EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made this 7th day of
January, 2000 by and between Impact Solutions, Inc., Inc. a Delaware corporation
(the "Company"), a wholly owned subsidiary of Classics International
Entertainment, Inc., ("Classics"), a Delaware corporation and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("Executive").
WHEREAS, Classics wishes to employ Executive and Executive desires to be
employed by Classics, as President and Chief Operating Officer of the Company
upon the terms and conditions set forth herein;
WHEREAS, the Company is engaged in the business of marketing and selling
data compression technology, and consulting and integrating related business
technology solutions (the "Business").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Classics and Executive
agree as follows:
1. EMPLOYMENT. Classics agrees to employ Executive and Executive agrees
to be employed by Classics upon the terms and conditions of this Agreement.
2. TERM OF EMPLOYMENT. The term of Executive's employment under this
Agreement (the "Employment Term") will commence on the date of this Agreement
and, unless earlier terminated in accordance with Section 12 below, will
continue for two years, ending on the second anniversary of the date of this
Agreement (the "Initial Term"). At the end of the Initial Term, the Employment
Term will automatically be extended for successive one year periods (each an
"Extended Term") unless either party elects not to renew this Agreement by
giving written notice of such election at least sixty (60) days prior to the
scheduled expiration of the Initial Term or then-current Extended Term, as
applicable.
3. POSITION AND RESPONSIBILITIES. Executive will be employed as
"President and Chief Operating Officer" of the Company and will perform the
duties of President and Chief Operating Officer as described in Classics's
Bylaws and such other executive duties for the Company and/or its subsidiaries
as Classics' Board of Directors may reasonably prescribe from time to time.
4. COMMITMENT. During the Employment Term, Executive shall devote
substantially all of his business time, attention, skill, and efforts to the
faithful performance of his duties herein. Nothing herein shall preclude
Executive from making passive investments which do not interfere with
Executive's responsibilities to Classics and its subsidiaries. In addition, with
the prior written approval of Classics' Board of Directors, Executive may engage
in more active investments or business ventures so long as such investments and
ventures do not conflict or interfere with Executive's obligations to Classics
and its subsidiaries as provided in this Agreement.
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5. COMPENSATION. The following shall constitute Executives
"Compensation" hereunder:
(A) BASE SALARY. During the Employment Term, Classics will pay
Executive a BASE SALARY (THE "BASE SALARY") of $150,000 per year
payable on a bi-monthly basis and otherwise in accordance with Classics
then-current executive salary payment practice. Such Base Salary may be
reviewed during the Employment Period in the sole discretion of
Classics' Board of Directors, and shall not be decreased without the
prior written consent of Executive.
(B) OVERRIDE. Executive will receive a 1% override on
licensing fees/sales of the Company's Web Rapids product in excess of
$667,000 per year. The override shall be paid after audited closeout of
fiscal year accounting with such override program being reevaluated at
the end of year one. No override shall be earned or otherwise payable
on annual sales of Web Rapids below $667,000.
(C) INCENTIVE OPTIONS. Executive will be eligible for, but is
not guaranteed to receive, additional compensation ("Incentive
Options") based on performance milestones in accordance with mutually
agreeable guidelines detailed in Schedule I attached hereto.
(D) FRINGE BENEFITS. Executive will be entitled to participate
in Classics' group life and medical insurance plans, accidental/death
and dismemberment, dental, profit-sharing, short-term and long-term
disability and similar plans, and other "fringe benefits"
(collectively, "Fringe Benefits"), comparable to those made available
by Classics to its other senior executive employees, in accordance with
the terms of such plans. Classics shall pay for the cost of health care
benefits for Executive and Executive's spouse for the duration of the
Employment Term.
(E) WITHHOLDING. All compensation payable to Executive under
this Agreement is stated in gross amount and to the extent required by
law will be subject to all applicable withholding taxes, other normal
payroll deductions, and any other amounts required by law to be
withheld.
