Document:

EXHIBIT B

                       2000 NONQUALIFIED STOCK OPTION PLAN
                                       OF
                                 VDI MULTIMEDIA

1.       PURPOSES OF THE PLAN
         --------------------

         The purpose of the 2000 Nonqualified  Stock Option Plan ("Plan") of VDI
MultiMedia,  a  California  corporation  (the  "Company"),  is solely to attract
people who have not previously been employed by the Company through the granting
of options to them as a  substantial  inducement  to join the  Company.  Options
granted under this Plan  ("Options")  may only be  "nonqualified  stock options"
("NQOs").

2.       ELIGIBLE PERSONS
         ----------------

         Every person who at the date of an agreement to become  employed by the
Company,  or at the date to  grant  of an  Option,  is not yet  employed  by the
Company or any  Affiliate  (as  defined  below) of the  Company is  eligible  to
receive  NQOs  under  this  Plan.  Every  person  who at the  date of grant is a
consultant  or adviser  to, or  non-employee  director  of,  the  Company or any
Affiliate  (as defined  below) of the Company is eligible to receive  NQOs under
this  Plan.  The  term  "Affiliate"  as used  in this  Plan  means a  parent  or
subsidiary  corporation  as  defined  in the  applicable  provisions  (currently
Sections 424(e) and (f),  respectively) of the Internal Revenue Code of 1986, as
amended (the "Code").

3.       STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS
         ----------------------------------------------------

         Subject  to the  provisions  of Section  6.1.1 of this Plan,  the total
number of shares of stock which may be issued under Options granted  pursuant to
this Plan shall not exceed  2,000,000 shares of Common Stock. The shares covered
by the  portion of any grant  under this Plan which  expires,  terminates  or is
cancelled  unexercised  shall become available again for grants under this Plan.
Where  the  exercise  price of an  Option  is paid by  means  of the  optionee's
surrender  of  previously   owned  shares  of  Common  Stock  or  the  Company's
withholding  of  shares  otherwise  issuable  upon  exercise  of the  Option  as
permitted  herein,  only the net  number  of  shares  issued  and  which  remain
outstanding  in connection  with such exercise  shall be deemed  "issued" and no
longer available for issuance under this Plan.

4.       ADMINISTRATION
         --------------

         (a) This Plan shall be  administered  by the Board of  Directors of the
Company  (the   "Board")  or  by  a  committee   (the   "Committee")   to  which
administration  of this Plan, or of part of this Plan, is delegated by the Board
(in either  case,  the  "Administrator").  The Board  shall  appoint  and remove
members of the Committee in its discretion in accordance with  applicable  laws.
If  necessary in order to comply with Rule 16b-3 under the  Securities  Exchange
Act of 1934, as amended (the "Exchange Act"), or Section 162(m) of the Code, the
Committee shall, in the Board's discretion, be comprised solely of "non-employee
directors"  within the meaning of said Rule 16b-3 or "outside  directors" within
the meaning of Section  162(m) of the Code. The foregoing  notwithstanding,  the
Administrator  may  delegate  nondiscretionary  administrative  duties  to  such
employees  of the  Company as it deems  proper and the  Board,  in its  absolute
discretion,  may at any time and from time to time  exercise  any and all rights
and duties of the Administrator under this Plan.

                                       1
<PAGE>

         (b) Subject to the other  provisions  of this Plan,  the  Administrator
shall have the  authority,  in its  discretion:  (i) to grant  Options;  (ii) to
determine the fair market value of the Common Stock subject to Options; (iii) to
determine the exercise price of Options  granted;  (iv) to determine the persons
to whom,  and the time or times at  which,  Options  shall be  granted,  and the
number of shares subject to each Option; (v) to construe and interpret the terms
and provisions of this Plan and of any option  agreement and all Options granted
under this Plan;  (vi) to prescribe,  amend,  and rescind rules and  regulations
relating  to this Plan;  (vii) to  determine  the terms and  provisions  of each
Option granted (which need not be identical),  including but not limited to, the
time or times at which Options shall be exercisable;  (viii) with the consent of
the optionee,  to modify or amend any Option;  (ix) to reduce the exercise price
of any Option; (x) to accelerate or defer (with the consent of the optionee) the
exercise  date of any Option;  (xi) to authorize any person to execute on behalf
of the Company any instrument  evidencing  the grant of an Option;  and (xii) to
make  all  other   determinations   deemed   necessary  or  advisable   for  the
administration of this Plan or any option agreement or Option. The Administrator
may delegate  nondiscretionary  administrative  duties to such  employees of the
Company as it deems proper.

