EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT  AGREEMENT (THIS "AGREEMENT") IS MADE THIS DAY OF NOVEMBER,
17 day  1999  by  and  among  Classics  International  Entertainment,  Inc.,  a
Delaware  corporation  ("Classics"),   IBP,  Inc.,  a  Nevada  corporation  (the
"Company"), and Michael Steele ("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
Information   Officer"  of  Classics  and  will  perform  the  duties  of  Chief
Information  Officer 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

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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.

     5. COMPENSATION.  The following shall constitute Executive's "Compensation"
hereunder:

                  (A) SIGN-ON BONUS. Classics will pay Executive a one-time cash
         payment of  $20,000  AS A SIGN-ON  BONUS  (THE  "SIGN-ON  BONUS")  upon
         commencement of the Initial Term.

                  (B) BASE SALARY. During the Employment Term, Classics will pay
         Executive  an INITIAL  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  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)

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         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) 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 World 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  Discoveries  and  Work  Product  arising  during   Executive's

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         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  alter  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  without  the  necessity of showing

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         actual  monetary damages.  Nothing in this Section 11 will be construed
         a 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
         his 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 if 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 no 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 his 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)  or  the  year  in  which  such
         termination  occurs (payable within a reasonable time after 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  Executive's  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 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 o 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 (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
         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  aid  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.

         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.
                           919 N. Michigan Avenue, Suite 3700
                           Chicago, Illinois
                           60611

                  If to Executive:
                           Michael Steele
                           2602 Palisades Place
                           Mesquite, TX

                           75181

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 here
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 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 or 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 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






<PAGE>

                                   SCHEDULE I
                             INCENTIVE COMPENSATION

                                      ANNUAL AWARDS

 ANNUAL MILESTONES                CASH           STOCK OPTIONS        EVALUATION

                              (initial at $5M)  (initial at $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



<PAGE>

                                   SCHEDULE II
                            PERFORMANCE STOCK OPTIONS

1.       GRANT OF OPTION, OPTION PRICE AND TERM.

         (a)  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 opinion,
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.

                                        1

<PAGE>

         (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 or 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 are customary and are in accordance with the Stock Option Plan and
applicable law.