(F) EXPENSES. Classics, in accordance with its then-current
policies and past practices, will promptly pay or reimburse Executive
for all expenses (including travel and entertainment expenses)
reasonably incurred by Executive during the Employment Term in
connection with the performance of Executive's duties under this
Agreement, provided that Executive must provide to Classics
documentation or evidence of expenses for which Executive seeks
reimbursement, in accordance with Classics then-current reimbursement
policy as determined by Classics' Board of Directors.
(G) CONTRACT ACQUISITION OPTION GRANT. In consideration of the
Company's
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December 8, 1999 acquistition of ▇▇▇▇▇.▇▇▇, Inc. and the resulting and
concurrent acquisition of Executive's contract as part of said
acquisition, the Company hereby agrees to grant Executive, not in lieu
of salary or any other compensation for services, 350,000 option shares
of post reverse split, (pre-split option shares totaling 1,221,500),
registered shares of the authorized shares of Classics International
Entertainment, Inc. - based on the post split authorized shares as
anticipated by the Company's planned reorganization (the "Contract
Acquisition Option Grant"). The Contract Acquisition Option Grant shall
have an Acquisition Strike Price of $.01 (the "Acquisition Strike
Price") and shall be 100% vested as of the Acquisition Grant Date, (the
"Acquisition Grant Date") December 8, 1999. No Contract Acquisition
Options shall be exercisable prior to six months after the Acquisition
Grant Date nor later than 10 years after the Acquisition Grant Date.
(H) STOCK OPTIONS. Executive will be eligible for, but is not
guaranteed to receive, additional stock options ("Options"), in
accordance with the Company's anticipated 2000 Stock Option Plan, as
determined by the Board of Directors.
6. VACATION AND HOLIDAYS. During the Employment Term, Executive will
be entitled to receive paid vacation and paid holidays in accordance with
then-current Classics policy, but in no event less than four (4) weeks per
contract year.
7. LOCATION OF EMPLOYMENT. Executive will be entitled to perform
his duties under this Agreement at Executive's home office in New Jersey or such
location(s) that the Company and Executive mutually determine to be in the best
interests of the Company.
8. INTELLECTUAL PROPERTY RIGHTS
(a) Executive agrees that the Company will be the sole owner
of any and all of Executive's "Discoveries" and "Work Product" made
during the Employment Term, whether pursuant to this Agreement or
otherwise. For purposes of this Section 8, "Discoveries" means all
inventions, discoveries, improvements, and copyrightable works
(including, without limitation, any information relating to the
software products, source code, know-how, processes, designs,
algorithms, computer programs and routines, formulae, techniques,
developments or experimental work, work-in-progress, or business trade
secrets of the Company or its affiliates) made or conceived or reduced
to practice by Executive, whether or not potentially patentable or
copyrightable in the United States or elsewhere. For purposes of this
Agreement, "Work Product" means any and all work product relating to
Discoveries.
(b) Executive shall promptly disclose to the Company all
Discoveries and Work Product. All such disclosures must include
complete and accurate copies of all source code, object code or
machine-readable copies, documentation, work notes, flow-charts,
diagrams, test data, reports, samples, and other tangible evidence or
results (collectively, "Tangible Embodiments") of such Discoveries or
Work Product. All Tangible Embodiments of any Discoveries or Work
Product will be deemed to have been assigned to the Company as a
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result of the act of expressing any Discovery or Work Product therein.
(c) Executive hereby assigns and agrees to assign to the
Company all of his interest in any country in any and all Discoveries
and Work Product, whether such interest arises under patent law,
copyright law, trade-secret law, semiconductor chip protection law, or
otherwise. Without limiting the generality of the preceding sentence,
Executive hereby authorizes the Company to make any desired changes to
any part of any Discovery or Work Product, to combine it with other
materials in any manner desired, and to withhold Executive's identity
in connection with any distribution or use thereof alone or in
combination with other materials. This assignment and assignment
obligation applies to all Discoveries and Work Product arising during
Executive's employment with the Company (or its predecessors), whether
pursuant to this Agreement or otherwise.