         (c) All questions of interpretation, implementation, and application of
this  Plan  or any  option  agreement  or  Option  shall  be  determined  by the
Administrator, which determination shall be final and binding on all persons.

5.       GRANTING OF OPTIONS; OPTION AGREEMENT
         -------------------------------------

         (a) No Options shall be granted under this Plan after 10 years from the
date of adoption of this Plan by the Board.

         (b) Each Option shall be evidenced by a written stock option agreement,
in form  satisfactory  to the  Administrator,  executed  by the  Company and the
person to whom such  Option is granted.  In the event of a conflict  between the
terms or conditions of an option  agreement and the terms and conditions of this
Plan, the terms and conditions of this Plan shall govern.

6.       TERMS AND CONDITIONS OF OPTIONS
         -------------------------------

         Each Option  granted  under this Plan shall be subject to the terms and
conditions set forth in Section 6.1.

         6.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT.  All Options
granted under this Plan shall be subject to the following terms and conditions:

         6.1.1 CHANGES IN CAPITAL  STRUCTURE.  Subject to Section 6.1.2,  if the
stock of the Company is changed by reason of a stock split, reverse stock split,
stock dividend,  recapitalization,  combination or  reclassification,  or if the
Company effects a spin-off of the Company's subsidiary,  appropriate adjustments
shall be made by the  Administrator,  in its sole discretion,  in (a) the number
and class of shares of stock  subject to this Plan and each  Option  outstanding
under  this  Plan,  and (b) the  exercise  price  of  each  outstanding  Option;
provided,  however,  that the Company shall not be required to issue  fractional
shares as a result of any such adjustments.

                                       2
<PAGE>

         6.1.2 CORPORATE TRANSACTIONS. Except as otherwise provided in the stock
option  agreement,  in the event of a Corporate  Transaction (as defined below),
the  Administrator  shall notify each optionee at least 30 days prior thereto or
as soon as may be  practicable.  To the extent  not  previously  exercised,  all
Options shall terminate  immediately prior to the consummation of such Corporate
Transaction   unless  the  Administrator   determines   otherwise  in  its  sole
discretion;  provided, however, that the Administrator,  in its sole discretion,
may (i) permit exercise of any Options prior to their termination,  even if such
Options would not  otherwise  have been  exercisable,  and (ii) provide that all
outstanding  Options shall be assumed or an equivalent option  substituted by an
applicable successor  corporation or any Affiliate of the successor  corporation
in the event of a  Corporate  Transaction.  A  "Corporate  Transaction"  means a
liquidation  or  dissolution of the Company,  a merger or  consolidation  of the
Company  with  or  into  another  corporation  or  entity,  a  sale  of  all  or
substantially  all  of the  assets  of  the  Company,  or a  purchase  or  other
acquisition  of more than 50 percent  of the  outstanding  capital  stock of the
Company  in a single  transaction  or a series of  related  transactions  by one
person or more than one person acting in concert.

         6.1.3. TIME OF OPTION EXERCISE. Subject to Section 5, an Option granted
under this Plan shall be exercisable (a) immediately as of the effective date of
the stock option  agreement  granting the Option,  or (b) in  accordance  with a
schedule  or  performance  criteria  as may be  set  by  the  Administrator  and
specified in the written stock option agreement  relating to such Option. In any
case, no Option shall be exercisable  until a written stock option  agreement in
form satisfactory to the Company is executed by the Company and the optionee.

         6.1.4 OPTION GRANT DATE. The date of grant of an Option under this Plan
shall be the effective date of the stock option agreement granting the Option.

         6.1.5  NONTRANSFERABILITY  OF OPTION  RIGHTS.  Except  with the express
written  approval of the  Administrator  which  approval  the  Administrator  is
authorized to give only with respect to NQOs, no Option  granted under this Plan
shall be assignable or otherwise  transferable by the optionee except by will or
by the laws of descent and  distribution.  During the life of the  optionee,  an
Option shall be exercisable only by the optionee.

