Exhibit 10.18
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of May 6, 1996, and has been entered
into between Unapix Entertainment, Inc., a Delaware corporation with its
principal offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX, 00000 (hereinafter,
together with its subsidiaries referred to as the "Employer" or "Company"), and
Xxxxxxx Xxxxx , an individual with a residence located at Xxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx 00000 (hereinafter called the "Employee").
WHEREAS, Employer desires to employ, on the terms and conditions set forth
herein, the Employee as Executive Vice President of Production of Employer's
Unapix North American division (the "North American Division") and Pangea
Digital Pictures; and
WHEREAS, the Employee desires to be employed by the Employer on the terms
and conditions set forth herein,
NOW THEREFORE, the Employer and Employee agree as follows:
1. EMPLOYMENT:
The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and conditions hereinafter set forth.
2. TERM:
Subject to the provisions of termination as hereinafter provided,
the term of this agreement shall begin on May 6, 1996, and shall terminate on
February 14, 1998; provided, however, that such term shall be automatically
extended for an additional one year period, unless either Employer or Employee
gives notice to the other of its election not to so extend the term at least 180
days prior to February 14, 1998. The term of this Agreement is hereinafter
sometimes referred to as the "Employment Period".
3. COMPENSATION:
(a) For all services rendered by the Employee under this Agreement,
the Employer shall pay the Employee a salary of $135,000 per year (the "Base
Salary").
Such compensation shall be payable in equal installments in conformity
with the regular payroll of Employer. Commencing January 1, 1997 and for each
year thereafter that this agreement is in effect, Employee's Base Salary will be
increased by the increase, during the prior year, in the Consumer Price Index
applicable to the New York, New York, Metropolitan Region as
published by the Bureau of Labor statistics of the U.S. Department of Labor (the
"Index"). If the Employer's Board of Directors awards the Employee a
discretionary bonus or increases his salary in any year and an increase is due
to Employee as a result of an increase in the Index, the increase attributable
to the increase in the Index will be offset by the amount of the discretionary
bonus or salary increase received by the Employee in the prior year.
(b) Employee will be paid, as bonus compensation, an amount equal to
five percent (5%) of the profits accrued by the Company, during the Employment
Period and for the six month period immediately thereafter (the "Bonus Period"),
from programs ("Employee Programs") that are produced by the Company which he
developed and the production of which he is the principal employee of the
Company to supervise ("Program Profits"). Such profits shall be determined on a
title by title and accrual basis and computed by deducting the following from
revenues accrued by the Company from each such program: (i) all direct costs of
such program's production; (ii) interest expenses and other financing costs
incurred with respect to such production; (iii) distribution and marketing fees
and expenses incurred with respect to such program; (iv) all third-party
participations in connection with the distribution and production thereof; and
(v) an allocable portion of the Company's overhead expenses, which it is agreed
shall equal thirty percent (30%) of the Company's commitment to fund the
production budget of such program (and shall be deducted from revenues in
addition to the amount deducted pursuant to clause (i) above). Notwithstanding
the foregoing or anything else to the contrary contained herein, the amount of
such overhead expenses allocated to a program shall be reduced to the extent
overhead expense items of the Company are included in the production budget for
said program (for example, the inclusion of a portion of Employee's salary in
the budget). Such bonus shall be payable on the 45th day following the end of
each calendar quarter during the Bonus Period with respect to Program Profits
received during such quarter. If such bonus is being paid with respect to any
calendar quarter during which the Bonus Period terminated, then the amount of
the bonus to be paid pursuant to this Section 3(b) shall be the amount that
would otherwise be payable pursuant to this Section 3(b) had the Bonus Period
ended after such quarter multiplied by a fraction the numerator of which is the
number of days comprising the Bonus Period during that quarter and the
denominator of which is 91. Notwithstanding anything else to the contrary
contained herein, (i) the Company shall pay Employee $3000, as an advance of his
bonus hereunder, for successfully completing the production of each of the first
three six-part series of the "VISIONARIES" (i.e. a total advance of $9,000 for
successfully completing the production of the first 18 programs of the series),
which advance shall be recoupable from all bonus amounts which would otherwise
be due Employee hereunder and (ii) if a bonus payment is made to Employee with
respect to Program Profits accrued during a particular period (the "Applicable
Period") from a particular
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program, and there are subsequent chargebacks, returns or other adjustments
during subsequent periods with respect to such program, which adjustments relate
to sales or other items reflected in the calculation of Program Profits from
such program during the Applicable Period, then the Company shall be entitled to
recoup from future bonus payments otherwise payable to Employee under this
Section 3(b), the difference between (x) the bonus payment that was paid to
Employee with respect to such program for the Applicable Period and (y) the
amount that would have been payable to Employee with respect to such program for
the Applicable Period had the subsequent adjustments been reflected in the
calculation for the Applicable Period.