(d) At the request of the Company, Executive shall promptly
and without additional compensation execute any and all patent
applications, copyright registration applications, waivers of moral
rights, assignments, or other instruments that the Company deems
necessary or appropriate to apply for or obtain Letters Patent of the
United States or any foreign country, copyright registrations or
otherwise to protect the Company's interest in such Discovery and Work
Product, the expenses for which will be borne by the Company. Executive
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to,
if the Company is unable for any reason to secure Executive's signature
to any lawful and necessary document required or appropriate to apply
for or execute any patent application, copyright registration
application, waiver of moral rights, or other similar document with
respect to any Discovery and Work Product (including, without
limitation, renewals, extensions, continuations, divisions, or
continuations in part), (i) act, for and in his behalf, (ii) execute
and file any such document, and (iii) do all other lawfully permitted
acts to further the prosecution of the same legal force and effect as
if executed by him; this designation and appointment constitutes an
irrevocable power of attorney coupled with an interest.
(e) To the extent that any Discovery or Work Product
constitutes copyrightable or similar subject matter that is eligible to
be treated as a "work made for hire" or as having similar status in the
United States or elsewhere, it will be so deemed. This provision does
not alter or limit Executive's other obligations to assign intellectual
property rights under this Agreement.
(f) The obligations of Executive set forth in this Section 8
(including, with out limitation, the assignment obligations) will
continue beyond the termination of Executive's employment with respect
to Discoveries and Work Product conceived or made by Executive alone or
in concert with others during Executive's employment with the Company,
whether pursuant to this Agreement or otherwise. Those obligations will
be binding upon Executive, his assignees permitted under this
Agreement, executors, administrators, and other representatives.
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(g) Notwithstanding anything in this Agreement to the
contrary, this Section 8 DOES NOT APPLY to any invention of Executive
for which no equipment, supplies, facility, or Proprietary Information
(as defined below) of the Company was used and that was developed
entirely on Executive's own time, unless (i) the invention relates to
(A) the Business or (B) the Company's or its affiliates' actual or
demonstrably anticipated research or development, or (ii) the invention
results from any work performed by Executive for or on behalf of the
Company or its affiliates.
9. EXPOSURE TO PROPRIETARY INFORMATION
(a) As used in this Agreement, "Proprietary Information" means
all information of a business or technical nature that relates to the
Business including, without limitation, all information about the
Company's and its affiliates' software products whether currently
released or in development, all inventions, discoveries, improvements,
copyrightable work, source code, know-how, processes, designs,
algorithms, computer programs and routines, formulae and techniques,
and any information regarding the business of any customer or supplier
of the Company or its affiliates or any other information that the
Company or any affiliate of the Company is required to keep
confidential. Notwithstanding the preceding sentence, the term
"Proprietary Information" does not include information that is or
becomes publicly available through no fault of Executive.
(b) In recognition of the special nature of his employment
under this Agreement, including his special access to the Proprietary
information, and in consideration of his employment pursuant to this
Agreement, Executive agrees to the covenants and restrictions set forth
in Section 10.
10. USE OF PROPRIETARY INFORMATION. Executive acknowledges that the
Proprietary Information constitutes a protectible business interest of the
Company and its affiliates, and covenants and agrees that during the term of his
employment, whether under this Agreement or otherwise, and after the termination
of such employment, he will not, directly or indirectly, disclose, furnish, make
available or utilize any of the Proprietary Information, other than in the
proper performance of his duties for the Company. Executives obligations under
this Section 10 with respect to particular Proprietary Information will survive
expiration or termination of this Agreement and Executive's employment with the
Company, and will terminate only at such time (if any) as the Proprietary
Information in question becomes generally known to the public other than through
a breach of Executive's obligations under this Agreement.
