EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made this 7th day of
January, 2000 by and between Classics International Entertainment, Inc.,
("Company") a Delaware corporation and Xxx Xxxxxx ("Executive").
WHEREAS, the Company wishes to employ Executive and Executive desires
to be employed by Company, as President and Chief Operating Officer upon the
terms and conditions set forth herein;
WHEREAS, the Company is engaged in the business of developing,
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,
Company and Executive agree as follows:
1. EMPLOYMENT. Company agrees to employ Executive and Executive agrees
to be employed by Company 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 or 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 the Company's
Bylaws and such other executive duties for the Company and/or its subsidiaries
as the Company's 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 the Company and its subsidiaries. In addition,
with the prior written approval of the Company's Board of Directors, Executive
may engage in more active
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investments or business ventures so long as such investments and ventures do not
conflict or interfere with Executive's obligations to the Company and its
subsidiaries as provided in this Agreement.
5. COMPENSATION. The following shall constitute Executive's
"Compensation" here under:
(A) BASE SALARY. During the Employment Term, the Company will
pay Executive A BASE SALARY (THE "BASE SALARY") of $130,000 per year
payable on a bi-monthly basis and otherwise in accordance with the
Company's then-current executive salary payment practice. Such Base
Salary may be reviewed during the Employment Period in the sole
discretion of The Company's Board of Directors, and shall not be
decreased without the prior written consent of Executive.
(B) INCENTIVE COMPENSATION. Executive will be eligible for,
but is not guaranteed to receive, additional compensation ("Incentive
Compensation") based on performance milestones in accordance with
mutually agreeable guidelines detailed in Schedule I attached hereto.
(C) FRINGE BENEFITS. Executive will be entitled to participate
in the Company's 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 the Company to its other senior executive employees, in accordance
with the terms of such plans. The Company shall pay for the cost of
health care benefits for Executive and Executives spouse for the
duration of the Employment Term.
(D) 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.
(E) EXPENSES. The Company, 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 the Company
documentation or evidence of expenses for which Executive seeks
reimbursement, in accordance with the Company's then-current
reimbursement policy as determined by the Company's Board of Directors.
(F) CONTRACT ACQUISITION OPTION GRANT. In consideration of the
Company's December 8, 1999 acquisition of Xxxxx.xxx, Inc. and the
resulting and concurrent acquisition of Executive's contract as part
of said acquisition, the Company hereby agrees to grant
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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.
(G) "FOUNDERS" OPTION GRANT. 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 "Founder's Option Grant"). The Founders Option
Grant shall have a Strike Price of $135 (the "Founder's Strike Price")
and shall have a 2-year vesting period from the Founder's Grant date,
(the "Founder's Grant Date") to be determined as the execution date of
this Agreement, January 8, 2000. 50% of the aggregate Founder's Option
Grant will vest at the one year anniversary with the remaining 50%
vesting at the two year anniversary date. No Founder's Options shall be
exercisable prior to six month after the Founder's Grant Date nor later
than 10 years after the Founder's Grant Date. No portion of the
Founder's Option Grant shall be exercisable unless it is vested.
(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
the Company's then-current policy, but in no event less thanfour (4) weeks per
contract year.
7. LOCATION OF EMPLOYMENT. Executive will be entitled to perform his
duties under this Agreement at the Company's headquarters at 0000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 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
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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 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.
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(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, without 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.
(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 or 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
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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. Executive's 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.
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
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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 "cause" 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, any vested stock
options and the commitment to provide financial assistance set forth
it paragraph 5 of the Side Agreement. 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 12(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;
(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
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reduced by any benefits Executive receives from Company-provided
disability insurance (if any such insurance exists).
(c) The Company may elect to terminate Executives 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 is terminated in
accordance with Section 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
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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 through 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 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
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 either 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
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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 shall 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:
If to the Company:
Classics International Entertainment, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
If to Executive:
R. Xxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
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
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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 her to 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 shalt 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 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 shall be paid promptly by the party or parties so assessed.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first above written.
COMPANY:
Name: XXXXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXXX
Title: DIRECTOR
DATE: 1/7/2000
--------
EXECUTIVE:
Name: Don Aashley
/s/ Don Aashley
Date: 1/7/2000