         6.1.6  PAYMENT.  Except as provided  below,  payment in full,  in cash,
shall be made for all stock  purchased at the time written notice of exercise of
an Option is given to the Company,  and proceeds of any payment shall constitute
general funds of the Company. The Administrator, in the exercise of its absolute
discretion after considering any tax, accounting and financial consequences, may
authorize any one or more of the following additional methods of payment:

               (a) Acceptance of the optionee's  full recourse  promissory  note
for all or part of the Option  price,  payable on such  terms and  bearing  such
interest rate as determined by the Administrator  (but in no event less than the
minimum  interest rate specified under the Code at which no additional  interest
or original  issue  discount  would be imputed),  which  promissory  note may be
either  secured or unsecured in such manner as the  Administrator  shall approve
(including,  without  limitation,  by a security  interest  in the shares of the
Company);

                                       3
<PAGE>

               (b) Subject to the discretion of the  Administrator and the terms
of the stock option agreement  granting the Option,  delivery by the optionee of
shares of Common  Stock  already  owned by the  optionee  for all or part of the
Option price, provided the fair market value (determined as set forth in Section
6.1.9) of such  shares of Common  Stock is equal on the date of  exercise to the
Option  price,  or such portion  thereof as the optionee is authorized to pay by
delivery of such stock;

               (c) Subject to the discretion of the  Administrator,  through the
surrender of shares of Common Stock then  issuable  upon exercise of the Option,
provided the fair market  value  (determined  as set forth in Section  6.1.9) of
such  shares  of Common  Stock is equal on the date of  exercise  to the  Option
price, or such portion thereof as the optionee is authorized to pay by surrender
of such stock; and

               (d) By means of so-called  cashless  exercises as permitted under
applicable  rules and regulations of the Securities and Exchange  Commission and
the Federal Reserve Board.

         6.1.7  WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise and as
a  condition  thereto,  or at such other  time as the amount of such  obligation
becomes  determinable,  the  optionee  shall  remit to the  Company  in cash all
applicable  federal and state  withholding and employment taxes. Such obligation
to remit  may be  satisfied,  if  authorized  by the  Administrator  in its sole
discretion, after considering any tax, accounting and financial consequences, by
the optionee's (i) delivery of a promissory  note in the required amount on such
terms as the  Administrator  deems  appropriate,  (ii)  tendering to the Company
previously  owned shares of Common Stock or other securities of the Company with
a fair market  value equal to the  required  amount,  or (iii)  agreeing to have
shares of Common Stock (with a fair market  value equal to the required  amount)
which are acquired upon exercise of the Option withheld by the Company.

         6.1.8 OTHER PROVISIONS. Each Option granted under this Plan may contain
such other terms, provisions,  and conditions not inconsistent with this Plan as
may be determined by the Administrator  notwithstanding anything to the contrary
in this Plan or any agreement signed in connection with this Plan.

         6.1.9  DETERMINATION  OF VALUE.  For  purposes  of this Plan,  the fair
market  value of  Common  Stock  or other  securities  of the  Company  shall be
determined as follows:

               (a) If the  stock  of  the  Company  is  listed  on a  securities
exchange or is regularly quoted by a recognized  securities  dealer, and selling
prices are  reported,  its fair market value shall be the closing  price of such
stock on the date the value is to be  determined,  but if selling prices are not
reported,  its fair market  value shall be the mean between the high bid and low
asked  prices  for such stock on the date the value is to be  determined  (or if
there are no quoted  prices for the date of grant,  then for the last  preceding
business day on which there were quoted prices).

               (b) In the absence of an  established  market for the stock,  the
fair  market  value   thereof   shall  be   determined  in  good  faith  by  the
Administrator,  with reference to the Company's net worth,  prospective  earning
power,  dividend-paying  capacity,  and other  relevant  factors,  including the
goodwill of the Company,  the economic  outlook in the Company's  industry,  the
Company's position in the industry, the Company's management,  and the values of
stock of other corporations in the same or a similar line of business.

                                       4
<PAGE>

         6.1.10 OPTION TERM. No Option shall be  exercisable  more than 10 years
after the date of grant,  or such  lesser  period of time as is set forth in the
stock option  agreement  (the end of the maximum  exercise  period stated in the
stock option agreement is referred to in this Plan as the "Expiration Date").