11. RETURN OF COMPANY MATERIALS UPON TERMINATION. Executive
acknowledges that all records, documents, and Tangible Embodiments containing or
of Proprietary Information prepared by Executive or coming into his possession
by virtue of his employment by the Company are and will remain the property of
the Company; upon termination of his employment with the Company, Executive
shall immediately return to the Company all such items in his possession and all
copies of such items.
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12. EQUITABLE REMEDIES.
(a) Executive acknowledges and agrees that the agreements and
covenants set forth in Sections 8, 9, 10, and 11 are reasonable and
necessary for the protection of the Company's business interests, that
irreparable injury will result to the Company if Executive breaches any
of the terms of said covenants, and that in the event of Executive's
actual or threatened breach of any such covenants, the Company will
have no adequate remedy at law. Executive accordingly agrees that, in
the event of any actual or threatened breach by him of any of said
covenants, the Company will be entitled to immediate injunctive and
other equitable relief, without bond and without the necessity of
showing actual monetary damages. Nothing in this Section 12 will be
construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach, including the
recovery of any damages that it is able to prove.
(b) Each of the covenants in Sections 8, 9, 10 and 11 will be
construed as independent of any other covenants or other provisions of
this Agreement.
(c) In the event of any judicial determination that any of the
covenants in Sections 8, 9, 10, and 11 are not fully enforceable, it is
the intention and desire of the parties that the court treat said
covenants as having been modified to the extent deemed necessary by the
court to render them reasonable and enforceable, and that the court
enforce them to such extent.
13. TERMINATION.
(a) If there has been a material breach of this Agreement by
Executive, the Company may terminate the Employment Term upon fifteen
days' prior written notice to Executive issued upon approval of the
Company's Board of Directors which approval was obtained prior to
issuance of such notice. Executive shall have the right to cure any
such breach within such fifteen-day period. Any uncured material breach
shall be considered "causes" hereunder. Upon expiration of such notice
period, the Employment Term will immediately end and Executive will not
be entitled to receive any further compensation (whether in the form of
Base Salary, Incentive Compensation, Fringe Benefits or otherwise)
other than accrued but unpaid Base Salary and any vested stock options.
Without limiting the generality of the preceding sentence, any breach
by Executive of any of his obligations under Sections 8, 9, 10, and 11
will be deemed a material breach of this Agreement that is incapable of
being cured. Notwithstanding the foregoing, any of the following events
will also be deemed a material breach of this Agreement that, except in
the case of 13(a)(i) and 13(a)(ii), is incapable of being cured:
(i) Executive's continued and deliberate neglect of, willful
misconduct in connection with the performance of, or refusal
to perform his duties in accordance with, Section 3 of this
Agreement;
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(ii) Executive's failure to devote his full business time
to the Company's business in accordance with Section 4 of this
Agreement;
(iii) willful misconduct on the part of Executive that causes
or is likely to cause a material financial injury to the
Company, including, without limitation, Executive's
embezzlement of the Company's funds or theft or
misappropriation of the Company's or any other party's
property; or
(iv) Executive's conviction of a felony class crime.
The fifteen day notice requirement of this Section 13(a) applies to
both curable and incurable breaches.
(b) The Employment Term will terminate upon the death or
disability of Executive. Disability of Executive will be deemed to have
occurred whenever Executive has suffered physical or mental illness,
injury, or infirmity that prevents Executive from fulfilling his duties
under this Agreement for 120 consecutive days and the Company
determines in good faith that such illness or other disability is
likely to continue for at least the next following 30 days. In the case
of death or disability, Executive will be entitled to receive accrued
but unpaid Base Salary as of the date of such termination, and a pro
rata portion of Incentive Compensation (if any) for the year in which
such termination, occurs (payable within a reasonable time after the
year in question), but all other obligations of the Company to pay
Executive any further compensation, whether in the form of Base Salary,
Incentive Compensation, or Fringe Benefits (other than death and
disability benefits, if any) or otherwise, will terminate. Executive's
Base Salary during any period of disability will be reduced by any
benefits Executive receives from Company-provided disability insurance
if any such insurance exists).
