller desires to sell, and the Buyer desires to purchase
for the consideration and on the terms set forth in this Agreement 1,436,179
shares of the common stock (the COMMON STOCK) of Point.360, a California
corporation (the COMPANY), owned by the Seller.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations and warranties herein
contained, the Buyer and the Seller agree as follows:
1. Purchase and Sale of Seller's Shares of Common Stock.
(a) On and subject to the terms and conditions of this Agreement, at the
Closing (as defined in Paragraph 1(c) hereof), the Buyer shall hereby purchase
from the Seller, and the Seller shall hereby sell to the Buyer 1,436,179 shares
of Common Stock of the Company owned by the Seller (the SHARES) for a purchase
price of $1.85 per Share, and an aggregate purchase price of $2,656,931 (the
AGGREGRATE PURCHASE PRICE).
(b) At the Closing, the Seller shall deliver or will cause to be
delivered to the Buyer a stock power and assignment endorsed in blank covering
the transfer and assignment of the Shares.
(c) A closing (the CLOSING) shall be held at the offices of Xxxx &
Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, XX, or such other place as the
parties to this Agreement may agree on, as soon as practicable (but in any event
within three business days) following the date upon which all conditions set
forth in Paragraph 6 that are capable of being satisfied prior to the Closing
have been satisfied or waived, or at such other date as the Buyer and the Seller
may agree; provided, that the Closing shall be delayed if and only for so long
as necessary if a banking moratorium, act of terrorism or war (whether or not
declared) affecting United States banking or financial markets generally
prevents the Closing. The date on which the Closing takes place is referred to
as the CLOSING DATE. For tax purposes, the Closing shall be effective at the end
of the day on the Closing Date.
(d) Simultaneously herewith, the Seller shall execute an Irrovocable
Proxy in the form attached hereto as EXHIBIT A (the IRREVOCABLE PROXY).
2. Payment of Purchase Price.
(a) If the Closing takes place on or prior to October 10, 2002, the
Buyer shall pay to the Seller $100,000 in cash (by certified check or wire
transfer) on or before October 10, 2002. If the Closing takes place after
October 10, 2002, the Buyer shall pay to the Seller $100,000 in cash (by
certified check or wire transfer) at the Closing. Each and every payment
pursuant to this Paragraph 2, and the other covenants, representations,
warrantys and related undertakings of the Buyer and Seller contained herein,
shall also constitute consideration for the grant of the Irrevocable Proxy.
(b) As of the Closing Date , the Buyer shall assume all payment
obligations of the Seller in connection with the Seller's account at Prudential
Securities Incorporated (PRUDENTIAL), number OEO-343473, totaling approximately
$895,000 (the PRUDENTIAL ACCOUNT), excluding the Seller's obligation to pay
interest to the Buyer pursuant to a Guaranty Agreement,by and among the Buyer,
the Seller and Prudential, dated as of December __, 2001 (the GUARANTY) through
the later of September 1, 2002 or the Closing Date. In addition, the Buyer shall
indemnify the Seller from and against any and all liabilities relating to or
arising after the Closing Date from the Seller's obligations under the
Prudential Account, excluding the Seller's obligation to pay interest to the
Buyer pursuant to the Guaranty through the later of September 1, 2002 or the
Closing Date. The Buyer will use his best efforts to secure a novation from
Prudential to become the named party on the Prudential Account or in connection
with any successor account or accounts which the Buyer may open to replace the
Prudential Account (in each case, a SUCCESSOR ACCOUNT).
(c) As of the Closing Date, the Buyer shall assume all payment
obligations of the Seller in connection with the repayment of all remaining
amounts due under Seller's note to the Company dated August 28, 2000, in the
principal amount of $850,000 (the NOTE), such remaining payments totaling, as of
the date of this Agreement, approximately $776,000 (principal plus interest). In
addition, the Buyer shall indemnify the Seller from and against any and all
liabilities relating to or arising after the Closing Date from the Seller's
obligations to repay the note to the Company.
(d) The Buyer shall pay the Seller the balance of the Aggregate Purchase
Price, which is approximately $887,000, in two deferred installments of
approximately $443,500 each, with the first such installment to be paid on or
before August 15, 2003 (the FIRST DEFERRED INSTALLMENT) and the second such
installment to be paid on or before April 15, 2004 (the SECOND DEFERRED
INSTALLMENT). The actual amount of each such installment payment shall be
calculated as follows: (1) the First Deferred Installment shall be equal to one
half of (A) the Aggregate Purchase Price, minus (B) the sum of the actual
amounts paid and liabilities and indebtedness assumed by the Buyer pursuant to
Paragraphs 2(a), 2(b) and 2(c) above; and (2) the Second Deferred Installment
shall be equal to (A) the Aggregate Purchase Price, minus (B) the sum of the
actual amounts paid and liabilities and indebtedness assumed by the Buyer
pursuant to Paragraphs 2(a), 2(b), 2(c) and the First Deferred Installment
above.