         6.1.11  EXERCISE  FOR  RESTRICTED  STOCK.  At  the  discretion  of  the
Administrator,  an option  granted  under  this plan may be  exercised  prior to
vesting in exchange for stock bearing the same forfeiture and nontransferability
restrictions  (the  "Restrictions")  as  the  unvested  portion  of  the  option
exercised (the "Restricted Stock") or such other or additional  restrictions and
conditions as the  Administrator  shall  prescribe.  The Restricted  Stock shall
vest, and the  Restrictions  shall lapse,  upon the same terms and conditions as
the exercised  options.  The  Restricted  Stock shall bear a legend  stating the
Restrictions;  and when, and under what  circumstances,  the Restrictions  shall
lapse, and the stock shall vest.

         6.2 TERMS AND CONDITIONS TO WHICH OPTIONS ARE SUBJECT.  Options granted
under this Plan, which are designated as NQOs, shall be subject to the following
terms and conditions:

         6.2.1.EXERCISE PRICE.

               (a) The exercise  price of an NQO shall be the amount  determined
by the Administrator as specified in the option agreement.

               (b)  To  the  extent  required  by  applicable  laws,  rules  and
regulations,  the  exercise  price of an NQO  granted  to any  person  who owns,
directly or by attribution  under the Code  (currently  Section  424(d)),  stock
possessing  more than ten  percent  of the total  combined  voting  power of all
classes  of  stock  of  the  Company  or  of  any   Affiliate  (a  "Ten  Percent
Stockholder")  shall in no  event be less  than  110% of the fair  market  value
(determined in accordance with Section 6.1.9) of the stock covered by the Option
at the time the Option is granted.

         6.2.2  TERMINATION OF EMPLOYMENT.  Except as otherwise  provided in the
stock option  agreement,  if for any reason an optionee ceases to be employed by
the Company or any of its Affiliates,  Options that are NQOs held at the date of
termination  (to the extent then  exercisable)  may be  exercised in whole or in
part at any time within 90 days of the date of such termination (but in no event
after the Expiration  Date).  For purposes of this Section  6.2.2,  "employment"
includes  service as a director,  consultant  or adviser.  For  purposes of this
Section  6.2.2,  an  optionee's  employment  shall not be deemed to terminate by
reason of the  optionee's  transfer  from the Company to an  Affiliate,  or vice
versa, or sick leave,  military leave or other leave of absence  approved by the
Administrator,  if the  period of any such  leave does not exceed 90 days or, if
longer,  if the optionee's right to reemployment by the Company or any Affiliate
is guaranteed either contractually or by statute.

                                       5
<PAGE>

7.       MANNER OF EXERCISE
         ------------------

         (a) An optionee wishing to exercise an Option shall give written notice
to the  Company at its  principal  executive  office,  to the  attention  of the
officer of the Company designated by the  Administrator,  accompanied by payment
of the exercise  price and  withholding  taxes as provided in Sections 6.1.6 and
6.1.7.  The date the Company  receives  written notice of an exercise  hereunder
accompanied by payment of the exercise price will be considered as the date such
Option was exercised.

         (b) Promptly  after receipt of written  notice of exercise of an Option
and the payments  called for by Section 7(a), the Company  shall,  without stock
issue or transfer taxes to the optionee or other person entitled to exercise the
Option,  deliver  to  the  optionee  or  such  other  person  a  certificate  or
certificates  for the  requisite  number  of shares of  stock.  An  optionee  or
permitted  transferee  of  the  Option  shall  not  have  any  privileges  as  a
stockholder  with respect to any shares of stock covered by the Option until the
date of issuance  (as  evidenced  by the  appropriate  entry on the books of the
Company or a duly authorized transfer agent) of such shares.

8.       EMPLOYMENT OR CONSULTING RELATIONSHIP
         -------------------------------------

         Nothing in this Plan or any Option granted  hereunder  shall  interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any  optionee's  employment,  consulting or advising at any time,  nor
confer upon any  optionee  any right to continue in the employ of, or consult or
advise with, the Company or any of its Affiliates.

9.       CONDITIONS UPON ISSUANCE OF SHARES
         ----------------------------------

         9.1 SECURITIES ACT. Shares of Common Stock shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and  delivery of such shares  pursuant  thereto  shall  comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended (the "Securities Act").