(c) The Company may elect to terminate Executive's employment
hereunder without cause upon 60 days prior written notice; provided,
that the Company shall continue to pay Executive all Compensation in
accordance with Section 5 hereof for the remainder of the Initial Term
or then-current Extended Term as applicable.
(d) Executive may elect to terminate the Employment Term upon
30 days prior written notice to the Company if there has been a
material breach of this Agreement by the Company, unless such breach
has been cured within such 30 day period.
(e) Termination of the Employment Term in accordance with this
Section 13, or expiration of the Employment Term, will not affect the
provisions of this Agreement that survive such termination, including,
without limitation, the provisions in Sections 8, 9, 10 and 11 and will
not limit either party's ability to pursue remedies at law or equity.
(f) In the event the Employment Term i terminated in
accordance with Section
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13(b), 12(c), 12(d) or 12(e) of the Employment Agreement, the unvested
portion of the Option as of the date of such termination shall become
fully vested and exercisable to the extent specified below:
(i) The percentage of Option Shares scheduled to vest on the
Anniversary Date immediately following the date that the
Employment Term is terminated shall be multiplied by a
fraction, the numerator of which is the number of full
calendar months in the twelve-month period immediately
proceeding such Anniversary Date during which you were an
employee of the Company, and the denominator of which is 12;
and
(ii) the percentage of Option shares scheduled to vest on the
second Anniversary Date, if any, following the date that the
Employment Term is terminated shall be multiplied by one-half
(1/2).
(g) Regardless of whether the Employment Term is terminated
with or without cause or any other contingency, those Option Shares
vested shall remain vested. Further, during the Option Period you are
entitled to exercise vested Option Shares regardless of your employment
status and/or any other contingency.
14. COVENANT NOT TO COMPETE.
14.1 Executive Acknowledgment. Executive acknowledges that, as
a result of his position with the Company he has and will further develop
knowledge about the Company and its affiliates, and knowledge and a working
relationship with customers with whom they do business, which knowledge and
relationship is special, unique and of an intellectual character.
Such business information is considered confidential by the Company, the value
of which would be destroyed by disclosure of such information or by its use in
competition with the Company. In addition, Executive will be performing services
to the Company pursuant to this Agreement and thereby will occupy a position of
trust and confidence with respect to the Proprietary Information. In light of
the foregoing, Executive is agreeing to the covenants set forth below.
14.2 Non-Competition.
(a) During Executive's employment with the Company or any
affiliate of the Company (whether pursuant to this Agreement or
otherwise) and for a period two years thereafter, Executive will not,
directly or indirectly though any person, entity or affiliate, whether
as an Executive, consultant, independent contractor, owner,
shareholder, limited or general partner, officer, director, advisor or
otherwise, (i) provide software development, sales, marketing,
management or other related services to an entity that competes with
the Company or any affiliate of the Company in the Business or (ii)
solicit or contact any customer, client, vendor or similar party, which
Executive solicited or contacted at any time
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during the then two previous years of employment with the Company or
any affiliate of the Company for the purposes of representing any
business which competes with such party in the Business.
(b) Executive acknowledges that the Business is conducted
throughout the world and that the Company and its affiliates will be
competing as such and that the foregoing restriction would be
ineffective if limited to a more specific geographic area. The
Executive further acknowledges that this Section 14.2 including the
nature of the activities restrained hereby, has been as narrowly drawn
as possible to protect the legitimate interests of the Company, and
that he will be able to support his family notwithstanding these
restrictions.
