AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
AMENDMENT NO. 1, effective as of January 1, 1996, to the employment
agreement, dated as of August 9, 1993 (the "Employment Agreement"), between
Unapix Entertainment, Inc., a Delaware corporation ("Employer" or "Company"),
and Xxxxxx Xxxxx ("Employee"). Except as otherwise expressly provided herein,
each initially capitalized term used herein has the meaning ascribed to it in
the Employment Agreement.
WHEREAS, the Employment Agreement provides for certain compensation to be
paid to the Employee with respect to his employment by the Company and certain
other terms of employment;
WHEREAS, the Employment Agreement provides for Employee's serving as
President and Chief Executive Officer of A Pix Entertainment, Inc. ("A Pix"),
the Company's home video subsidiary;
WHEREAS, A Pix, has been, or will be, merged into the Company (the
"Merger");
WHEREAS, the parties desire to change the compensation which is to be paid
to the Employee, and to effect certain changes to the Employment Agreement to
reflect the Merger as well as certain other changes to the terms of Employee's
employment, and to amend the Employment Agreement accordingly;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. The Employment Agreement is hereby amended by changing the definition
of "Home Video Subsidiary" which appears in the first recital of the Employment
Agreement to mean the Company's division known as "A Pix Entertainment" which
distributes to the North American home video rental market all films as to which
the Company has such distribution rights.
2. Section 2 of the Employment Agreement is hereby amended to read in its
entirety as follows:
"2. Term: Subject to the provisions of termination as hereinafter
provided, the term of this Agreement shall begin on January 1, 1996, and shall
terminate on December 31, 2000 (being five years after the commencement date);
provided, however, that such term will be automatically renewed for successive
four year periods, unless either Employer or Employee gives notice to the other
of its election not to so renew the term at least 90 days prior to the end of
the
then current term; provided, further, however, that if Employer gives notice to
Employee that it elects not to renew such term less than one year prior to the
end of the then current term, then the term shall be extended so that it expires
one year from the date such notice is delivered to Employee. The term of this
Agreement is hereinafter sometimes referred to as the "Employment Period."
3. Section 3(a) of the Employment Agreement is hereby amended to read in
its entirety as follows:
"(a) For all services rendered by the Employee under this Agreement, the
Employer shall pay the Employee the following annual salary for the respective
periods set forth below (the "Base Salary"):
$195,000 for calendar year 1996;
$220,000 for calendar year 1997; and
$245,000 for calendar year 1998.
Commencing January 1, 1999 and for each year thereafter that this
agreement is in effect, Employee's Base Salary will be increased by the increase
in the Consumer Price Index applicable to the New York, New York Metropolitan
Region (the "Index") during the prior year. If the Employer's board of directors
awards the Employee a discretionary bonus or increases his salary in any year by
an amount in excess of that specifically provided herein 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 discretionary bonus
or salary increase received by the Employee in the prior year."
Employee's Base Salary shall be payable in equal installments in
conformity with the regular payroll policy of the Employer."
4. Section 3 (b) of the Employment Agreement is hereby amended to read in
its entirety as follows:
"(b) Employee will receive from the Company the following bonus
compensation:
(i) For the year 1996, two and one-quarter percent (2.25%) of the
Company's annual earnings before taxes ("Company EBT") in excess of $650,000;
(ii) For the year 1997, three percent (3%) of Company EBT in excess of
$650,000;
(iii) For the year 1998 and for each year thereafter during the Employment
Period, three percent (3%) of Company EBT; and
(iv) In addition to the bonus payable pursuant to clauses (i), (ii) and
(iii) of this Section 3 (b), for each of the Company's
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fiscal years during the Employment period, if Company EBT for such year is at
least 5% of the Company's total consolidated sales for said year ("Company
Sales"), then Employee shall be paid a bonus equal to 1% of all A Pix total net
sales for said year, if any, exceeding 125% of A Pix's total net sales for its
immediately preceding fiscal year; provided, however, that in no event shall the
bonus paid pursuant to this clause (iv) exceed $100,000 with respect to any
particular fiscal year nor shall the bonus paid to Employee pursuant to this
clause (iv) with respect to any particular year ever exceed 75% of the bonus
paid to Xxxxx X. Xxx, the President of the Company, based upon Company Sales for
such year; provided, further, however, that (x) if Company EBT is less than 5%
of Company Sales for any particular fiscal year during the Employment Period but
greater than 2.5% of such sales for said year, Employee shall be paid a bonus
equal to the bonus to which he would otherwise have been entitled for such year
had Company EBT constituted more than 5% of Company Sales for such year
proportionally reduced to the extent Company EBT is less than 5% (i.e. such
bonus shall be reduced by 4% for every 1/10% that Company EBT constitutes less
than 5% of Company Sales for said year), and (y) if Company EBT for a particular
year is not greater than 2.5% of Company Sales for such year, then Employee
shall not be entitled to any such additional bonus pursuant to this clause (iv).
