EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
7th day of January, 1997, by and between Prism Entertainment Corporation, a
Delaware corporation (the "Company"), and Xxxxx Xxxxxxx ("Xxxxxxx").
1. Term of Employment. The Company hereby employs Xxxxxxx, and Xxxxxxx
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hereby agrees to serve the Company, under and subject to all of the terms,
conditions and provisions of this Agreement for a period of two (2) years from
the date hereof, in the capacity of President of the Company, or to serve in
such other executive capacity with the Company as the Company's board of
directors (the "Board") may from time to time designate, provided such
assignment is consistent with Xxxxxxx'x level of experience and expertise. In
the performance of his duties and the exercise of his discretion, Xxxxxxx shall
be under the supervision and control of, and shall report only to, the Chairman
of the Board. Xxxxxxx'x duties shall be designated by the Chairman of the Board
and shall be subject to such policies and directions as may be established or
given by the Board of Directors from time to time.
2. Devotion of Time to Company Business. Xxxxxxx shall devote
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substantially all of his productive time, ability and attention to the business
of the Company during the term of this Agreement. Xxxxxxx shall not, without
the prior written consent of the Board of Directors, directly or indirectly
render any services of a business, commercial or professional nature to any
other person or organization, whether for compensation or otherwise, which may
compete or conflict with the Company's business or with Xxxxxxx'x duties to the
Company.
3. Compensation.
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3.1 Base Salary. For all services rendered by Xxxxxxx under this
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Agreement, the Company shall pay Xxxxxxx a salary ("Base Salary"), payable semi-
monthly, at the rate of $178,000 per year.
3.2 Bonus. In addition to the Base Salary, the Company shall pay
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Xxxxxxx the following bonuses ("Bonuses"):
(a) an annual bonus equal to 12% of all revenues (net of
commissions and expenses related thereto) recorded in excess of $625,000 from
the licensing of and/or transfer of rights to the Film Library accrued for each
fiscal year during the term hereof;
(b) an annual bonus equal to 5% of any (MDF) marketing
development funds from any source in excess of $350,000 received by or credited
to the Company for each fiscal year during the term hereof; and
(c) a bonus equal to 20% of proceeds in excess of $3,700,000
(net of commissions and expenses of sale) received by the Company generated by
the sale of the Film Library in its entirety.
As used herein, Film Library means the rights of the Company in the motion
pictures listed on Schedule 5.25 to the Merger Agreement dated as of October 25,
1996 between the Company and Xxx Video City, Inc.
4. Benefits.
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(a) In addition to the Base Salary and the Bonus, if any,
Xxxxxxx will be entitled to participate in all benefits of employment available
to other members of the Company's management, on a commensurate basis as they
may be offered from time to time by the Board of Directors to the Company's
other management employees. Such benefits include, but are not limited to, full
medical, dental and long term disability insurance for Xxxxxxx and his immediate
family and participation in group life insurance and retirement plans. During
the period of his employment hereunder, Xxxxxxx will be reimbursed for
reasonable business, travel and entertainment expenses incurred in accordance
with Company policy on behalf of the Company in connection with his employment,
and will be required to submit appropriate expense reports for approval by
signature of the Chairman of the Board as a condition of reimbursement of such
expenses.
(b) The Company will pay up to $500 per month (including all
maintenance and operating expenses) for Xxxxxxx to have the use of one Company
provided automobile (or an equivalent expense allowance for an automobile owned
by Xxxxxxx).
5. Authority. So long as Xxxxxxx serves as an officer of the Company
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under this Agreement, he shall have the authority specified in the Bylaws of the
Company, except that he shall not proceed with any matters, or permit the
Company to take any actions, which are prohibited by, or are in conflict with,
resolutions or guidelines adopted by the Board of Directors.
6. Termination. This Agreement shall terminate in advance of the time
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specified in Section I above (and except as provided in Sections 6(c) and 6(d)
below, Xxxxxxx shall have no right to receive any compensation not due and
payable to him or to his estate at the time of such termination) under any of
the following circumstances:
(a) Upon the death of Xxxxxxx.