(e) In order to provide security for the installment payments set forth
in Paragraph 2(d) above, the Buyer hereby grants to the Seller a secondary
security interest in the Shares as set forth below. At all times until the
payment of the Second Deferred Installment, the Seller shall have a security
interest equal to such number of Shares as shall be equal to the lesser of (1)
the 1,436,179 Shares of Common Stock of the Company transferred hereunder, and
(2) such number of Shares, other marketable securities or cash as are equivalent
to the fair market value of any amounts which are unpaid pursuant to Paragraph
2(d) above. This security interest shall be subordinated to and subject to the
terms of the margin and all other provisions in favor of the first secured
lender under the Prudential Account or any and all Successor Accounts. In the
event that the Buyer is required to post any additional security to satisfy the
provisions of this Paragraph, he shall do so within 10 business days after the
Company's 20 day average closing stock price reaches a level which would require
such posting. The Buyer further hereby agrees not to transfer or sell any Shares
from the Prudential Account until the margin loan to Prudential is satisfied or
a novation is obtained from Prudential which removes the Seller's name from the
Prudential Account. The Seller's security interest in such Shares shall attach
to the Shares without further action on the part of the Buyer or Seller.
3. Seller's Representations and Warranties. The Seller hereby represents
and warrants to the Buyer as follows:
(a) The Seller has the requisite legal power and authority to execute
and deliver this Agreement and to perform his obligations hereunder.
(b) The Seller is, and shall be at the Closing, the sole owner of the
Shares and the Shares are and shall at the Closing be free and clear of all
liens and encumbrances, and there are and shall at the Closing be no
restrictions on transfer of the Shares, except for liens and encumbrances
created by the Prudential Account. The Seller represents and covenants that he
shall take no action to sell, pledge, encumbrance, impair or otherwise diminish
or adversely impact the Shares, the Prudential Account or the Note through or
after the Closing.
(c) Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject, or to
the Seller's best knowledge, any law or regulation, or (B) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Seller is a party or by which he is bound or to
which any of his assets is subject.
4. Buyer's Representations and Warranties. The Buyer hereby represents
and warrants to the Seller as follows:
(a) The Buyer has the requisite legal authority and power to execute,
deliver and perform this Agreement and to perform his obligations hereunder.
(b) Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject, or to
the Buyer's best knowledge, any law or regulation, or (B) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Buyer is a party or by which he is bound or to
which any of his assets is subject.
5. Buyer's Indemnification of the Seller. Subject to the provisions of
Paragraph 2 above, from the Closing Date forward, the Buyer shall hereby
indemnify the Seller from and against any and all payment obligations,
liabilities, claims, actions, suits and proceedings taken by the Company arising
from or out of, relating to, or in connection with the Seller's obligations
under the Note and the Prudential Account.
6. Conditions Precedent. The following conditions must be met before
this Agreement will become effective:
(a) On or before the Closing, the Seller shall resign all positions with
the Company or any of its affiliates, including his positions as an officer and
director of the Company, as well as in all positions with any trade
organizations and industry groups relating to the Company's business;
(b) All applicable Company banks, lenders and financing syndicates and
consortiums execute a formal waiver or waivers of any event of default or
otherwise waives any objection to any provision of this Agreement and any
Resignation and General Release Agreement between the Seller and the Company
(collectively, the "Bank Waivers").
(c) Simultaneously herewith, the Seller shall execute the Irrevocable
Proxy.
7. Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of the Buyer and the Seller;
(b) by either the Buyer or the Seller, if the Conditions Precedent
contained in Paragraph 6 hereof, shall not have been met or waived by the
parties on or prior to October 10, 2002, or such later date as may be agreed to
by the Buyer and the Seller.
8. Miscellaneous.
(a) 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 Seller:
R. Xxxx Xxxxxxxx
Point.360
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to the Buyer:
Xxxx X. Bagerdjian
Point.360
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
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.
(b) 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.
(c) Each of the Buyer and the Seller agree 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.
(d) 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.
(e) 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.