Employer agrees to negotiate in good-faith the amount of a bonus to be
paid to Employee based upon a percentage of the profits generated by programs
that Employer produces that were developed by Employee but the production of
which he is not the principal employee of Employer to supervise. Employee
understands and acknowledges that such percentage will be less than five percent
(5%).
4. DUTIES:
The Employee is employed as Executive Vice President of Production
of the North American Division and Pangea Digital Pictures. Employee shall
report to the President and Chairman of the Board of the Company, until
otherwise directed by the Company's Board of Directors, and shall perform such
duties as are assigned to him by the President or Chairman of the Board.
5. EXTENT OF SERVICES:
During the term of his employment, Employee will devote all of his
business related time to the performance of his services for the Company, and
except as may be specifically permitted by the Board of Directors of the
Company, shall not be engaged in any other business activity during the
Employment Period.
6. VACATION:
The Employee shall be entitled each year to a vacation of two weeks
as well as three personal days, during which time his compensation shall be paid
in full and his fringe benefits shall not be suspended or diminished.
7. FRINGE AND RETIREMENT BENEFITS:
The Employee shall be entitled to participate on the same basis, and
subject to the same qualifications as other executives of the Employer (other
than those benefits provided under or pursuant to separate individual employment
agreements or arrangements), in any pension, profit sharing, insurance, stock
purchase, savings, hospitalization, sick leave and other fringe benefit plans
("Plans") in effect from time to time with respect to
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executives of the Employer (the "Fringe Benefits"). Employee's Base Salary shall
constitute the compensation on the basis of which the amount of Employee's
benefits under any such plan shall be fixed and determined.
8. EXPENSES:
The Employee shall be entitled to reimbursement for reasonable
out-of-pocket expenses incurred on behalf of the Employer, including all
reasonable travel and entertainment expenses paid or incurred by Employee in
connection with the performance of his duties. Employee shall provide such
documentation for such expenses as Employer shall from time to time reasonably
require.
9. TERMINATION:
(a) Death. If Employee dies during the Employment Period, the
Company shall pay Employee's designated beneficiary (or, in the event of the
death of or failure to designate a beneficiary, Employee's personal
representative) the Base Salary provided for in Section 3(a) above, for the four
calendar week period (the "Four Week Period") following the calendar week in
which Employee dies, at the rate in effect at the time of his death. The
Employment Period shall be deemed to end as of the end of the Four week Period,
but without prejudice to any other payments due in respect of Employee's death.
(b) Disability. If Employee suffers a "Disability" (as hereinafter
defined) and as a result is unable to perform substantially and continuously the
duties assigned to him for a period of 90 consecutive or non-consecutive days
out of any consecutive twelve-month period, the Company shall have the right to
terminate the employment of the Employee effective 30 days after notice in
writing to the Employee. In the event of termination pursuant to this Section
9(b), the Employee shall be entitled to receive (i) any Base Salary and other
benefits earned and accrued, and reimbursement for expenses incurred, prior to
the date of termination, and (ii) regular installments of the Employee's Base
Salary for the four week period immediately following such termination. No
provision of this Agreement shall limit any of Employee's rights under any Plans
for which the Employee was eligible at the time of such death or Disability.
During the period of any Disability prior to termination of the Employee's
employment, the Employee shall continue to receive his Base Salary, reduced by
any payments paid to the Employee for the same period because of disability
under any disability or pension plan of the Company.
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For purposes of this Agreement, "Disability" shall mean the mental or
physical inability of the Employee to materially perform his duties under this
Employment Agreement.