For purposes of this Section 3(b), Company EBT for a particular year shall
consist of the Company's earnings for such year before payment of all local,
state and federal income taxes, but after deduction of all other expenses
allocable to that year, and shall be determined in accordance with generally
accepted accounting principles ("GAAP"). For purposes of clause (iv) of this
Section 3(b), Company Sales for any particular year shall be determined in
accordance with GAAP and shall be based entirely upon such amounts reflected in
the Company's audited financial statements for such year; provided, however,
that a sale of a property with respect to which the Company is acting as a sales
agent for another company, such as sales agent for Orion Pictures, shall not be
included in such amounts except if a commission is accrued by the Company
constituting more than 10% of said sale.
Employer will remit payment of any bonus to Employee within thirty (30)
days of the date Employer's independent auditors complete the financial
statements of the Company for the year with respect to which such bonus is being
paid. If such bonus is being paid with respect to any fiscal year of the Company
during which the Employment Period either commenced or terminated, then the
amount of the bonus to be paid shall be the amount that would otherwise be
payable pursuant to this Section 3(b) had the Employment Period commenced prior
to such year or ended after such year multiplied by a fraction the numerator of
which is the number of days comprising the Employment Period during that year
and the denominator of which is 365.
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Employer shall not reduce any bonus payments to which Employee is entitled
hereunder as a result of bonus amounts advanced pursuant to the Employment
Agreement prior to the effective date of Amendment No. 1 hereto, and Employee is
hereby released from any obligation to repay any amount of his bonus advanced to
him pursuant to Section 3(b) of his Employment Agreement as in effect
immediately prior to said Amendment No. 1."
5. Section 4 of the Employment Agreement is hereby amended to read in its
entirety as follows;
"4. DUTIES: The Employee is employed as President and Chief Executive
Officer of the Home Video Subsidiary and as an Executive Vice President of
Employer. His duties shall be consistent with the responsibilities of such
offices and shall include oversight of all of the Home Video Subsidiary's
day-to-day operations and activities. Employee shall perform such other
reasonable activities related to such offices as are assigned to him by the
Company's Chairman of the Board, President or its Board of Directors. Subject to
reasonable travel requirements on behalf of the Company and Home Video
Subsidiary, Employee's duties shall be performed at an office in New York City.
The Company shall consult with Employee regarding the location of such office.
In performing his duties, Employee shall attend such festivals and markets as
are reasonably necessary and desirable in the performance of his duties.
Notwithstanding anything to the contrary contained herein, Employee shall not be
entitled to incur any expenses in excess of $10,000 on behalf of the Home Video
Subsidiary or the Company without the prior written approval of the Company's
President; provided, however, that so long as the film that the Employee seeks
to acquire does not glorify drugs or contain excessive violence, after
consulting with the Company's President but without being required to obtain the
approval of the Company of its President, the Employee shall have the right to
enter into agreements for the acquisition of titles for domestic home video
rental distribution for an advance or purchase price of not more that $100,000
per title and aggregating not more that $300,000 for all unreleased films at any
one time. Subject to the foregoing, Employee shall have complete creative
control in connection with the acquisition and marketing of all titles for the
domestic home video rental market."
