EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (THIS "AGREEMENT") IS MADE 16 this day of
November, 1999 by and among Classics International Entertainment, Inc., a
Delaware corporation ("Classics"), IBP, Inc., a Nevada corporation (the
"Company"), and Xxxxx Xxxxxx ("Executive").
WHEREAS, Classics, the Company, Executive and other parties named therein
have entered into a Side Agreement (the "Side Agreement") dated as of the date
hereof, pursuant to which, in pertinent part, Classics will acquire all of the
issued and outstanding capital stock of the Company through a reverse subsidiary
merger of Classics Acquisition Subsidiary, Inc., a Delaware corporation ("CAS"),
with and into the Company;
WHEREAS, as a condition to closing the transactions contemplated by the
Side Agreement, Classics wishes to employ Executive and Executive desires to be
employed by Classics, as Chief Information Officer of Classics, upon the terms
and conditions set forth herein;
WHEREAS, Classics is engaged in the business of developing, marketing and
selling software, firmware and hardware products and other information
technology products and services (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 "Chief
Scientist" of Classics and will perform the duties of Chief Scientist as
described in Classics' Bylaws and such other executive duties for Classics
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.
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Nothing herein shalt 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.
5. COMPENSATION. The following shall constitute Executive's "Compensation"
here under:
(A) SIGN-ON BONUS. Classics will pay Executive a cash payment of
$20,000 as a sign-on bonus upon commencement of the Initial Term and a
$50,000 payment, payable BY JANUARY 3, 2000. (THE "SIGN-ON BONUS")
(B) BASE SALARY. During the Employment Term, Classics will pay
Executive an INITIAL BASE SALARY (THE "BASE SALARY") of $150,000 for
the first year followed by a second year base salary of $200,000
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 at the sole
discretion of Classics' Board of Directors, and shall not be decreased
without the prior written consent of Executive.
(C) 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.
(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 will pay for the cost of
Executive's COBRA package, or comparable package, for health care
benefits for Executive and Executive's spouse and dependents until
such time as Executive elects to participate in Classics corresponding
benefit plans, but in no event later than the first anniversary date
of this Agreement Additionally, key man life insurance shall be
provided by Classics, at its sole cost and expense, in the amount of
$2,500,000 with the beneficiary of surviving family members in the
amount of $700,000.
(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
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which Executive seeks reimbursement, in accordance with Classics
then-current reimbursement policy as determined by Classics' Board of
Directors.
(G) STOCK OPTIONS. Executive shall be awarded Stock Options (the
"Options") with values, performance criteria and vesting periods set
forth in Schedule II attached hereto.
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 three (3) weeks per
contract year.
7. INTELLECTUAL PROPERTY RIGHTS.
(a) Executive agrees that Classics 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 7, "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 Classics or its subsidiaries) 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 Classics 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") and of such Discoveries or Work Product. All Tangible
Embodiments of any Discoveries or Work Product will be deemed to have been
assigned to Classics.
(c) Executive hereby assigns and agrees to assign to Classics 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 Classics
to make any desired changes to any part of any such 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
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Discoveries and Work Product arising during Executive's employment with
Classics (or its predecessors), whether pursuant to this Agreement or
otherwise.
(d) At the, request of Classics, 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 Classics 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 Classics' interest in such
Discovery and Work Product, the expenses for which will be borne by
Classics. Executive hereby irrevocably designates and appoints Classics and
its duly authorized officers and agents as his agents and attorneys-in-fact
to, if Classics 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 Executives other obligations to assign intellectual
property rights under this Agreement.
(f) The obligations of Executive set forth in this Section 7
(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 Classics,
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 7 DOES NOT APPLY to any invention of Executive
for which no equipment, supplies, facility, or Proprietary Information
(as defined below) of Classics was used and that was developed entirely
on Executive's own time, unless (i) the invention relates to (A) the
Business or (B) Classics' actual or demonstrably anticipated research
or development, or (ii) the invention results from any work performed
by Executive for or on behalf of Classics or its subsidiaries.
8. EXPOSURE TO PROPRIETARY INFORMATION.
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(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 Classics'
and its subsidiaries' 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 Classics or its subsidiaries or any other information that Classics
or any subsidiary of Classics 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.
