Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement (this AGREEMENT), dated as of October 2, 2002,
is entered into by and between Point.360, a California corporation (the
COMPANY), and R. Luke Stefanko (the CONSULTANT).
WHEREAS, the Consultant resigned, as of the end of business on the date
hereof, from all positions he held with the Company, including his positions as
an officer and director of the Company; and
WHEREAS, the Company desires to hire the Consultant and the Consultant
desires to serve the Company on a part-time basis to assist in the transition to
new management upon the terms and provisions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the Company and the Consultant hereby agree as follows:
1. Consulting Relationship. Beginning as of the date of this Agreement
and continuing through December 31, 2002, the Consultant shall be available to
provide to the Company, on a part-time basis, but in no event greater than 20
hours per month, the following consulting services (the SERVICES): (i) managing
the day to day operations of the Company; (ii) overseeing the Company's sales;
(iii) developing a five year plan for the Company; (iv) attending facilities
meetings to assist in the transition to new management; and (iv) any other
consulting services as the Company shall determine. The Services shall be
rendered by Consultant primarily in Hollywood, California and at such times and,
if required in particular circumstances, such other locations as reasonably
requested by the Company. Beginning January 1, 2003 and continuing as long as
this Agreement is in effect, the Consultant shall be available to provide the
Services to the Company on an as-needed basis, upon reasonable request from the
Company from time to time, but in no event greater than 10 hours per month.
2. Fees. In consideration of the Services to be rendered hereunder, the
Company shall pay to the Consultant $10,000 per month beginning as of the date
hereof and continuing through December 31, 2002, payable on the 15th day of each
month. In addition, while this Agreement is in effect, the Company will allow
the Consultant's current option grants, as set forth in the attached Exhibit A,
to continue to vest and become exercisable, with such options terminating upon
the second anniversary of the date of this Agreement, or earlier in accordance
with Section 4(b) below or Section 1 of the Noncompetition Agreement between the
Company and the Consultant, entered into as of the date hereof and attached
hereto as EXHIBIT B For all Services Consultant provides to the Company after
January 1, 2003 while this Agreement is in effect, the Company shall pay the
Consultant a consulting fee of $150 per hour.
3. Expenses. The Company shall reimburse the Consultant within 30 days
following receipt of appropriate documentation for necessary and reasonable
out-of-pocket business expenses incurred by the Consultant in the performance of
the Services; provided, however, that the Consultant shall not be authorized to
incur on behalf of the Company any expenses in excess of $1,000 without the
prior consent of the Company.
4. Term and Termination. The Consultant shall serve as a consultant to
the Company and shall render the Services to the Company for a period commencing
on October 3, 2002 and terminating October 2, 2004, unless earlier terminated by
either party hereto as set forth in this Section 4. This Agreement and the
Consultant's rights and obligations hereunder shall, under any of the following
circumstances, terminate in advance of the time specified in this Section 4, and
the Consultant shall have the right to receive only his Fees that shall be
accrued hereunder through the effective date of such termination and shall have
no right to receive any further compensation hereunder from and after the time
of such termination:
(a) Death. This Agreement and the Consultant's duties hereunder shall
terminate immediately upon the Consultant's death.
(b) Termination by the Company. In the event that the Consultant shall
become either physically or mentally incapacitated so as to be incapable
of performing his duties as required hereunder, and if such incapacity
shall continue for a period of 40 consecutive days, the Company may, at
its option, terminate this Agreement and the Consultant's duties
hereunder by written notice to the Consultant at that time or at any
time thereafter while such incapacity continues. The Company may
terminate this Agreement for Cause (as hereinafter defined) at any time
upon written notice to the Consultant. "Cause" as used in this Agreement
means that (i) the Consultant, after reasonable notice and warning, has
failed to perform his assigned duties, (ii) the Consultant has
materially breached any of the terms or conditions of this Agreement, or
(iii) the Consultant has been charged with a felony or with any
intentionally fraudulent act that materially damages, or may materially
damage, the business or reputation of the Company.
(c) Termination by the Consultant. The Consultant may terminate this
Agreement at any time upon written notice to the Company if the Company
shall have materially breached any of the provisions of this Agreement.
5. Independent Contractor. The Consultant's relationship with the
Company will be that of an independent contractor and not that of an employee of
the Company.
(a) No Authority to Bind Company. Neither the Consultant, nor any partner,
agent or employee of the Consultant, has authority to enter into
contracts that bind the Company or create obligations on the part of the
Company without the prior written authorization of the Company.
(b) No Benefits. The Consultant acknowledges and agrees that the Consultant
will not be eligible for any Company employee benefits and, to the
extent the Consultant otherwise would be eligible for any Company
employee benefits but for the express terms of this Agreement, the
Consultant hereby expressly declines to participate in such Company
employee benefits.