6. The second sentence of Section 7 of the Employment Agreement is hereby
amended to read in its entirety a follows: "Employee shall not be required to
account to the Company for any such expenses."
7. Sections 10 (a) and (b) of the Employment Agreement are hereby amended
to read in their entirety as follows:
"(a) Death. If Employee dies during the Employment Period, the
Company shall pay Employee's designated beneficiary
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(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 6 month period (the "6 Month Period") from the week in which
Employee dies, at the rate in effect at the time of his death, plus the pro-rata
amount of bonus pursuant to Section 3(b) as if the Employment Period had ended
six months after the date of the Employee's death. The Employment Period shall
be deemed to end as of the end of the 6 Month Period, but without prejudice to
any other payment 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 ninety (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 10 (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, (ii) regular installments
of the Employee's Base Salary for the six month period immediately following
such termination, and (iii) the pro-rata amount of bonus pursuant to Section 3
(b) and Fringe Benefits as if the Employment Period has ended six months after
the date of 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.
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. Notwithstanding anything else to the contrary contained
herein, the amount of any Base Salary or other amounts to be paid to the
Employee pursuant to this Section 10(b) shall be reduced by any payments paid to
Employee for the same period because of Disability under any disability or
pension plan of the Company."
8. The last sentence of Section 10(c) is hereby amended to read in its
entirety as follows: "Upon termination of employment pursuant to this Section
10(c), Employee shall not be entitled to any further bonus payments pursuant to
Section 3(b)."
9. The second sentence of Section 10(d) is hereby amended to read in its
entirety as follows: "In such event, or in the event of a wrongful termination
of Employee, (i) the discounted present value of the Base Salary due to Employee
through the end of the Employment Period (had employment not been so terminated)
shall be paid immediately by Employer, and (ii) Employee shall be entitled
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to receive the bonus compensation pursuant to Section 3(b)and the fringe
benefits to which he otherwise would have been entitled, at the times he would
have otherwise been entitled to such compensation and fringe benefits, had
Employee's employment not been so terminated."
10. The second and third sentences of the first paragraph of Section 15
are hereby amended to read in their entirety as follows: "The outstanding
balance of principal and accrued interest on the Loan shall be due and payable
upon the Company's demand." The second, third, fourth, and fifth paragraphs of
Section 15 of the Employment Agreement are hereby deleted in their entirety.
11. Section 14 of the Employment Agreement is hereby amended by adding a
new paragraph (b) to read in its entirely as follows:
"(b) If any options to purchase shares of the Company's common stock, $.01
par value, are granted after the date hereof to Xxxxx X. Xxx, the
Company's president, Employee shall be entitled to receive a grant of
options equal to 75% of the number of options granted by the Company to
Xx. Xxx and having substantially identical terms as such options granted
to Xx. Xxx."
12. Section 16 of the Employment Agreement is hereby deleted in its
entirety.
13. Section 18 of the Employment Agreement is hereby amended by adding a
new paragraph (1) to read in its entirety as follows:
"(1) Setoff of debt: The Company and Employee hereby agree that Employee
is entitled to $6,250 for bonus payments for 1995, net of the advance paid
to Employee for such year. The Company and Employee also agree that such
amount shall be setoff against the following amounts that Employee would
otherwise be required to pay to the Company: (i) the principal payment in
the amount of $5,000 due on May 1, 1996 (the "May 1 Principal Payment") on
that certain promissory note, in the original principal amount of $95,000,
and dated as of September 1, 1995, made by Employee payable to the
Company; and (ii) the principal payment, in the amount of $1,250, due on
January 3, 1996 (the "January 3 Principal Payment"), on that certain
promissory note in the original principal amount of $25,000 and, dated as
of January 3, 1994, made by Employee payable to the Company."
14. Except as expressly provided in this Amendment No. 1, the terms and
provisions of the Employment Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to the
Employment Agreement as of the date first written above.
UNAPIX ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board
/s/ Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxx
Employee
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