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Employment Agreement dated February 1, 1996 with Xxxxxxxx Xxxxxxxxx
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EMPLOYMENT AGREEMENT
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I. This Employment AGREEMENT ("AGREEMENT') is entered into as of
February 1, 1996, and is to continue for four (4) years to January 31, 2000,
between DCC Compact Classics, Inc. ('DCC") , a Colorado corporation, on the one
hand, Employer ("EMPLOYER"), and Xxxxxxxx Xxxxxxxxx ("EMPLOYEE" or "XXXXXXXXX"),
on the other hand.
II. EMPLOYER and EMPLOYEE agree that EMPLOYEE XXXXXXXXX possesses unique
talents of an unusual value to DCC.
III. EMPLOYER and EMPLOYEE agree that EMPLOYEE XXXXXXXXX'x services are
of a special value to DCC and, therefore, DCC is willing to provide EMPLOYEE
XXXXXXXXX with certain rights, benefits, and compensation to secure the services
of EMPLOYEE XXXXXXXXX for the duration of this AGREEMENT.
IV Both EMPLOYER DCC and EMPLOYEE XXXXXXXXX agree to the following:
A. Employment. DCC hereby employs XXXXXXXXX to perform the duties and
render the services set forth in this AGREEMENT, for a period of four (4) years
from the commencement date of the AGREEMENT, that commencement date being
February 1, 1996. Subject to the termination provisions as provided in the
AGREEMENT, EMPLOYEE XXXXXXXXX hereby accepts these employment obligations and
agrees faithfully to perform the services required of EMPLOYEE XXXXXXXXX, during
the term of this AGREEMENT.
B. Duties. XXXXXXXXX agrees to perform such duties as may be reasonably
required of him in his capacity as an employee of DCC. XXXXXXXXX for this four
(4) year period of this AGREEMENT, shall assume and carry out the duties of
President of DCC and shall be responsible for and shall be in charge of all
aspects of the executive management of DCC, including, but not limited to: (i)
undertaking all strategic management decisions, and supervision of DCC
employees, (ii) undertaking of executive hiring and termination, (iii)
maintaining the principal relationship between DCC and its Board of Directors,
its accountants, its legal counsel, and all other interested outside
constituencies. The type of services to be rendered shall be at XXXXXXXXX'x
discretion and judgment. In addition, EMPLOYEE XXXXXXXXX, at his discretion,
agrees to serve and shall serve on the Board of Directors through the term of
this AGREEMENT, and, by this AGREEMENT, the DCC Board of Directors agrees to
nominate XXXXXXXXX for Board membership. XXXXXXXXX'x voluntary resignation from
the Board of Directors shall not be construed as a breach of this AGREEMENT.
C. No Acts Inconsistent. EMPLOYEE XXXXXXXXX agrees during the term of
this AGREEMENT not to undertake any acts inconsistent with his duties under this
AGREEMENT.
D. Compensation. In consideration for the services to be rendered by
EMPLOYEE XXXXXXXXX, EMPLOYER DCC shall pay to EMPLOYEE XXXXXXXXX and EMPLOYEE
XXXXXXXXX shall receive the following compensation:
(1) Annual Salary. Effective February 1, 1996, and continuing for
forty-eight (48) months, EMPLOYEE XXXXXXXXX shall receive; for the first twelve
(12) months, for the year 1996: $170,000 payable at the rate of $14,166 per
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month; for the second twelve (12) months (1997) , EMPLOYEE XXXXXXXXX shall
receive a total of $170,000, payable at the rate of $14,100 per month; and, for
the third twelve (12) months (1998), $170,000 or $14,106.00 per month and for
the fourth twelfth (12) months (1999) $170,000 or $14,106.00 per month.
(2) Signing Bonus. EMPLOYEE XXXXXXXXX shall receive a $50,000
signing bonus upon execution of this Employment AGREEMENT.