(c) Termination for Employee's Breach. Employer shall have the right to
terminate this Agreement and the employment hereunder if Employee materially
violates his responsibilities under the Agreement and such violation continues
after having received notice of such violation and 30 days to cure such
violation(s) to the satisfaction of Employer's Board of Directors. Employer may
immediately terminate this Agreement upon: (i) determination by Employer's Board
of Directors that the Employee has willfully defaulted on a material obligation
of this Agreement; (ii) upon the determination by Employer's Board of Directors
that there has been a defalcation of the Employer's funds by Employee or that
Employee has otherwise been dishonest in connection with his employment; (iii)
upon conviction of Employee on a felony charge or commission of an act of moral
turpitude; or (iv) upon the determination by Employer's Board of Directors that
the Employee has had unauthorized discussions of Employer's business activities,
or improperly disclosed trade secrets or confidential information concerning
Employer's business activities or proposed business activities. Notwithstanding
anything to the contrary contained in this Agreement, upon termination of
employment pursuant to this Section 9(c), Employee shall not be entitled to any
further bonus payments pursuant to Section 3(b).
(d) Termination for Employer's Breach. Employee shall have the right to
terminate this Agreement if the Employer materially breaches any of the
provisions hereof and such breach is not cured within thirty (30) days after the
Employer receives written notice from Employee thereof.
10. CUSTOMER LISTS AND TRADE SECRETS:
From and after the date of this Agreement, including after the
Employment Period, Employee shall treat as the Company's confidential trade
secrets all data, information, ideas, knowledge and papers pertaining to the
affairs of the Company. Without limiting the generality of the foregoing, such
trade secrets shall include: the identity of the Company's customers, suppliers
and prospective customers and suppliers; the identity of the Company's creditors
and other sources of financing or potential creditors and other potential
sources of financing; the Company's estimating and costing procedures and the
cost and gross prices charged by the Company for its products; the prices or
other consideration charged to or required of the Company by any of its
suppliers or potential suppliers; the Company's sales and promotional policies;
and all information relating to entertainment programs or properties being
produced or otherwise developed by the Company. Employee shall not reveal said
trade secrets to others except in the proper exercise of his duties and
authorities for the Company, or use his knowledge
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thereof in any way that would be detrimental to the interests of the Company,
unless compelled to disclose such information by judicial or administrative
process; provided, however, that the divulging of information shall not be a
breach of this Section 10 to the extent that such information was (i) previously
known by the party to which it is divulged or (ii) already in the public domain,
all through no fault of Employee. Employee shall also treat all information
pertaining to the affairs of the Company's suppliers and customers and
prospective customers and suppliers as confidential trade secrets of such
customers and suppliers and prospective customers and suppliers.
11. CERTAIN RESTRICTIONS:
During the Employment Period and for a period of one year thereafter
Employee shall not (i) influence or attempt to influence any customer not to do
business with the Company, (ii) induce, invite, solicit or attempt to induce,
invite or solicit any person who shall have been an employee of the Company at
the time of termination of the Employment Period or during any part of the
period of one year prior to such date to leave the employ of the Company or to
become interested in or in any way conducted with a business similar to that of
the Company, or employ or attempt to employ any such employee of the Company,
(iii) divert or attempt to divert any business from the Company, (iv) interfere
or attempt to interfere in any way with the Company's relationship with any of
such customers, employees or suppliers. Notwithstanding the foregoing or
anything else to the contrary contained herein, the provisions of this paragraph
shall not be applicable if Employee terminates this Agreement pursuant to
Section 9 (d) as a result of Employer's material breach of the provisions of
this Agreement.
In addition to any other restrictions on Employee's activities during and
after the Employment Period contained in this Agreement or otherwise, Employee
shall not, during the Employment Period, directly or indirectly, except with the
written consent of Company, engage in any business (whether alone or as a
consultant, officer, director, owner, employee, partner or other active or
passive participant) with or for, be financially interested in, or represent or
otherwise render assistance or services to any person or entity who or which
competes or intends to compete, or who or which is affiliated (by reason of
common control, ownership or otherwise) with any other person or entity who or
which competes or intends to compete, directly or indirectly, with the business
then conducted by the Company or any of its affiliates. Notwithstanding the
foregoing, Employee shall not be precluded from the ownership, directly or
indirectly, solely as an investment, of securities of any entity which are
traded on any national securities exchange or NASDAQ, if Employee (A) is not a
controlling person of, or a member of a group which controls, such entity and
(B) does not, directly or indirectly, own 5% or more of any class of securities
of such entity.
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12. INJUNCTION:
Notwithstanding any other provisions of this Agreement, Employee
acknowledges and agrees that in the event of a violation or threatened violation
of any of the provisions of Section 10 or 11, Employer shall have no adequate
remedy at law and shall therefore be entitled to enforce each such provision by
temporary or permanent injunctive or mandatory relief obtained in any court of
competent jurisdiction, without prejudice to any other remedies that may be
available at law or in equity.
13. OPTIONS TO PURCHASES COMMON STOCK:
Promptly following execution of this Agreement the Company shall
issue to Employee 25,000 common stock purchase options (the "Initial Options"),
each entitling the Employee to purchase one share of the Company's common stock
at an exercise price of $4.00 per share. None of the Initial Options shall be
exercisable until the first anniversary of the date of this Agreement.
Commencing on such first anniversary and on each of the next two such
anniversaries during the Employment Period, one third of the Initial Options
shall become exercisable (i.e. on the first anniversary 8,334 Initial Options
shall become exercisable; on the second anniversary 8,333 Initial Options shall
become exercisable; and on the third anniversary the remaining 8,333 Initial
Options shall become exercisable); provided, however, that all of Employee's
options shall become immediately exercisable if (i) the Company sells all or
substantially all of its assets or (ii) merges into or consolidates with another
corporation or sells shares of capital stock, and in connection with such
transaction there is a change in the composition of a majority of the Company's
Directors.
The Company will issue to Employee an additional 25,000 common stock
purchase options (the "Additional Options;" the Initial Options together with
the Additional Options are referred to collectively as the "Options") at such
time during the Employment Period as Employee has developed, and been the
principal employee of the Company to have overseen the production of, at least
18 television programs for the Company and all of the programs developed and so
overseen by Employee, on a cumulative basis, have resulted in a profit for the
Company (the "Additional Option Threshold"). Such profit shall be determined on
an accrual basis and shall be computed by deducting the following from the
revenues accrued by the Company from such programs: all direct costs of their
production; interest expenses and other financing costs incurred with respect to
such productions; all distribution and marketing fees and expenses incurred with
respect to such programs; all third party participations in connection with the
distribution and production thereof; and all overhead expenses allocated to said
programs and deducted from revenues derived therefrom in computing the profits
from such programs pursuant to Section 3(b). Each Additional Option shall
entitle Employee to
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purchase one share of the Company's common stock ("Common Stock") at an exercise
price equal to $.125 above the "Market Value" (as hereinafter defined) of such
Common Stock on the date such Additional Options have been earned in accordance
herewith. "Market Value" means the closing sales price of a share of Common
Stock as reported by the principal stock exchange on which shares of Common
Stock are traded, or if not so traded on a securities exchange, then as reported
by NASDAQ (and if not so reported by NASDAQ, then the average of the bid and ask
prices as reported by the National Quotation Bureau). The Additional Options
shall be deemed earned on the date immediately preceding the Company's public
announcement of financial results for a fiscal quarter or fiscal year in which
the Additional Option Threshold has been achieved.
The Initial Options shall terminate on June 30, 2001. Each Additional
Option shall terminate five years after the date it is earned. Notwithstanding
the foregoing, all Options shall terminate ninety (90) days after termination of
Employee's employment by the Company, unless such termination of employment is
pursuant to section 9 (c), in which case such Options shall immediately expire.
The Options shall have such other terms and provisions as are customarily
contained in options granted by the Company to its other employees.
14. MISCELLANEOUS PROVISIONS:
(a) Notice and Communication. All notices and communications
hereunder shall be in writing and shall be hand delivered or sent postage
prepaid by registered or certified mail, return receipt requested, to the
addresses first above written or to such other address of which notice shall
have been given in the manner herein provided. A copy of any notice sent to
Employee shall also be sent to Xxxx X. Xxxxxxx, Esq., c/o Pellettieri, Rabstein
and Xxxxxx, 000 Xxxxxx Xxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000-0000.
(b) Entire Agreement. All prior agreements and understandings
between the parties with respect to the subject matter of this Agreement are
superseded by this Agreement, and this Agreement constitutes the entire
understanding between the parties with respect to employment of the Employee by
Employer. This Agreement may not be modified, amended, changed or discharged,
except by a writing signed by the parties hereto and then only to the extent
therein set forth.
(c) Non-Delegation, Etc. Neither party may assign any rights or
obligations under this Agreement, without the consent of the other party
hereto.
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(d) Waiver. No waiver of any breach of this agreement or of any
objection to any act or omission connected herewith shall be implied or claimed
by any party, or be deemed to constitute a consent to any continuation of such
breach, act or omission, unless in a writing signed by the party against whom
enforcement of such waiver or consent is sought, and then only to the extent
therein set forth.