(c) If any court of competent jurisdiction shall at any time
determine that a covenant contained in this Section 14.2, or any part
hereof, is unenforceable due to the duration of its term or
geographical scope, or scope of activities precluded, such court shall
reduce the duration or scope of such provision as the case may be, to
the extent necessary to render it enforceable and in its reduced form s
such provisions shall then be enforced.
15. EFFECT OF PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the Company and Executive relating to the subject matter
hereof and supersede any prior employment agreement between Executive and the
Company or other agreement relating to the subject matter hereof between the
Company and Executive. Executive acknowledges that he is not bound by any other
agreements, including employment agreements, confidentiality agreements and
restrictive covenants, that would prohibit or restrict Executive from entering
into this Agreement.
16. MODIFICATION AND WAIVER. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties. No term or
condition of this Agreement will be deemed to have been waived, except by
written instrument of the party charged with such waiver. No such written waiver
will be deemed to be a continuing waiver unless specifically stated therein, and
each such waiver will operate only as to the specific term or condition waived
and shalt not constitute a waiver of such term or condition for the future or as
to any act other than that specifically waived.
17. SEVERABILITY. If, for any reason, any provision of this Agreement
is held invalid, such invalidity will not affect any other provision of this
Agreement, and each provision will to the full extent consistent with law
continue in full force and effect. If any provision of this Agreement is held
invalid in part, such invalidity will in no way affect the rest of such
provision, and the rest of such provision, together with all other provisions of
this Agreement, will, to the full extent consistent with law, continue in full
force and effect.
18. NOTICES. Any notice or consent required or permitted pursuant to
the provisions of this Agreement must be in writing and will be deemed to have
been properly given if sent by certified or registered United States mail;
prepaid, by overnight courier; or when personally delivered, addressed as
follows:
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If to the Company or Classics:
Classics International Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Executive:
▇▇▇▇▇ Greybil
▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Each party will be entitled to specify a different address for the
receipt of subsequent notices by giving written notice thereof to the other
party in accordance with this Section 18.
19. HEADINGS. The headings and other captions in this Agreement
are included solely for convenience of reference and will not control the
meaning and interpretation of any provision of this Agreement.
20. GOVERNING LAW. This Agreement has been executed in the State
of Texas, and its validity, interpretation, performance, and enforcement will
be governed by the laws of such state, except with respect to conflicts of laws
principles.
21. BINDING EFFECT. This Agreement will be binding upon and inure to
the benefit of Executive, the Company, and their respective successors and
permitted assigns. The Company will be entitled to assign its rights and duties
under this Agreement provided that the Company will remain liable to Executive
should such assignee fail to perform its obligations under this Agreement.
22. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any person.
23. ARBITRATION. Subject to the Company's right to seek equitable
relief as provided for in Section 12, if any controversy or claim between the
parties hereto arises out of this Agreement, such disagreement or dispute shall
be submitted to binding arbitration in Dallas, Texas, under the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"). There
shall be one arbitrator, as shall be agreed upon by the parties. In the absence
of such agreement, each party shall select one arbitrator and the arbitrators so
selected shall select a third arbitrator. In the event the arbitrators cannot
agree upon the selection of a third arbitrator, such third arbitrator shall be
appointed by the AAA at the request of either party. The arbitrator or
arbitrators (as the case may be) shall be an individual or individuals (as the
case may be) skilled in employment matters. The decision rendered by the
arbitrator or arbitrators shall be accompanied by a written opinion in support
thereof. Such decisions shall be final and binding upon the parties without
right of appeal. Judgment upon any such decision may be entered into in any
court having jurisdiction thereof, or
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application may be made to such court for a judicial acceptance of the decision
and order of enforcement. Costs of the arbitration shall be, assessed by the
arbitrator or arbitrators against any or both parties, and shalt be paid
promptly by the party or parties so assessed.
[Signature Page Follows)
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.
COMPANY:
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ITS: DIRECTOR
DATE: JANUARY 7, 2000
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EXECUTIVE:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
DATE: JANUARY 7, 2000
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