         9.2  NON-COMPETE  AGREEMENT.  As a further  condition to the receipt of
Common Stock pursuant to the exercise of an Option,  an optionee may be required
not to render services for any organization, or engage directly or indirectly in
any business, competitive with the Company at any time during which an Option is
outstanding  to such Optionee and for six months after any exercise of an Option
or the receipt of Common Stock pursuant to the exercise of an Option. Failure to
comply with this condition  shall cause such Option and the exercise or issuance
of shares  thereunder  to be  rescinded  and the  benefit  of such  exercise  or
issuance to be repaid to the Company.

10.      NONEXCLUSIVITY OF THIS PLAN
         ---------------------------

         The  adoption  of this Plan  shall not be  construed  as  creating  any
limitations  on  the  power  of  the  Company  to  adopt  such  other  incentive
arrangements  as it may  deem  desirable,  including,  without  limitation,  the
granting of stock options other than under this Plan.

                                       6
<PAGE>

11.      MARKET STANDOFF
         ---------------

         Each optionee,  if so requested by the Company or any representative of
the  underwriters  in connection  with any  registration  of the offering of any
securities of the Company under the Securities  Act, shall not sell or otherwise
transfer any shares of Common Stock acquired upon exercise of Options during the
180-day period  following the effective date of a registration  statement of the
Company filed under the Securities Act; provided, however, that such restriction
shall apply only to the first  registration  statement  of the Company to become
effective under the Securities Act after the date of adoption of this Plan which
includes  securities  to be sold on behalf of the  Company  to the  public in an
underwritten  public  offering under the Securities  Act. The Company may impose
stop-transfer  instructions with respect to securities  subject to the foregoing
restriction until the end of such 180-day period.

12.      AMENDMENTS TO PLAN
         ------------------

         The Board may at any time amend,  alter,  suspend or  discontinue  this
Plan. Without the consent of an optionee, no amendment,  alteration,  suspension
or  discontinuance  may adversely affect  outstanding  Options except to conform
this Plan and NQOs  granted  under this Plan to the  requirements  of federal or
other tax laws relating to stock options. No amendment,  alteration,  suspension
or discontinuance  shall require stockholder approval unless the Board otherwise
concludes that stockholder approval is advisable.

13.      EFFECTIVE DATE OF PLAN; TERMINATION
         -----------------------------------

         This Plan shall become  effective  upon adoption by the Board.  Options
may be  granted  and  exercised  under  this  Plan  only  after  there  has been
compliance with all applicable federal and state securities laws. This Plan (but
not Options previously granted under this Plan) shall terminate within ten years
from the date of its adoption by the Board.  Such  termination  shall not affect
any outstanding Options.

                                       7EMPLOYMENT AGREEMENT
                              --------------------

         This  Employment  Agreement  (the  "Agreement")  is entered into by and
between VDI MultiMedia,  a California  corporation (the "Company"),  and Alan R.
Steel (the "Executive"), as of November 3, 2000.

I.       RECITAL.
         --------

         WHEREAS,  the Company  desires to employ the  Executive  as Senior Vice
President-Finance and Administration.

         NOW,  THEREFORE,  the Company and the Executive  desire to set forth in
this Agreement the terms and conditions of the  Executive's  employment with the
Company.

II.      EMPLOYMENT.
         ----------

         The Company  hereby  employs the  Executive  and the  Executive  hereby
accepts such  employment,  upon the terms and conditions  hereinafter set forth,
from November 3, 2000 to and including December 31, 2002. The term of employment
in this Agreement shall be automatically  extended by one additional year unless
the Executive or the Company gives notice to the other, in writing,  at least 30
days prior to December 1, 2001 or, thereafter, 13 months prior to the expiration
of this  Agreement,  of its or his desire to terminate  this Agreement or modify
its terms.  The Company  agrees  that the  Executive  will be located,  and will
render such services, in the Hollywood, California area.

III.     DUTIES.
         -------

         A. The  Executive  shall serve during the course of his  employment  as
Senior Vice  President-Finance  and Administration of the Company and shall have
such other similar duties and  responsibilities as the Board of Directors of the
Company shall determine from time to time.

         B. The Executive agrees to devote substantially all of his time, energy
and  ability to the  business  of the  Company  and shall not be involved in the
operations or management of any other competitive business. Nothing herein shall
prevent the  Executive,  upon written  approval of the Board of Directors of the
Company,  from  serving  as a  director  or  trustee  of other  corporations  or
businesses  which are not in competition  with the business of the Company or in
competition with any present or future affiliate of the Company.