(f) The Seller and the Buyer 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 the Seller and the Buyer and no
presumption or burden of proof shall arise favoring or disfavoring either the
Seller or the Buyer by virtue of the authorship of any of the provisions of this
Agreement.
(g) The descriptive headings of this Agreement are for convenience only
and do not constitute a part of this Agreement.
(h) 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 successors and such permitted assigns.
(i) All of the representations, warranties, covenants and obligations of
the parties contained in this Agreement shall survive the closing hereunder.
(j) Any dispute or controversy between the Seller and the Buyer 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 xx.xx. 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 Seller and the Buyer, 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.
(k) 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.
(l) The Buyer shall be responsible for all broker's fees, if any,
incurred in connection with the purchase of the Shares.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
/s/ Xxxx X. Bagerdjian
----------------------
Xxxx X. Bagerdjian
/s/ R. Xxxx Xxxxxxxx
----------------------
R. Xxxx Xxxxxxxx
EXHIBIT A
IRREVOCABLE PROXY
1. The undersigned, R. Xxxx Xxxxxxxx (SHAREHOLDER), holder of the number
of shares of common stock of Point.360, a California corporation (the COMPANY)
set forth below (the SHARES), hereby irrevocably appoints and constitutes Xxxx
X. Bagerdjian (PROXY HOLDER) as his attorney and proxy to attend meetings, vote,
give consents, and in all other ways to act in his place and stead as to all
shares subject to this irrevocable proxy (this PROXY) as long as it is in
effect. Death or incapacity of the Shareholder shall not cause a revocation of
the Proxy. Proxy Holder shall have full power of substitution and revocation and
any proxies heretofore given are hereby revoked.
2. In compliance with California Corporations Code section 705(e), the
Proxy is made irrevocable and executed in consideration of the covenants,
representations, warranties, payments, and related undertakings of the Holder
and the Shareholder pursuant to the Stock Purchase Agreement, which is being
executed by them simultaneously with this Irrevocable Proxy (the Stock Purchase
Agreement); including without limitation the payment of the Purchase Price to
the Shareholder, pursuant to Paragraph 2 of the Stock Purchase Agreement.
3. Proxy Holder shall have complete discretion to vote the shares under
the Proxy as to any matter requiring a vote of shareholders of the Company.
4. Any additional Company shares issued to the Shareholder shall be
subject to the Proxy. Certificates representing the shares set forth below and
any additional Company shares issued to the Shareholder shall be affixed with a
legend indicating that the shares are subject to the Proxy as follows:
"The voting power of the shares represented by this Certificate has been
previously granted to Xxxx X. Bagerdjian pursuant to a written proxy effective
October 2, 2002, which proxy is irrevocable."
5. Prior to any Closing under the Stock Purchase Agreement, the Proxy
shall terminate upon the occurrence of the earliest of the following: (a) the
termination of the Stock Purchase Agreement in accordance with its terms; or (b)
the passage of one (1) year from the date of execution. Once the Closing has
taken place under the Stock Purchase Agreement, the Proxy shall become
permanent, and shall be irrevocable throughout and after any period in which the
Shares are registered in the Shareholder's name.
6. In the event that Proxy Holder is unable to vote the shares under the
Proxy due to death or incapacity, the trustee of the Proxy Holder's estate shall
become Proxy Holder. In the event the Trustee is unable to vote the shares under
the Proxy due to death or incapacity, any successor Trustee shall become Proxy
Holder.
7. In the event of a dispute or controversy arising out of or relating
to the Proxy, or its performance, Proxy Holder shall be entitled to vote the
shares pursuant to the Proxy during the pendency of such dispute. Shareholder
acknowledges that the only basis to contest in any way the Proxy, or the voting
of shares under it, is for gross abuse by Proxy Holder of the voting rights
herein transferred. The prevailing party in any litigation or proceeding
pertaining to the Proxyshall be entitled to reasonable attorney fees actually
incurred, together with costs of the litigation, including expert witness fees,
if any.
8. The Proxy may be executed in one or more counterparts constitute an
original document, but all of which together shall be one and the same Proxy.
Number of Company shares subject to the Proxy: 1,436,179, representing
all of the shares held by the Shareholder in account number OEO-343473 at
Prudential Securities Incorporated.
Shareholder
/s/ R. Xxxx Xxxxxxxx
--------------------
R. Xxxx Xxxxxxxx
Address:
ACCEPTED AND AGREED TO
Proxy Holder
/s/ Xxxx X. Bagerdjian
----------------------
Xxxx X. Bagerdjian
Address:
