EMPLOYMENT AGREEMENT
AGREEMENT dated as of September 1, 1997 between UNITEL VIDEO, INC.,
a Delaware corporation (the "Corporation"), with an address at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and Xxxxx Xxxxxxx ("Employee"), residing at
00 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 .
W I T N E S S E T H:
WHEREAS, the Corporation believes the contributions that have been
made and can continue to be made by Employee toward the success of the
business of the Corporation are valuable and wishes to retain the services of
Employee for its benefit; and
WHEREAS, Employee is willing to continue as an employee of the
Corporation upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Corporation and Employee hereby agree as follows:
1.Term.
1. The Corporation hereby employs Employee, and Employee
hereby accepts employment by the Corporation, on the terms and conditions
herein contained, to perform the duties described in paragraph 2 for a
term (as such term may be extended or earlier terminated as provided
herein, the "Employment Term") commencing on the date hereof and, subject
to the remaining provisions of this Agreement, ending on August 31, 1998.
(b) On August 31, 1998 and each subsequent August 31, the
Employment Term automatically shall be extended for an additional period of
one year unless either the Corporation or Employee shall give the other party
not less than 90 days' written notice prior to such August 31 that such party
shall not desire that the Employment Term be so extended, in which event the
Employment Term shall not thereafter be extended beyond the then current
expiration date thereof.
(c) Notwithstanding the provisions of paragraph 1(b), upon a Change
of Control (as hereinafter defined), the Employment Term automatically shall
be extended for an additional period commencing on the date the Change of
Control shall have occurred and ending on the last day of the calendar month
immediately succeeding the date that is 18 months from and after the date of
occurrence of such Change of Control (the "Change of Control End Date"). On
the Change of Control End Date and on each anniversary of the Change of
Control End Date, the Employment Term automatically shall be extended for an
additional period of one year unless either the Corporation or Employee shall
give the other party not less than 90 days' written notice
prior to the Change of Control End Date or such anniversary of the Change of
Control End Date, as the case may be, that such party shall not desire that
the Employment Term be so extended, in which event the Employment Term shall
not thereafter be extended beyond the then current expiration date thereof.
(d) In the event that the Corporation shall not extend the
Employment Term pursuant to paragraphs 1(b) or (c), then at the expiration of
the Employment Term, the Corporation shall pay to Employee, within 30 days of
such expiration (10 days of expiration pursuant to paragraph 1(c)) and
without regard to any applicable principles of mitigation of damages, set off
and the like, an amount equal to one times the annual Base Salary in effect
on such expiration of the Employment Term. In addition, within 30 days after
the next Financial Statement Receipt Date (as hereinafter defined) to occur,
the Corporation shall also pay to Employee an amount equal to all bonus,
incentive or similar or other form of compensation under any plan or
arrangement with the Corporation which he would have been entitled to for the
period in which the end of the Employment Term occurs computed through the
expiration of the Employment Term and utilizing the method for pro-ration
described in paragraph 4(c). The Corporation shall also pay to Employee all
Accrued Compensation Amounts (as hereinafter defined) through the expiration
of the Employment Term and shall reimburse Employee for expenses as
contemplated by paragraph 3(c). In addition, for a period of 12 months after
such expiration of the Employment Term, the Corporation will provide Employee
and his family the same medical, disability, life and other insurance
coverages provided immediately prior to such expiration.
2. Duties.
1. During the Employment Term, Employee shall serve as
President and Chief Executive Officer of the Corporation, with such
authority, duties and responsibilities as shall from time to time be
designated by the Board of Directors of the Corporation. Employee agrees
that during the Employment Term he will devote his full time and
attention during regular business hours to the business and affairs of
the Corporation and its subsidiaries except during vacation periods and
periods of illness or incapacity. Nothing contained herein shall prevent
Employee from serving as a director or trustee of any corporation or
other organization, and in any other capacity with any non-commercial
enterprise; provided, that such service does not materially interfere
with the performance of his duties hereunder and such business or
organization does not have business relations with or compete with the
Corporation or any of its subsidiaries or affiliates.
2. Employee will perform his duties and services
hereunder with the same degree of diligence and integrity which he has
exercised during the course of his employment by the Corporation prior to
the date of this Agreement. In addition, Employee agrees to serve as a
director of the Corporation and its subsidiaries, including committee
memberships, to which he may from time to time be elected or appointed.
3. Compensation and Benefits.
1. The Corporation agrees to pay Employee a base salary
("Base Salary") at the rate of $200,000 per year, payable in accordance
with the Corporation's regular pay intervals or in such other manner as
shall be mutually agreeable to Employee and the Corporation. Employee's
Base Salary shall be increased effective on each May 1 from time to time
during the Employment Term, commencing May 1, 1998, by an amount equal to
the greater of (i) 5% of the Base Salary in effect on the immediately
preceding April 30 and (ii) the Base Salary in effect on the immediately
preceding April 30 multiplied by a fraction, the numerator of which is
the Index (as hereinafter defined) for the month of April immediately
preceding the effective date of such increase and (B) the denominator of
which is the Index for the month of April in the immediately preceding
calendar year. Any increase in Base Salary or other compensation shall
not limit or reduce any other obligation of the Corporation under this
Agreement. As used in this Agreement, "Index" for any calendar month
means the Revised Consumer Price Index for Urban Wage Earners and
Clerical Workers, All Items (base index year 1982-84=100), for New
York-Northern New Jersey-Long Island, NY-NJ-CT, for such month, as
published by the United States Department of Labor, Bureau of Labor
Statistics. If the Index is not published by the Bureau of Labor
Statistics or another governmental agency at any time, then such
calculation shall be made using the most closely comparable statistics on
the purchasing power of the consumer dollar as published by a responsible
financial authority selected in good faith by the Board of Directors of
the Corporation.
2. During the Employment Term, Employee shall be entitled to
participate in all bonus, incentive compensation, stock option or stock
related right, retirement, profit-sharing, medical payment, disability,
health or life insurance and other benefit plans and arrangements which
may be or become available to executives of the Corporation in general;
provided, that Employee shall be required to comply with the conditions
attendant to coverage by such plans and arrangements and notwithstanding
anything contained herein to the contrary, shall comply with, and be
entitled to benefits only in accordance with, the terms and conditions of
such plans and arrangements. Notwithstanding the foregoing, the
Corporation shall continue to provide Employee with substantially the
same medical, disability, life and other insurance coverages currently
provided to Employee.
3. Employee shall be entitled to reimbursement, not less
frequently than biweekly, for expenses reasonably incurred by him in
furtherance of the business of the Corporation and in the performance of
his duties hereunder, on an accountable basis with such substantiation as
the Corporation may at the time and from time to time require from its
senior executive officers.
4. Employee shall be entitled to five weeks vacation in each
year during the Employment Term, which is the number of weeks currently
available to Employee based upon his seniority with the Corporation.
Such vacation shall be taken at such time or times as may be mutually
agreed upon by the Corporation and Employee.
5. Employee shall also be entitled to receive a cash bonus
equal to 2 1/2% of Consolidated Pretax Profits (as hereinafter defined)
in each fiscal year of the Corporation during the Employment Term. The
cash bonus is sometimes hereinafter referred to as "Incentive
Compensation." Employee shall be entitled to receive Incentive
Compensation within 15 days of receipt of the Corporation from its then
independent certified public accountants of the audited financial
statements for the applicable fiscal year (the date of receipt by the
Corporation of such audited financial statements being hereinafter
referred to as the "Financial Statement Receipt Date"). For purposes of
this Agreement, the term "Consolidated Pretax Profits" shall mean
earnings before (i) income taxes, (ii) the cumulative or other effect of
changes in accounting principles or practices, (iii) other extraordinary
items and (iv) gain or loss from the sale of businesses (including
divisions and subsidiaries) of the Corporation, all as determined in
accordance with generally accepted accounting principles, consistently
applied, and reflected on the Corporation's audited Consolidated
Statements of Operations for the applicable fiscal year.
6. Throughout the Employment Term, the Corporation will
continue to furnish Employee with an automobile comparable to the
automobile provided at the commencement of this Agreement and shall pay
for or reimburse Employee for all expenses relating to the insurance,
maintenance and operation thereof, on an accountable basis with such
substantiation as the Corporation may at the time and from time to time
require from its senior executive officers.
4. Termination upon Death or Disability. Employee's employment
hereunder shall terminate upon his death, or, at the election of the
Corporation, by written notice to Employee, if Employee becomes Disabled (as
hereinafter defined). In the event of a termination of Employee's employment
for death or Disability, the Corporation shall pay Employee (or his legal
representatives, as the case may be), as follows:
1. within fifteen (15) days following death or such notice,
any accrued but unpaid Base Salary, any accrued and unused vacation days
based upon Employee's salary on a 365 day per year daily basis, any
accrued but unpaid expenses as per paragraph 3(c) hereof and any other
accrued and unpaid compensation or benefits to which Employee may be
entitled under this Agreement (collectively, "Accrued Compensation
Amounts"), in each case as of the Termination Date (as hereinafter
defined);
2. Employee's Base Salary until the expiration of 12 months
from the date of death or termination for Disability (the "Extension
Period"), such Base Salary to be paid as and when such Base Salary would
have been paid had the employment of Employee continued through the
Extension Period; and
3. within fifteen (15) days after the Financial Statement
Receipt Date immediately following such termination of Employee's
employment, an amount equal to (i) the amount of Incentive Compensation,
if any, that would have been payable to Employee
with respect to the fiscal year during which the Termination Date
occurred multiplied by (ii) a fraction, the numerator of which is the
number of days in such fiscal year which expired prior to the Termination
Date and the denominator of which is 365.
For the purposes of this Agreement, Employee shall be deemed to be
"Disabled" or have a "Disability" if as a result of the occurrence of mental
or physical disability during the Term he has been unable to perform his
duties hereunder for six (6) consecutive months, as determined in good faith
by the Board of Directors of the Corporation.
Employee acknowledges that the payments referred to in this
paragraph 4 and the payment and benefits, if any, to which Employee (or his
legal representatives, as the case may be) may be entitled under the
Corporation's group life insurance plan now or at any time hereafter in
effect constitute the only payments to which Employee (or his legal
representatives, as the case may be) shall be entitled to receive from the
Corporation under this Agreement in the event of a termination of his
employment for death or Disability, and that except for such payments and
benefits, the Corporation shall have no further liability or obligation to
him (or his legal representatives, as the case may be) under this Agreement.
5. Change of Control.
(a) Employee may, at any time during the twelve (12) month period
following a Change of Control, by delivery of written notice to the
Corporation, terminate his employment hereunder in the event that during such
period the compensation, benefits, authority, responsibilities, privileges,
duties and/or title of Employee are materially diminished (individually or in
the aggregate). Upon such permitted termination by Employee, the Corporation
shall pay to Employee, within 10 days of such termination and without regard
to any applicable principles of mitigation of damages, set off and the like,
the greater of (i) the Base Salary Employee would have received (based on the
Base Salary in effect on the date of such termination of the Employment Term)
through what would otherwise have been the last day of the Employment Term
had this Agreement not been so terminated and (ii) one times the annual Base
Salary in effect on the date of such termination of the Employment Term. In
addition, within 30 days after the next Financial Statement Receipt Date (as
hereinafter defined) to occur, the Corporation shall also pay to Employee an
amount equal to all bonus, incentive or similar or other form of compensation
under any plan or arrangement with the Corporation which he would have been
entitled to for the period in which the end of the Employment Term occurs
computed through the Termination Date and utilizing the method for pro-ration
described in paragraph 4(c). The Corporation shall also pay to Employee all
Accrued Compensation Amounts through the Termination Date of the Employment
Term and shall reimburse Employee for expenses as contemplated by paragraph
3(c). In addition, for a period of 12 months after such termination of the
Employment Term, the Corporation will provide Employee and his family the
same medical, disability, life and other insurance coverages provided
immediately prior to such termination.
(b) "Change of Control" as used in this Agreement means the
occurrence of any of the following: (i) the approval by the Board of
Directors of the Corporation and the execution by the Corporation of an
agreement providing for the sale by the Corporation of all or
substantially all of its properties and assets to one or more corporations or
other entities not owned by or affiliated with the Corporation; (ii) the
majority of the Board of Directors of the Corporation shall consist of
persons who are neither present members of the Board of Directors, nor
persons initially selected by the Board of Directors (rather than elected by
shareholders) as additional or replacement members of the Board of Directors;
(iii) if any "person" (as such term is defined in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect on
the date hereof), other than an employee stock ownership plan or similar
benefit plan of the Corporation, becomes a beneficial or record holder,
directly or indirectly, of securities of the Corporation representing thirty
(30%) percent or more of the Corporation's then outstanding securities having
the right to vote on the election of directors; (iv) if the Board of
Directors approves a merger or consolidation of the Corporation with any
other corporation or entity, other than a merger or consolidation that would
result in the holders of voting securities of the Corporation outstanding
immediately prior thereto being the holders of at least 80% of the voting
securities of the surviving or resulting entity outstanding immediately after
such merger or consolidation; or (v) the adoption by the Board of Directors
of the Corporation and approval by the Corporation's shareholders of a plan
of liquidation or dissolution of the Corporation.
6. Termination for Cause; Termination without Cause.
1. The Corporation may terminate this Agreement, without
liability (other than for (i) the payment of all Accrued Compensation
Amounts through the Termination Date of the Employment Term and (ii) the
reimbursement of Employee for expenses as contemplated by paragraph
3(c)), if Employee's employment is terminated for "Cause". The term
"Cause" shall, for all purposes of this Agreement, mean and be limited to
(i) the continued failure by Employee to substantially perform his duties
to the Corporation pursuant hereto after a demand for performance is
delivered to Employee that specifically identifies the manner in which
the Corporation believes that Employee has not substantially performed
his duties, and Employee has failed to cure such failure in the good
faith opinion of the Board of Directors within 30 days of such demand by
the Corporation, (ii) the conviction of Employee of a felony under
federal or state law, and (iii) the violation by Employee of the
provisions of paragraph 8 of this Agreement. Amounts payable under this
paragraph 6(a) shall be paid by the Corporation within 30 days of the
Termination Date.
(b) The Corporation may terminate this Agreement at any time
without Cause. In such event, the Corporation shall pay to Employee, within
30 days of termination (within 10 days of termination if such termination
shall occur after the occurrence of a Change of Control) and without regard
to any applicable principles of mitigation of damages, set off and the like,
the greater of (i) the Base Salary Employee would have received (based upon
the Base Salary in effect on the Termination Date) through what otherwise
would have been the last day of the Employment Term had this Agreement not
been so terminated and (ii) one times the annual Base Salary in effect on the
Termination Date. In addition, within 30 days after the next Financial
Statement Receipt Date to occur, the Corporation shall also pay to Employee
an amount equal to all bonus, incentive or similar or other form of
compensation under any plan or arrangement with the Corporation which he
would have been entitled to for the period in which the end of the
Employment Term occurs computed through the Termination Date and utilizing
the method for pro-ration described in paragraph 4(c). The Corporation shall
also pay to Employee all Accrued Compensation Amounts through the Termination
Date of the Employment Term and shall reimburse Employee for expenses as
contemplated by paragraph 3(c). In addition, for a period of 12 months after
any termination pursuant to this paragraph or, if longer, the period
commencing on the date of termination and ending on what otherwise would have
been the last day of the Employment Term has this Agreement not been so
terminated, the Corporation will provide Employee and his family the same
medical, disability, life and other insurance coverages provided immediately
prior to such termination.
(c) It is intended that the "present value" of the payments and
benefits to Employee, whether under this Agreement or otherwise, which are
includable in the computation of "parachute payments" shall not, in the
aggregate, exceed 2.99 times the "base amount" (the terms "present value,"
"parachute payments" and "base amount" being determined in accordance with
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")).
Accordingly, if Employee has received or is entitled at any time to receive
any such payments or benefits that would, in the opinion of the independent
certified public accountants retained by the Corporation immediately prior to
any Change of Control, subject any such payments or benefits to Employee to
the excise tax imposed by Section 4999 of the Code, such payments and
benefits shall be reduced by the smallest amount necessary, in the opinion of
such accountants, to avoid such excise tax; provided, that the type of
payment or benefits to be reduced shall be determined by Employee. No
reduction in any such payments or benefits in reliance of such accountant's
opinion shall be permitted unless and until the Corporation shall have
provided to Employee a copy of any such opinion no later than the date
otherwise required for the payment of such payments or benefits.