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(b) In the event that Xxxxxxx shall become either physically or
mentally incapacitated so as to not be capable of performing his duties as
required hereunder, and if such incapacity shall continue for a period of six
months consecutively, the Company may, at its option, terminate this Agreement
by written notice to Xxxxxxx at that time or at any time thereafter while such
incapacity continues. In case of termination under this Section 6(b) or under
Section 6(a), Xxxxxxx or his estate shall be entitled to receive Base Salary or
any other compensation accrued or earned as of or to the date of termination for
six months following such termination, or until the expiration of the term of
this Agreement, whichever is earlier.
(c) By Xxxxxxx, if the Company shall have materially breached
any of the provisions of this Agreement, and such termination shall have the
same effect on the payment of Xxxxxxx'x Salary as a termination by the Company
under Section 6(f).
(d) By the Company for Cause. The term "Cause" used in this
Section 6(e) means Xxxxxxx, (i) after repeated notices and warnings, fails to
perform his reasonably assigned duties as reasonably determined by the Company,
(ii) materially breaches any of the terms or conditions of Sections 1 or 2 of
this Agreement, or (iii) commits or engages in a felony or any intentionally
dishonest or fraudulent act which materially damages the Company's reputation.
If the Company terminates Xxxxxxx for Cause, no payments or benefits under this
Agreement shall become payable after the date of Xxxxxxx'x termination. The
Company may terminate Xxxxxxx'x employment under this Section 6(e)(i) or (ii)
only if written notice of the facts constituting the basis for such termination
has been given to Xxxxxxx and Xxxxxxx shall have been afforded 30 days
opportunity to take such action as may be reasonable under the circumstances to
furnish assurance to the Board of Directors that such basis for termination has
been corrected or cured (to the extent susceptible to cure) and will not recur.
(e) By the Company at any time, without Cause; provided, that
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the Company shall pay Xxxxxxx his Salary through the remaining term of this
Agreement.
7. Attorney Fees. The successful party in any litigation relating to
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matters covered by this Agreement shall be entitled to an award of reasonable
attorneys' fees in such action.
8. Assignment. Neither this Agreement nor any of the rights or
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obligations of either party hereunder shall be assignable by either Xxxxxxx or
the Company, except that this Agreement shall be assignable by the Company to
and shall inure to the benefit of and be binding upon (i) any successor of the
Company by way of merger, consolidation or transfer of all or substantially all
of the assets of the
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Company to an entity other than any parent, subsidiary or affiliate of the
Company and (ii) any parent, subsidiary or affiliate of the Company to which the
Company may transfer its rights hereunder.
9. Binding-Effect. The terms, conditions, covenants and agreements set
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forth herein shall inure to the benefit of, and be binding upon, the heirs,
administrators, successors and assigns of each of the parties hereto, and upon
any corporation, entity or person with which the Company may become merged,
consolidated, combined or otherwise affiliated.
10. Amendment. This Agreement may not be altered or modified except by
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further written agreement between the parties.
11. Notices. Any notice required or permitted to be given under this
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Agreement by one party to the other shall be sufficient if given or confirmed in
writing and delivered personally or mailed by first class mail, registered or
certified, return receipt requested (if mailed from the United States), postage
prepaid, addressed to such party as respectively indicated below or as otherwise
designated by such party in writing.
If to the Company, to:
Prism Entertainment Corporation
0000 XxXxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxx
Fax: (000) 000-0000
If to Xxxxxxx, to:
Xxxxx Xxxxxxx
0000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
12. California Law. This Agreement is being executed and delivered and
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is intended to be performed and shall be governed by and construed in accordance
with the laws of the State of California.
13. Board of Directors. On any matter calling for authorization,
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approval, decision, determination or other action of the Board of Directors
under the provisions of this Agreement, Xxxxxxx'x vote as a director shall not
be counted.
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14. Indemnification Agreement. The Company shall enter into an
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Indemnification Agreement with Xxxxxxx indemnifying him against personal
liability to the fullest extent permissible under applicable corporate law.
15. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement,
including without limitation the employment agreement, bonus arrangement and
termination arrangement referred to in Schedules 5.18 and 5.21 to the Agreement
and Plan of Reorganization and Merger dated as of October 29, 1996 by and
between the Company and Xxx Video City, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
PRISM ENTERTAINMENT CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx, President
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
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