(3) Stock Options: Upon execution of this Employment AGREEMENT
XXXXXXXXX is granted an option to purchase 300,000 shares of DCC common stock at
the price of $0.20 a share. The option period whereby XXXXXXXXX may exercise
this option shall be from February 1, 1996 to January 31, 1999. The entire
option for 300,000 DCC shares may be exercised in one transaction or may be
partially exercised in several transactions totaling 300,000 shares which
XXXXXXXXX shall determine at his discretion. The option or partial exercise of
the option shall be undertaken by XXXXXXXXX by notification to the Secretary of
the Corporation of DCC of the request to exercise the option(s) with the
payment amount after which DCC shall issue the stock to XXXXXXXXX within five
(5) days.
(3) Other Benefits.
(a) Automobile Benefits. During the term of this AGREEMENT,
DCC shall provide XXXXXXXXX, at his discretion, an automobile, reasonably
insured, to be used primarily for business purposes. DCC shall pay all
reasonable expenses connected with XXXXXXXXX' 5 automobile.
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(b) Insurance. During the term of the AGREEMENT, DCC shall
provide XXXXXXXXX with Term Insurance Coverage with a minimum value of $250,000.
The beneficiaries or this Term Insurance Coverage shall be XXXXXXX XXXXXXXXX, or
the ESTATE OF XXXXXXXXX, as XXXXXXXXX may designate.
(c) DCC shall pay XXXXXXXXX such additional amount or
amounts as a bonus for services rendered by XXXXXXXXX as the Board of Directors
of the Company may, from time to time and the Board's sole discretion,
determine. In determining the amount of such bonus, DCC shall look to the
quality and extent of services rendered by XXXXXXXXX hereunder, particularly as
such services may result in revenue received by DCC.
(d) XXXXXXXXX'x services hereunder are to be rendered
principally at XXXXXXXXX'x home or at DCC's offices, within twenty (20) miles
thereof. However, XXXXXXXXX shall also render services at such other place or
places within or without the United States as DCC may designate from time to
time. When and if XXXXXXXXX is required to render such services away from home,
DCC agrees to either furnish such necessary transportation and living expenses
may reasonable be required for XXXXXXXXX during and on account of the rendition
of such services, or pay XXXXXXXXX a fixed weekly sum as reimbursement for such
expenses incurred by XXXXXXXXX. In the latter regard, XXXXXXXXX agrees to keep
records of such expenses and furnish DCC reasonably detailed reports of actual
expenses incurred by XXXXXXXXX. All expenses incurred by DCC for travel,
entertainment or business are deemed to be business expenses which are ordinary
and necessary to the conduct of the regular operating affairs of DCC. However,
should it be finally determined by an authorized representative of the
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Internal Revenue Service that any or all of such expense are not ordinary and
necessary business expenses, then such expenditures by DCC shall be considered
additional compensation to XXXXXXXXX for services actually rendered thereby in
addition to the items specified above. XXXXXXXXX shall be entitled to
participate in each and every fringe benefit program adopted by DCC and
benefiting employees performing same or similar functions as XXXXXXXXX.
E. Termination; Default by DCC. The term of this AGREEMENT may be
terminated by DCC only as a result of death, or, change of control, or
termination for cause, and for no other cause or reason:
(a) Death. XXXXXXXXX'x salary and all other benefits under
the AGREEMENT shall continue to be paid for a period of thirty (30) days
following the date of EMPLOYEE XXXXXXXXX'x death. The term of this AGREEMENT
shall be deemed to terminate thirty (30) days after the death of XXXXXXXXX, as
though it had expired by its own terms.
(b) Payment to Spouse as a Result of Death. If XXXXXXXXX
dies while employed by DCC, DCC will pay XXXXXXXXX'x spouse (or XXXXXXXXX'x
successor-in-interest, if there is no surviving spouse) XXXXXXXXX'X then monthly
salary for a period of eighteen (18) months following the month which XXXXXXXXX
passes away. DCC shall also pay the sum of Five Thousand Dollars ($5,000) within
ninety (90) days after XXXXXXXXX'x death to XXXXXXXXX'x spouse or, if XXXXXXXXX
is not survived by a spouse, to XXXXXXXXX'x successor-in-interest. It is the
purpose and intent of this paragraph that the foregoing payment shall qualify
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as an employee death benefit under Section 101(b) of the Internal Revenue Code
of 1986, as amended.