9. USE OF PROPRIETARY INFORMATION. Executive acknowledges that the
Proprietary Information constitutes a protectible business interest of Classics
and its subsidiaries, 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 Classics. Executive's obligations under
this Section 9 with respect to particular Proprietary Information will survive
expiration or termination of this Agreement and Executive's employment with
Classics, 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.
10. 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 Classics are and will remain the property of
Classics; upon termination of his employment with Classics, Executive shall, as
soon as reasonably practicable, return to Classics all such items in his
possession and all copies of such items.
11. EQUITABLE REMEDIES.
(a) Executive acknowledges and agrees that the agreements and
covenants set forth in Sections 7, 8, 9, and 10 are reasonable and
necessary for the protection of Classics' business interests, that
irreparable injury will result to Classics 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, Classics 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, Classics will
be entitled to immediate injunctive and other equitable relief, without
bond, and
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without the necessity of showing actual monetary damages. Nothing in this
Section 11 will be construed as prohibiting Classics 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 7, 8, 9, and 10 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 7, 8, 9, and 10 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.
12. TERMINATION.
(a) If there has been a material breach of this Agreement by
Executive, Classics may terminate the Employment Term upon thirty days'
prior written notice to Executive issued upon approval of Classics'
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 thirty-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 and any vested Options.
Without limiting the generality of the preceding sentence, any breach
by Executive of any of his obligations under Sections 7, 8, 9, and 10
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 12(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
Classics' 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
Classics, including, without limitation, Executive's
embezzlement of Classics' funds or theft or misappropriation
of Classics' or any other party's property; or
(iv) Executive's conviction of a felony class crime.
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The thirty day notice requirement of this Section 12(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 Classics 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 alter the year in
question), but all other obligations of Classics 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 Classics-provided disability insurance.
(c) Classics may elect to terminate Executives employment
hereunder without cause upon 60 days prior written notice; provided,
that Classics 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 Classics if there has been a material
breach of this Agreement by Classics, unless such breach has been cured
within such 30 day period. Upon such elective termination of
employment, Classics 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.
(e) Termination of the Employment Term in a accordance with
this Section 12, 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 7, 8, 9 and
10 and will not limit either party's ability to pursue remedies at law
or equity.
13. COVENANT NOT TO COMPETE.
13.1 EXECUTIVE ACKNOWLEDGMENT. Executive acknowledges that, as
a result of his position with Classics he has and will further develop
knowledge about the Classics and its subsidiaries, 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
Classics, the value of which would be destroyed by disclosure of such
information or by its use in competition with
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Classics. In addition, Executive will be performing services to
Classics 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.
13.2 NON-COMPETITION.
(a) During Executive's employment with Classics or any subsidiary of
Classics (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 Classics or any subsidiary of
Classics in the Business or (i.) 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
Classics or any subsidiary of Classics for the purposes of representing
any business which competes such party in the Business.
(b) Executive acknowledges that the Business is conducted throughout
the world and that Classics and its subsidiaries 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 13.2, including the nature of the activities
restrained hereby, has been as narrowly drawn as possible to protect
the 'legitimate interests of Classics, 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 13. 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.
14. EFFECT OF PRIOR AGREEMENTS. This Agreement and the Side Agreement
is the entire understanding between Classics and Executive relating to the
subject matter hereof and supersede any prior employment agreement between
Executive and Classics or other agreement relating to the subject matter hereof
between Classics 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
15. 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 shall not
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constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
16. 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 not 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.
17. 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 Classics-:
Classics International Entertainment, Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx
00000
If to Executive:
Xxxxx Xxxxxx
0000 Xxxxxx Xxxxx
Xxxxx Xxxxxx, XX
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 17.
18. 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.
19. 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.
20. JURISDICTION AND VENUE. Any judicial proceeding brought by or against
any party on any dispute arising out of this Agreement or any matter related
thereto shall be brought in the state or federal courts of Dallas County, Texas
and by execution and delivery of this Agreement, each of the parties accepts for
itself the exclusive jurisdiction and venue of the aforesaid courts as trial
courts, and irrevocably agrees to be bound by any judgement rendered thereby in
connection
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with this Agreement after exhaustion of all appeals taken (or by the
appropriate appellate court if such appellate court renders judgement).
21. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of Executive, Classics, and their respective successors and permitted
assigns. Classics will be entitled to assign its rights and duties under this
Agreement provided that Classics 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 Classics' 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) ski)led 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 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.