         C. For the term of this  Agreement,  the Executive  shall report to the
Chief Executive Officer of the Company.

IV.      COMPENSATION.
         -------------

         A. BASE SALARY.  The Company shall pay the Executive a base salary at a
rate to be  determined by the  Compensation  Committee of the Board of Directors
but which rate shall not be less than the greater of

                                        1
<PAGE>

             1. $175,000 per year, or

             2. if such rate is increased from time to time by the  Compensation
Committee, such increased rate of Base Salary.

Such  salary  shall  be  earned   monthly  and  shall  be  payable  in  periodic
installments  no less  frequently  than monthly in accordance with the Company's
customary  practices.  Amounts payable shall be reduced by standard  withholding
and other authorized deductions.

         B. ANNUAL BONUS, INCENTIVE, SAVINGS AND RETIREMENT PLANS. The Executive
shall be entitled to  participate  in all annual bonus,  incentive,  savings and
retirement plans, practices, policies and programs applicable generally to other
peer  executives of the Company as well as  discretionary  plans approved by the
Compensation Committee.

         C.  WELFARE  BENEFIT  PLANS.   The  Executive  shall  be  eligible  for
participation  in and shall receive all benefits  under welfare  benefit  plans,
practices,  policies  and  programs  provided  by  the  Company  to  the  extent
applicable  generally  to  other  peer  executives  of the  Company  as  well as
discretionary plans approved by the Compensation Committee.

         D.  EMPLOYMENT  EXPENSES.  The  Executive  shall be entitled to receive
prompt  reimbursement for all reasonable  employment expenses incurred by him in
accordance  with the policies,  practices and procedures as in effect  generally
with respect to other peer executives of the Company.

         E. FRINGE BENEFITS.  The Executive shall be entitled to fringe benefits
in  accordance  with the plans,  practices,  programs  and policies as in effect
generally with respect to other peer executives of the Company.

         F. ACCRUED  VACATION.  The Executive shall be entitled to paid vacation
of four weeks per year.

         G. AUTOMOBILE.  The Company shall provide the Executive with the use of
a Company owned or leased automobile or, at the Company's option,  the Executive
shall be entitled to a $350.00 per month automobile allowance.

V.       TERMINATION.
         ------------

         A. DEATH OR DISABILITY.  The  Executive's  employment  shall  terminate
automatically  upon the  Executive's  death.  If the Company  determines in good
faith that disability of the Executive has occurred  (pursuant to the definition
of Disability set forth below),  it may give to the Executive  written notice of
its  intention to  terminate  the  Executive's  employment.  In such event,  the
Executive's  employment with the Company shall terminate effective on the day of
receipt  of such  notice  by the  Executive.  For  purposes  of this  Agreement,
"Disability"  shall mean the absence of the  Executive  from his duties with the
Company on the basis  provided in this  agreement  for a period of 3 months as a
result of incapacity due to mental or physical illness which is determined to be
total and  permanent by a physician  selected by the Company or its insurers and
acceptable to the Executive or his legal  representative.  "Incapacity"  as used
herein shall be limited only to such  Disability  which  substantially  prevents
Company from availing itself of the services of the Executive.

                                       2
<PAGE>

         B. CAUSE.  The Company may terminate  the  Executive's  employment  for
Cause.  For  purposes of this  Agreement,  "Cause"  shall mean that the Company,
acting in good faith  based  upon the  information  then  known to the  Company,
determines that the Executive has:

             1.  committed an act of fraud upon, or an act  evidencing  material
dishonesty toward the Company; or

             2. been convicted of a felony,  which  conviction  through lapse of
time or otherwise is not subject to appeal; or

             3. refused to perform material required duties and responsibilities
or  performed  them  with  negligence  or  misconduct  and  failed  to cure such
misconduct  given the opportunity  within ten days written notice by the Company
to remedy such acts; or

             4.  materially  breached  any of the  covenants  set  forth in this
Agreement; or

             5.  committed  any  act  materially  detrimental  to the  Company's
business or goodwill.