(c) Withholding; Indemnification. The Consultant shall have full
responsibility for applicable withholding taxes for all compensation
paid to the Consultant under this Agreement, and for compliance with all
applicable labor and employment requirements with respect to the
Consultant's self-employment, sole proprietorship or other form of
business organization. The Consultant agrees to indemnify, defend and
hold the Company harmless from any liability for, or assessment of, any
claims or penalties with respect to such withholding taxes, labor or
employment requirements, including any liability for, or assessment of,
withholding taxes imposed on the Company by the relevant taxing
authorities with respect to any compensation paid to the Consultant.
6. Corporate Opportunity. The Consultant agrees that the Consultant's
right to pursue activities that may be deemed "corporate opportunities" of the
Company is subject to the Noncompetition Agreement referred to in Section 2
above (attached hereto as EXHIBIT B) and incorporated into this Agreement by
this reference.
7. Confidential Information. While this Agreement is in effect, the
parties agree to be bound by the terms and provisions of the Noncompetition
Agreement referred to in Section 2 above (attached hereto as EXHIBIT B) with
respect to confidential information.
8. Proprietary Rights. All work performed and all materials developed or
prepared for the Company by the Consultant in rendering the Services are the
property of the Company and all title and interest therein shall vest in the
Company and shall be deemed to be works made for hire and made in the course of
the services rendered hereunder. To the extent that title to any such works may
not, by operation of law, vest in the Company or such works may not be
considered works made for hire, all rights, title and interest therein are
hereby irrevocably assigned to the Company. The Consultant agrees to give the
Company and any person designated by the Company such reasonable assistance, at
the Company's expense, as is required to perfect the rights defined in this
Section 8.
9. Indemnification. The Consultant agrees to indemnify and hold the
Company harmless from and against any and all claims, demands, causes of action,
losses, damages, liabilities, costs and expenses, including attorneys' fees,
arising from a breach of any of the Consultant's representations and warranties
herein or attributable to or resulting from the Consultant's gross negligence or
willful misconduct in rendering the Services to the Company. The Consultant
warrants and represents that the Consultant has full power and authority to
enter into and perform this Agreement. The Company agrees to indemnify and hold
the Consultant harmless from and against any and all claims, demands, causes of
action, losses, damages, liability, costs and expenses, including attorneys fees
arising out of the Consultant's services hereunder, other than those arising
from the Consultant's breach of any of his representations and warranties
hereunder or the Consultant's gross negligence or willful misconduct.
10. Miscellaneous.
(a) Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the parties.
(b) Sole Agreement. This Agreement constitutes the sole agreement of the
parties and supersedes all oral negotiations and prior writings with
respect to the subject matter hereof.
(c) Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed
facsimile, 48 hours after being deposited in the regular mail as
certified or registered mail (airmail if sent internationally) with
postage prepaid, if such notice is addressed to the party to be notified
at such party's address or facsimile number as set forth below, or as
subsequently modified by written notice.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of California, without giving effect to the principles of conflict of
laws.
(e) Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be decided by binding arbitration by the American
Arbitration Association and shall be held in Los Angeles, California.
The ruling of the arbitrator shall be final and may be enforced by any
party to such arbitration in any court of competent jurisdiction located
in Los Angeles, California.
(f) Attorneys' Fees. If an arbitration or other legal proceeding is brought
to enforce or interpret the provisions of this Agreement or as to the
rights or obligations of any party to this Agreement, the prevailing
party in such action shall be entitled to recover its reasonable
attorneys' fees and costs.
(g) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach
a mutually agreeable and enforceable replacement for such provision,
then (i) such provision shall be excluded from this Agreement, (ii) the
balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be enforceable
in accordance with its terms.
(h) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will
constitute one and the same instrument.
(i) Effect on Successors in Interest; Assignment. This Agreement shall inure
to the benefit of and be binding upon the heirs, administrators,
executors, and successors of each of the parties hereto. The services to
be rendered under this Agreement are personal to and may not be
delegated by the Consultant except to a company wholly owned by the
Consultant; provided, however, that the Consultant may assign his rights
to payment under this Agreement to any person or entity.
The parties have executed this Agreement on the respective dates set
forth below.
POINT.360
By: /s/ Haig S. Bagerdjian
-----------------------
Haig S. Bagerdjian
Date: 10/02/02
By: /s/ Alan Steel
-----------------------
Alan Steel
Date: 10/02/02
Address:
Point.360
P.O. Box 1830
Hollywood, CA 90028
Attn: President
Fax: (323) 957-2297
R. LUKE STEFANKO
By: /s/ R. Luke Stefanko
-----------------------
R. Luke Stefanko
Address:
Date: 10/02/02
EXHIBIT A
CURRENT STOCK OPTIONS
Number of Shares
----------------
55,000
179,000
200,000
64,100
200,000
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698,100
EXHIBIT B
NONCOMPETITION AGREEMENT
See Exhibit 10.3 to this Form 8-K.