(c) Change in Control. For purposes of this AGREEMENT, the
term "change in control" shall mean, without the approval of DCC Board of
Directors obtained prior thereto (i) the acquisition by a single entity or
group of affiliated entities of more than fifty (50~) percent of the outstanding
capital stock of DCC (ii) the consummation of any merger of DCC into another
company or any sale, transfer or other disposition of all or substantially all
of DCC's assets to another entity or a parent company.
F. Payment to XXXXXXXXX. Upon a change in control of DCC,
EMPLOYEE XXXXXXXXX shall be entitled to receive under this AGREEMENT the amounts
described in Paragraph G below. Such amounts shall be paid in full, immediately
upon a 'change in control," or, immediately prior to the consummation of a
merger, sale or other disposition.
X. Xxxxxxxxx Pay. Upon termination other than that for death or
cause, EMPLOYEE XXXXXXXXX shall be entitled to severance pay in an amount equal
to the total compensation due EMPLOYEE XXXXXXXXX, throughout the balance of the
term remaining in this AGREEMENT, or, two (2) times EMPLOYEE XXXXXXXXX'x current
total annual salary, whichever is greater.
X. Xxxx in Favor of XXXXXXXXX. DCC hereby grants to XXXXXXXXX a
first lien and a security interest against assets of DCC (as listed in Exhibit A
attached to this AGREEMENT), or assets of equivalent value and liquidity. DCC
shall execute and file a UCC-l financing statement identifying XXXXXXXXX as a
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secured creditor, in order to secure payment to EMPLOYEE XXXXXXXXX, of any sums
due EMPLOYEE XXXXXXXXX under this AGREEMENT.
I. Default in Payment. In the event DCC fails to pay to XXXXXXXXX
the compensation and benefits provided in this AGREEMENT for a period in excess
of thirty (30) days, or fails on more than one (1) occasion to pay for a period
of ten (10) days or more, EMPLOYEE XXXXXXXXX shall have the right to cease the
provision of EMPLOYEE XXXXXXXXX'x services under this AGREEMENT, and shall have
the right to immediately receive the severance payment set forth in Paragraph X.
X. Termination For Cause. The term of this AGREEMENT may be
terminated by DCC for cause, which shall be one of the following:
(1) final judgment convicting EMPLOYEE XXXXXXXXX of a felony
involving specific intent; or
(2) breach by EMPLOYEE XXXXXXXXX of the Provisions of
Paragraph IV of this AGREEMENT.
K. Payment Pending Resolution of Disputes. In the event of any
dispute under this EMPLOYMENT AGREEMENT, DCC shall continue to pay all fees and
compensation and Board of Director expense due EMPLOYEE XXXXXXXXX under this
AGREEMENT, and DCC shall not have the right to terminate the payment of such
fees and compensation due XXXXXXXXX except and until there is adjudication of a
final judgment by a court in favor of DCC. In the event of a dispute, DCC agrees
to pay XXXXXXXXX his reasonable legal fees with regard to defense or claims
under this AGREEMENT on a current basis until the dispute is resolved.
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L. Non-Competition. While EMPLOYEE XXXXXXXXX is employed by DCC,
EMPLOYEE XXXXXXXXX shall not engage in or participate in any business in direct
competition with that of DCC, in any of the states where DCC now does business
except with the written approval of DCC. Such prohibition shall not apply to
individual real estate or securities investments made individually or with
isolated groups of individuals known to EMPLOYEE XXXXXXXXX, provided that
EMPLOYEE XXXXXXXXX advises DCC of such investments.
M. Renewal. This AGREEMENT shall automatically be renewed for
successive terms of one (1) year at the expiration of the term set forth in
Section 1 under this AGREEMENT, unless either the Board of Directors or EMPLOYEE
XXXXXXXXX shall give written notice to the other of it or his intention not to
renew this AGREEMENT at least ninety (90) days prior to the expiration of such
term or renewed term.
N. Assignment. This AGREEMENT shall inure to the benefit of and
shall be binding upon the successors and the assigns of DCC. Since this
AGREEMENT is based upon the unique abilities of and personal confidence in
EMPLOYEE XXXXXXXXX, he shall have no right to assign this AGREEMENT or any of
the rights under this AGREEMENT without the written consent of DCC.