         C.  OBLIGATIONS  OF THE COMPANY  UPON  TERMINATION  BASED UPON DEATH OR
DISABILITY OR CAUSE.

             1. DEATH OR DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Death or Disability, this Agreement shall terminate
without further obligations to the Executive or his legal  representatives under
this  Agreement,  other than for payments  made by the Company to the  Executive
equal to the sum of:

                 (a) the  Executive's  annual  base  salary  through the date of
termination to the extent not theretofore paid

                 (b) reasonable employment expenses, as provided herein, through
the date of termination to the extent not theretofore paid and

                 (c) any accrued vacation pay to the extent not theretofore paid

The  sum of the  amounts  described  in  clauses  (a),  (b)  and  (c)  shall  be
hereinafter referred to as the "Accrued Obligations", which shall be paid to the
Executive or his estate or  beneficiary,  as  applicable,  in a lump sum in cash
within 30 days of the date of termination and in addition, the Company shall pay
to the Executive or his estate or  beneficiary,  as applicable,  any amounts due
pursuant to the terms of any applicable welfare or pension benefit plans.

             2.  CAUSE.  If the  Executive's  employment  is  terminated  by the
Company for Cause, this Agreement shall terminate without further obligations to
the Executive  other than for the timely payment of Accrued  Obligations and any
amounts due pursuant to the terms of any applicable  welfare or pension  benefit
plans.

                                       3
<PAGE>

             3. WITHOUT CAUSE.  If the  Executive's  employment is terminated by
the Company without Cause, in addition to Executive's other rights,  the Company
shall continue to pay  Executive's  health and medical  benefits for a period of
two  years  following  the  termination,  at which  time the  Executive  will be
entitled to pursue, at the Executive's cost, applicable COBRA benefits.

             4.  CONSTRUCTIVE  TERMINATION.  For  purposes  of  this  Agreement,
constructive termination shall occur if

                 (a)  the  Executive's  place  of  employment  or the  Company's
business office is moved more than 50 miles from its present location,

                 (b) there is a  material  downward  change  in the  Executive's
duties and responsibilities,

                 (c) there is a downward change in the Executive's  Base Salary,
or

                 (d)  there  is  a  change  in  the  Executive's   title  and/or
responsibilities that is clearly a demotion.

VI.      ARBITRATION.
         ------------

         Any  controversy or claim arising out of or relating to this Agreement,
its enforcement or interpretation,  or because of an alleged breach, default, or
misrepresentation  in connection with any of its provisions,  shall be submitted
to  arbitration,  to be held in Los Angeles,  California in accordance  with the
rules and  procedures  of the  American  Arbitration  Association.  In the event
either party institutes arbitration under this Agreement, the costs and expenses
of such  arbitration  (including  counsel  fees)  shall  be borne by each of the
parties, or as the arbitrator(s) may determine at the request of either party.

VII.     CONFIDENTIAL INFORMATION.
         -------------------------

         The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or  confidential  information,  knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been  obtained by the  Executive  during his  employment by the
Company  or any of its  affiliated  companies  and which  shall not be or become
public knowledge (other than by acts by the Executive or his  representatives in
violation of this Agreement).  After  termination of the Executive's  employment
with the  company,  he shall  not,  without  the prior  written  consent  of the
Company, or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.

VIII.    SUCCESSORS.
         -----------

         A. This  Agreement is personal to the Executive and shall not,  without
the prior written consent of the Company, be assignable by the Executive.

                                       4
<PAGE>
         B. This Agreement shall inure to the benefit of and be binding upon the
Company and its  successors and assigns and any such successor or assignee shall
be deemed  substituted for the Company under the terms of this Agreement for all
purposes.  As used herein,  "successor" and "assignee" shall include any person,
firm,  corporation  or other  business  entity  which at any  time,  whether  by
purchase, merger or otherwise,  directly or indirectly acquires the stock of the
Company or to which the Company  assigns  this  Agreement by operation of law or
otherwise.

IX.      WAIVER.
         -------

         No waiver  of any  breach of any term or  provision  of this  Agreement
shall be  construed  to be,  nor shall be, a waiver of any other  breach of this
Agreement.  No waiver shall be binding unless in writing and signed by the party
waiving the breach.

X.       MODIFICATION.
         -------------

         This  Agreement may not be amended or modified  other than by a written
agreement executed by the Executive and the Board of Directors of the Company.

XI.      SAVINGS CLAUSE.
         ---------------

         If any provision of this Agreement or the  application  thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement  which  can  be  given  effect  without  the  invalid   provisions  or
applications and to this end the provisions of this Agreement are declared to be
severable.