24. APPOINTMENT TO THE BOARD OF DIRECTORS OF CLASSICS AND THE COMPANY. At
the execution of the Side Agreement, Classics shall take all action within its
power to cause the appointment of Executive and Mr. Xxxxxxx Xxxxxx to
alternating positions as members of the Board of Directors of Classics. Such
appointments shall be for alternating terms of one year, made during the Initial
Term and Extended Term (if applicable) of this Agreement. Both Executive and Xx.
Xxxxxx shall be appointed to the Board of Directors of the Company as soon as
reasonably practicable.
25. CLASSICS GUARANTEE. Classics hereby unconditionally guarantees the
payment, performance and accuracy of all the obligations, agreements an
covenants of the Company as set forth in this Agreement. Any breach of such
obligations, agreements and covenants by the Company shall entitle Executive to
all remedies against Classics that are available against the Company under this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.
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CLASSICS:
Classics International Entertainment, Inc.
By:
Its:
DATE: 11/17/99
EXECUTIVE:
(Name)
DATE: 11/10/99
------------------------
SCHEDULE I
INCENTIVE COMPENSATION
ANNUAL MILESTONES ANNUAL AWARDS EVALUATION
CASH STOCK OPTIONS
(initial at $5M) (initial that $5M)
Gross Sales Revenue $ 5M $ 15,000 33,000 shares Audited Sales
(additional award)(additional award)
Gross Sales Revenue $ 50M $ 15,000 33,000 shares Audited Sales
(additional award)(additional award)
Gross Sales Revenue $100M+ $ 15,000 34,000 shares Audited Sales
Maximum Awards (Grand Totals) $45,000 100,000 shares Audited Sales
SCHEDULE II
PERFORMANCE STOCK OPTIONS
1. GRANT OR OPTION, OPTION PRICE AND TERM.
Classics hereby agrees to grant you, in accordance with the achievement
of performance milestones noted on page 2 of Schedule II, not in lieu of salary
or any other compensation for services, the right and option (the "Option") to
purchase 200,000 shares of the issued and outstanding shares of Classics
International Entertainment, Inc. (CIE), (the "Option Shares") after the Merger
on the terms and conditions set forth herein.
(b) For each of the Option Shares purchased, you shall pay Classics an
option price of $1.35 (the "Option Price").
(c) The term of the Option shall be a period of five (5) years from the
Grant Date (the "Option Period"). The termination of the Option Period shall
result in the termination and cancellation of the Option. In no event shall the
Option be exercisable after the end of the Option Period.
(d) The Option shall be granted pursuant to an incentive stock option,
non-qualified stock option agreement or other comparable agreement by and
between you and Classics (the "Stock Option Agreement"). Such performance
options shall be reviewed for award on a quarterly basis by the Board of
Directors and shall not be unreasonably withheld.
2. VESTING AND EXERCISABILITY.
(a) The Option Shares shall vest in accordance with the following
schedule.
ANNIVERSARY OF THE DATE OF THIS AGREEMENT AGGREGATE PERCENTAGE OF
------------------------------------------ -----------------------
(THE "ANNIVERSARY DATE") OPTION SHARES VEST
------------------------ ------------------
First Anniversary 50%
Second Anniversary 100%
No portion of the Option shall be exercisable unless it is vested.
(b) Notwithstanding Section 2(a) above and subject to Section 3, the
Option granted hereunder shall vest and become fully exercisable immediately
upon consummation of a "Change of Control" (as such term will be defined in the
Stock Option Plan, which definition will be consistent with customary
practices).
3. TERMINATION OF EMPLOYMENT.
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(a) Notwithstanding the provisions of Section 2 above, in the event
that during the Option Period the Company terminates the Employment Term in
accordance with Section 12(a) of
the Employment Agreement, the unvested portion of the Option as of the date of
such termination shall be forfeited by you and you shall have no interest in
such unvested portion of the Option.
(b) Notwithstanding the provisions of Section 2 above, in the event the
Employment Term is terminated in accordance with Section 12(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 (_).
(c) 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.
4. TERMS, CONDITIONS AND PROVISIONS.
The Stock Option Agreement shall contain such other terms, conditions and
provisions as tie customary and are in accordance with the Stock Option Plan and
applicable law.
