POINT 360
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>rlsnoncompete.txt
<TEXT>
                                  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.

<PAGE>

        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

<PAGE>

        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.

<PAGE>

        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
---------------------------
R. Luke Stefanko
                                        By: /s/ Haig S. Bagerdjian
                                            -------------------------
                                                Haig S. Bagerdjian
                                                Chairman of the Board


                                        By: /s/ Alan Steel
                                            -------------------------
                                                Alan Steel
                                                Chief Financial Officer









</TEXT>
</DOCUMENT>