O. Indemnity. DCC shall indemnify EMPLOYEE XXXXXXXXX and hold him
harmless from any cost, expense or liability arising out of his activities as an
EMPLOYEE of DCC, to the fullest extent available. Among other items provided in
the indemnification provisions DCC shall pay all expenses including reasonable
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attorney's fees actually incurred by EMPLOYEE XXXXXXXXX in or proceeding
(including any appeals therefrom) alleged or brought by a third party arising
out of or relating to XXXXXXXXX'x performance under this AGREEMENT.
P. If any claim, action or suit is sought against DCC, pursuant
to the foregoing, EMPLOYEE XXXXXXXXX shall promptly notify DCC in writing and
DCC shall have the right to assume and control the defense by counsel reasonably
satisfactory to EMPLOYEE XXXXXXXXX. Without limiting any other provision of this
AGREEMENT, this provision shall survive the termination or expiration of this
AGREEMENT for a term of three (3) years after expiration of this AGREEMENT or
EMPLOYEE XXXXXXXXX'x voluntary resignation from the Board of Directors.
Q. Prior Contracts. Any prior contract or AGREEMENT between DCC
and EMPLOYEE XXXXXXXXX regarding employment is hereby canceled and shall be of
no further force or effect.
R. Severability. If any provision of this AGREEMENT shall be
found invalid by any court of incompetent jurisdiction, such findings shall not
effect the validity of the other provisions under this AGREEMENT and the invalid
provisions shall be deemed to have been severed herefrom.
S. Waiver of Breach. The waiver of DCC or EMPLOYEE XXXXXXXXX of
the breach of any provision of this AGREEMENT by the other party or the failure
to exercise by DCC or EMPLOYEE XXXXXXXXX of any right granted under this
AGREEMENT shall not operate or be construed as the waiver of any subsequent
breach by the other party or the waiver of the right to exercise any such right.
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T. Entire AGREEMENT. This instrument contains the entire
AGREEMENT of the parties, and may be amended only by an AGREEMENT in writing
signed by the parties.
U. Notice. Any notice required or permitted to be given under
this AGREEMENT shall be sufficient if in writing and if sent by certified mail
to XXXXXXXXX'x residence, in case of the EMPLOYEE XXXXXXXXX, or to its principal
office, in the case of DCC.
V. California Law. This AGREEMENT is entered into and executed in
the State of California and shall be governed by the laws of such state.
W. Arbitration. Any dispute as to the rights of the parties under
this AGREEMENT or its construction or its validity or enforcement or as to any
such dispute shall be submitted to binding arbitration in Los Angeles,
California to a retired Superior or Federal Court Judge. The Arbitrator will be
required to follow the laws of the Sate of California. The Arbitrator's decision
upon confirmation will be an appealable decision, appealable to the Court of
Appeals subject to the laws of the State of California as if it were a decision
by a Judge in a Court trial. The prevailing party in such arbitration, or any
proceedings in respect thereof, shall be entitled to receive its or his
attorneys' fees incurred in connection therewith.
X. DCC Representation. DCC represents and warrants (i) that this
AGREEMENT has been approved by DCC's Board of Directors and specifically DCC's
non-employee members with EMPLOYEE XXXXXXXXX abstaining from the vote, and is
binding on DCC; (ii) that this AGREEMENT will not violate the corporate charter
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or By-Laws of DCC and/or any DCC affiliate, or any covenants heretofore made by
DCC and/or the DCC affiliate; (iii) that DCC and the DCC affiliate agree not to
hereafter enter into any covenants or undertake any other acts which conflict
with this AGREEMENT.
IN WITNESS WHEREOF, the parties to this AGREEMENT have hereunto set
their hands as of the day and year first above written.
EMPLOYEE DCC COMPACT CLASSICS, INC.
By:/s/Xxxx Xxxxxxx
/s/Xxxxxxxx Xxxxxxxxx --------------------------
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Xxxxxxxx Xxxxxxxxx
Name: Xxxx Xxxxxxx
I ------------------------
Title:
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