XII.     COMPLETE AGREEMENT.
         -------------------

         This  instrument  constitutes  and  contains the entire  agreement  and
understanding  concerning  the  Executive's  employment  and the  other  subject
matters  addressed  herein between the parties,  and supersedes and replaces all
prior negotiations and all agreements proposed or otherwise,  whether written or
oral, concerning the subject matters hereof. This is an integrated document.

XIII.    GOVERNING LAW.
         --------------

         This  Agreement  shall be deemed to have been  executed  and  delivered
within the State of  California,  and the rights and  obligations of the parties
hereunder  shall be construed and enforced in accordance  with, and governed by,
by the laws of the State of California  without regard to principles of conflict
of laws.

XIV.     CONSTRUCTION.
         -------------

         Each party has  cooperated  in the  drafting  and  preparation  of this
Agreement.  Hence, in any  construction  to be made of this Agreement,  the same
shall not be  construed  against  any party on the basis  that the party was the
drafter.  The captions of this Agreement are not part of the  provisions  hereof
and shall have no force or effect.

                                       5
<PAGE>
XV.      COMMUNICATIONS.
         ---------------

         All notices, requests, demands and other communications hereunder shall
be in  writing  and shall be deemed to have been duly given if  delivered  or if
mailed by  registered  or  certified  mail,  postage  prepaid,  addressed to the
Executive at the  Executive's  residence  address on file with the  Company,  or
addressed to the Company at 7083 Hollywood Blvd.,  Hollywood,  California 90028.
Any party may  change  the  address  at which  notice  shall be given by written
notice given in the above manner.

XVI.     EXECUTION.
         ----------

         This Agreement is being executed in one or more  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument. Photographic copies of such signed counterparts may
be used in lieu of the originals for any purpose.

XVII.    LEGAL COUNSEL.
         --------------

         The Executive and the Company  recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.
<TABLE>
<CAPTION>

VDI MULTIMEDIA
<S>                                                           <C>
                                                              --------------------------------------------------

By:                                                           /s/ Alan R. Steel
   --------------------------------------------------         -------------------------------------------------

Its:
    -------------------------------------------------

</TABLE>

                                      6
<PAGE>

                 ADDITIONAL EMPLOYMENT TERMS (November 3, 2000)

These Additional  Employment Terms ("Terms")  itemize Terms in addition to those
set forth in that certain Employment  Agreement  ("Agreement") dated November 3,
2000 between VDI MultiMedia (the "Company") and Alan R. Steel (the "Executive").

MOVING ALLOWANCE
----------------

The Company will pay the Executive's:

1. Moving  expenses from  Medford,  Oregon to the Los Angeles area for household
goods (i.e., packing, moving and unpacking).

2. Temporary  living expenses from the date of employment until escrow is closed
on a new home, not to exceed three months, together with tax gross-up amount.

3. Round trip coach air fare for two house hunting trips (for both the Executive
and his wife) and up to five round trips for the  Executive to return home until
escrow is closed on a new home.

STOCK OPTIONS
-------------

The  Executive  will be  provided a 10-year  option to purchase  250,000  shares
exercisable at $4.38, the closing market price on October 30, 2000, the date the
parties agreed on the employment  relationship.  Incentive stock options will be
granted to the  maximum  allowable.  The options  shall vest when the  Company's
common stock trades for 10 consecutive trading days as follows:

                      PRICE           % VESTING
                      -----           ---------
                     $ 8.50              20%
                      11.00              40%
                      14.00              60%
                      18.00              80%
                      23.00             100%

In the event  Executive  is  terminated  without  cause  during  the term of the
Agreement,  all options shall  immediately  vest.  However,  options to purchase
50,000  shares will be cancelled if the  Executive is  terminated  without cause
prior to December 31, 2001.

PAYMENT OF SALARY
-----------------

Although  Executive's  salary  shall accrue from  November 3, 2000,  the initial
payment for salary will be made on January 2, 2001,  which payments will include
all retroactive amounts due from Executive's employment date.

<TABLE>
<CAPTION>

VDI MULTIMEDIA
<S>                                                           <C>
                                                              --------------------------------------------------

By:                                                           /s/ Alan R. Steel
   --------------------------------------------------         -------------------------------------------------

Its:
    -------------------------------------------------

</TABLE>

                                       7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}]]