(e) Section Headings. The section headings of this agreement are
solely for the purpose of convenience and shall neither be deemed a part of
this agreement nor used in any interpretation thereof.
(f) Governing Law. This Agreement and the relationship of the
parties shall be governed by, and construed in accordance with, the laws of
the State of New York.
(g) Prior Employment. Employee represents to Employer that Employee
is not a party to or bound by any written agreement, understanding or
restriction relating to his employment, nor, to the best of his knowledge and
belief, is he a party to or bound by any other agreement, understanding, or
restriction relating to his employment. Employee expressly represents,
undertakes and agrees that to the best of his knowledge and belief he has not
done and will not do anything in furtherance of this Agreement or his duties
hereunder that will violate any obligations he may have to any prior employer
and that he has complied with all requirements of notice applicable to the
termination of any prior employment or agreement before he commenced his
employment under this Agreement.
(h) Severability. If any provision of this Agreement or part
thereof, is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.
(i) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Employee, the Company, and the Company's successors
and assigns.
(j) Cooperation in Connection with Obtaining Key Man Life Insurance.
If the Company, in its discretion, elects to obtain "Key Man" life insurance
with respect to Employee, which insures Employees life and names the Company as
beneficiary, Employee shall cooperate with the Company in obtaining said
insurance. Without limiting the generality of the foregoing, Employee agrees to
submit to such medical examinations, and take such other actions, as may be
reasonably requested by the Company in obtaining such insurance.
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(k) Relocation Expenses. Employer shall reimburse Employee for all
reasonable fees charged by moving companies to transport his personal property
from his present residence located in the San Xxxxxxxxx metropolitan area (the
"California Residence") to his residence located in the New York City
metropolitan area (the "New York City Residence"). Employer shall also reimburse
Employee for reasonable travel expenses incurred by him in transporting he and
his family from the California Residence to the New York City Residence.
In order to be entitled to reimbursement or any other payments pursuant to
the provisions of this Section 14(k), Employee shall promptly provide Employer
with copies of all documents, instruments and agreements, requested by Employer,
(i) evidencing the expenses incurred for which reimbursement is sought, or (ii)
otherwise necessary to enable the Employer to determine the amount of payments
to which the Employee is entitled pursuant to this Section 14(k). Within 30 days
of receipt of proper evidence of such expenses, Employer shall reimburse
Employee.
Notwithstanding the foregoing or anything else to the contrary contained
in this Agreement, in no event shall Employer be obligated to reimburse Employee
for any such relocation expenses exceeding $20,000.
(l) Indemnification. Subject to the accuracy of Employee's
representations and warranties contained in Section 14(g), and Employee's
compliance with this Agreement, Employer will indemnify and hold Employee
harmless from and against any and all loses, costs, expenses and liabilities
arising from (i) claims brought by third parties with respect to programs
produced by Employer that Employee develops and supervises on behalf of
Employer, and (ii) suits brought by IVN Communications, Inc. against Employee in
connection with the termination of his employment with IVN and his becoming
employed by Employer.
If any action, claim, proceeding or investigation is instituted or
threatened by a third party against Employee in respect of which indemnity may
be sought hereunder, Employee shall promptly notify Employer thereof in writing,
but the omission so to notify Employer shall not relieve Employer from any other
obligation or liability that Employer may have to Employee under this Agreement
or otherwise unless such failure to notify has materially prejudiced Employer.
Employee will, upon notice to Employer, have the right to retain counsel of his
choice in connection with any such action, claim, proceeding or investigation,
and to be reimbursed by Employer for the reasonable fees and disbursements for
such counsel. In lieu of reimbursing Employee for the expenses of defending any
such action, claim, proceeding or investigation, Employer shall have the option
of assuming and paying directly for the defense thereof with counsel reasonably
acceptable to Employee, and Employer shall have no liability for the expenses of
defending any such action, claim, proceeding or investigation incurred by
Employee after Employer notifies Employee of its assumption of such defense.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, Employer will have no
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liability or obligation to indemnify Employee for any losses, costs or expenses
incurred with respect to a settlement effected without its prior written
consent.
IN WITNESS WHEREOF, the parties hereto execute this Agreement and intend
to be hereby bound, effective as of the date first above written.
UNAPIX ENTERTAINMENT, INC.
ATTEST:
/s/_______________________________ By: /s/ Xxxxx X. Xxx
------------------------------
Xxxxx X. Xxx, President
WITNESS:
/s/ Xxxxx Xxxxxxxx-Xxxxx /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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