EXHIBIT 10.12
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 Xxxxxx X. Xxx ("Xxx").
1. Term of Employment. The Company hereby employs Xxx, and Xxx
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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 three years from the
date hereof, in the capacity of Chairman of the Board and Chief Executive
Officer 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 Xxx'x level of experience
and expertise. In the performance of his duties and the exercise of his
discretion, Xxx shall be under the supervision and control of, and shall report
only to, the Board of Directors. Xxx'x duties shall be designated by the Board
of Directors 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. Xxx shall devote substantially
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all of his productive time, ability and attention to the business of the Company
during the term of this Agreement. Xxx 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 Xxx'x duties to the Company.
3. Compensation. For all services rendered by Xxx under this Agreement,
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the Company shall pay Xxx the following amounts:
3.1 Base Salary. A base salary ("Base Salary"), payable semi-
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monthly, at the rate of $178,000 per year.
3.2 Bonus. In addition to the Base Salary, the Company shall pay Xxx
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an annual bonus ("Bonus") with respect to any pretax profit generated by the
Company (any such pretax profit to be determined in accordance with the usual
and customary accounting practices of the Company and consistent with generally
accepted accounting principles except that all bonuses paid to any employee
based on pretax profits shall be deducted in determining pretax profit for this
purpose) as follows:
(a) an amount equal to 3% of any pretax profit of the Company in
excess of $1,100,000 with respect to the fiscal year commencing in 1997;
(b) an amount equal to 3% of any pretax profit of the Company in
excess of $1,200,000 with respect to the fiscal year commencing in 1998; and
(c) an amount equal to 3% of any pretax profit of the Company in
excess of $1,300,000 with respect to the fiscal year commencing in 1999.
4. Benefits.
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(a) In addition to the Base Salary and the Bonus, if any, Xxx
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 Xxx and his immediate
family, participation in group life insurance and retirement plans, and term
life insurance of $1,000,000 payable to Xxx'x designees. During the period of
his employment hereunder, Xxx 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 Chief Financial
Officer 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 Xxx to have the use of one Company
provided automobile (or an equivalent expense allowance for an automobile owned
by Xxx).
(c) If the Company's headquarters is moved from Bakersfield,
California, such that Xxx must relocate, the Company shall pay his reasonable
relocation costs, including, but not limited to, moving expenses.
5. Authority. So long as Xxx serves as Chief Executive Officer of the
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Company 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
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time specified in Section 1 above (and except as provided in Sections 6(c) and
6(d) below, Xxx 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 Xxx.
(b) In the event that Xxx 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 Xxx 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), Xxx 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.
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(c) By Xxx, 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 Xxx'x Base Salary and Bonus 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 Xxx, (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 Xxx for Cause, no payments or benefits under this
Agreement shall become payable after the date of Xxx'x termination. The Company
may terminate Xxx'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 Xxx and Xxx 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 the
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Company shall pay Xxx his Base Salary and any Bonus which would otherwise have
become payable under Section 3.2 above through the remaining term of this
Agreement.
7. Attorney Fees. The successful party in any litigation relating
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to 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 Xxx 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 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
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set 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
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by 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.
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If to the Company, to:
Prism Entertainment Corporation
0000 XxXxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, President
Fax: (000) 000-0000
If to Xxx, to:
Xxxxxx X. Xxx
c/o Prism Entertainment Corporation
0000 XxXxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
12. California Law. This Agreement is being executed and delivered
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and 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, Xxx'x vote as a director shall not be
counted.
14. Indemnification Agreement. The Company shall enter into an
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Indemnification Agreement with Xxx indemnifying him against personal liability
to the fullest extent permissible under applicable corporate law.
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/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
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