7. Notice of Termination and Termination Date.
1. Any termination of Employee's employment by the
Corporation or by Employee shall be communicated by a Notice of
Termination to the other party hereto. For purposes hereof, a "Notice of
Termination" shall mean a notice which shall state the "Termination Date"
(as hereinafter defined) and the specific provision or provisions of this
Agreement pursuant to which this Agreement is being terminated.
2. "Termination Date" shall mean the date specified in the
Notice of Termination as the last day of Employee's employment, which
date shall not be sooner than the date on which the Notice of Termination
is given or such later date as specified in the applicable provision of
this Agreement.
8. Certain Covenants and Agreement.
1. Employee acknowledges that, by his employment, he has been
and will be in a confidential relationship with the Corporation and has
had and will have access to confidential information and trade secrets of
the Corporation, its subsidiaries and affiliates. Confidential
information and trade secrets include, but are not limited to,
customer and client lists, price lists, marketing and sales strategies
and procedures, operation techniques, business plans and systems, and all
other records, files and information which are not in the public domain.
Accordingly, Employee will not, during the term of this Agreement or
thereafter, except as may be required in the performance of his duties to
the Corporation under this Agreement, use, or disclose to any third
party, any confidential information or trade secrets.
(b) In the event of a breach or threatened breach by Employee of
any of the provisions of this paragraph 8, the Corporation shall be entitled
to an injunction by any court or tribunal to restrain Employee from
committing or continuing any violation. In any proceeding for an injunction,
Employee agrees that his ability to answer in damages shall not be a bar or
be interposed as a defense to the granting of a temporary or permanent
injunction against him. Employee acknowledges that the Corporation will not
have an adequate remedy at law in the event of any breach by him as aforesaid
and that the Corporation may suffer irreparable damage and injury in the
event of such a breach by him. Nothing contained herein shall be construed as
prohibiting the Corporation from pursuing any other remedy or remedies
available to the Corporation in respect of such breach or threatened breach.
(c) The provisions of this paragraph 8 shall survive the
termination of the Employment Term and/or this Agreement.
9. Assignability. This Agreement may not be assigned by Employee.
This Agreement and all of its terms and conditions shall be binding upon and
inure to the benefit of Employee and his heirs, executors, administrators,
legal representatives and assigns and the Corporation and its successors and
assigns. Successors of the Corporation shall include, without limitation, any
corporation or corporations acquiring directly or indirectly all or
substantially all of the assets of the Corporation whether by merger,
consolidation, purchase, lease or otherwise, and such successor shall
thereafter be deemed the "Corporation" for purposes hereof.
10. Notices. All notices, requests, demands and other
communications provided for hereby shall be in writing and shall be deemed to
have been duly given when delivered personally or two days after sent by
registered or certified mail, return receipt requested, to the party entitled
thereto at the address first above written or to such changed address as the
addressee may have given by a similar notice, with a copy, in each case, to
Xxxxxxx X. Xxxxxxxx, Esq., Xxxxxx Xxxxxx Flattau & Klimpl, LLP, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
11. Modification. This Agreement may be modified or amended only
by an instrument in writing signed by Employee and the Corporation and any
provision hereof may be waived only by an instrument in writing signed by the
party hereto against whom any such waiver is sought to be enforced.
12. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect, impair or invalidate any other
provision of this Agreement.
13. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts of law (or any other law that would
make the laws of any jurisdiction other than the State of New York applicable
to this Agreement).
14. Captions. The captioned headings contained herein are for
convenience of reference only and are not intended, nor shall they be
construed, to have any substantive effect.
IN WITNESS WHEREOF, the Corporation and Employee have signed this
Agreement on the date set forth on the first page of this Agreement.
UNITEL VIDEO, INC.
By: /s/ Xxxxx Xxxx Xxxxxxx
--------------------------
Name: Xxxxx Xxxx Xxxxxxx
Title: Vice President, General Counsel
and Secretary
/s/BarryKnepper
-------------------------
Xxxxx Xxxxxxx
