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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of September 25, 1996 between
Xxxxx X. Xxxxx ("Executive") and Creative Learning Products, Inc., a New Jersey
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the Executive's
employment with the Company upon the terms, conditions and provisions
hereinafter set forth; and
WHEREAS, the Executive desires to commit himself to serve the
Company upon the terms, conditions and provisions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment of Executive.
Employer hereby agrees to employ Executive, and
Executive hereby agrees to be and remain in the employ of Employer, upon the
terms and conditions hereinafter set forth.
2. Employment Period.
The term of Executive's employment under this
Agreement (the "Employment Period") shall commence as of August 7, 1996 and,
subject to earlier termination as provided in Section 7, shall terminate on
August 6, 1999 (the "Expiration Date").
3. Positions, Duties and Responsibilities.
(a) During the Term of Employment, the Executive
shall be employed as Chairman, Chief Executive Officer and President of the
Company and shall be responsible, subject to the control of the Board of
Directors of the Company (the "Board"), for the establishment and implementation
of corporate policy and general management of the Company. In that capacity the
Executive shall have the duties and responsibilities normally associated with
the positions of the Chairman, Chief Executive Officer and President. It is the
intention of the Parties that the Executive also serve as a member of the Board
during the Employment Period and, in this connection, shall use its best efforts
to continue his election thereon. The Executive, in
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carrying out his duties, under this Agreement, shall report to, and be subject
to the supervision of, the Board.
(b) The Executive shall devote all of his
professional time, energy and skill to the affairs of the Company and to the
promotion of its interests on a full-time basis and will render such services to
the best of the Executive's ability.
(c) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving on the boards of directors
of a reasonable number of other corporations not engaged in competition with the
Company or any subsidiary thereof or the boards of a reasonable number of trade
associations and/or charitable organizations, (ii) engaging in charitable
activities and community affairs, (iii) managing his personal investments and
affairs and (iv) being involved in other business transactions, provided that
such activities do not materially interfere with the proper performance of his
duties and responsibilities as the Company's Chairman, Chief Executive officer
and President.
4. Base Salary.
The Executive shall be paid a Base Salary at the annualized
rate of $200,000, payable in accordance with the regular payroll practices of
the Company for executive officers thereof, but in no event shall he be paid
less frequently than monthly. The Company may deduct from payments of the salary
during the Employment Period the amount of any applicable withholding taxes and
any payments received by the Executive as disability payments under any policy
or program for which the Company pays the premiums or other costs or which the
Executive receives as Social Security or other disability benefits.
5. Annual Bonus.
The Executive shall be entitled to be considered for receipt
of an annual bonus, the amount, if any, of which shall be determined by the
Board in its sole discretion.
6. Other Bonus.
Effective August 7, 1996, in consideration for Executives
services in developing alternative gaming products for the Company, the Company
grants to Executive a Common Stock purchase warrant to purchase 1,500,000 shares
of the Common Stock, no par value, of the Company at an exercise price of $0.75
per share and expiring on August 6, 1999.
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7. Events of Termination.
In the event that (a) the Executive breaches any
term or condition of this Agreement and such breach is not cured by the
Executive within 30 days after notice thereof; or (b) engages in conduct
detrimental to the Company as determined by the Board; or (c) in the event of
his death; or (d) in the event the Executive becomes disabled for a period of
four (4) consecutive weeks, then in any such event the Company shall have the
right to terminate this agreement upon five (5) days' written notice to him, at
which time this Agreement shall come to an end and be of no further force and
effect.
8. Non Competition and Confidentiality.
(a) During the Employment Period, and for a period of
three (3) years after the termination thereof, the Executive covenants and
agrees that he shall not:
(i) directly or indirectly own any interest
in, manage, operate, join, control, participate in, invest in, or otherwise be
connected in any manner with, whether as an officer, director, employee,
partner, investor, agent or otherwise, any business entity which is engaged in
the business that the Company or any subsidiary thereof engages or has engaged
in during the Employment Period in any territory or geographic area where a
material portion of the Company's or such subsidiary's business was conducted
during the Employment Period; provided, however, that nothing contained in this
Subsection 8(a)(i) shall preclude the Executive from owning up to five percent
(5%) of the issued and outstanding shares of publicly traded common stock of a
corporation engaged in the business conducted by the Company or any subsidiary
thereof; or
(ii) employ, offer to employ or otherwise
engage, solicit for employment or advise or recommend to any other person or
entity that such person or entity employ or offer to employ or otherwise engage,
any person or entity who during the Employment Period is or has been an
employee, sales representative or agent of, or consultant to, the Company or any
subsidiary thereof, except with the prior consent of the Company or except for
any members of the Executive's family.
(b) The Executive agrees that all Proprietary
Property (as hereinafter defined) discovered, developed, created or conceived by
the Executive at any time during the Employment Period for the Company or any
subsidiary thereof shall be the exclusive property of the Company or such
subsidiary and the Executive hereby irrevocably assigns and transfers to the
Company all Proprietary Rights (as hereinafter defined), Proprietary Property
and confidential or proprietary material pertaining thereto. The Executive
agrees that he shall not at any time
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during or subsequent to the Employment Period use any Proprietary Information
(as hereinafter defined) for his own benefit or for the benefit of any person
other than the Company or any subsidiary thereof. The Executive further agrees
that he shall not at any time during or subsequent to the Employment Period
disclose or otherwise make available any of the Proprietary Information to any
person other than the Company or a subsidiary thereof and the officers and other
agents thereof authorized to have access to such information, except with the
prior consent of the Company or unless the Executive is required to disclose or
make available any such Proprietary Information by a final, non-appealable order
of a court of competent jurisdiction in a proceeding of which the Company had
adequate notice and at which the Company had an opportunity to be heard.
(i) "Proprietary Property" shall mean any
invention, product, know-how, formula, process, design, concept, idea or other
creation which may be commercially exploited and is related to any business
conducted by the Company or any subsidiary thereof at any time during the
Employment Period.
(ii) "Proprietary Right" shall mean any
patent, letters patent, copyright or application for the registration thereof,
trade name, trademark or application for the registration thereof, or any other
industrial or commercial property right of whatsoever nature, kind or
description pertaining to any Proprietary Property.
(iii) "Proprietary Information" shall mean
any of the Company's or a subsidiary's data, knowledge, trade secrets,
inventions, products, know-how, formulas, processes, designs, concepts, ideas or
other creations of whatsoever nature, kind or description which is (a) acquired
by the Executive during the Employment Period or prior thereto and (b) of a
secret and confidential nature and not in the public domain.
(c) The Executive expressly agrees and acknowledges
that any breach or threatened breach by him of this Section 8 will cause
irreparable damage to the Company for which monetary damages will not be an
adequate remedy, and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, in addition to all
of the rights and remedies of the Company under this Agreement, including, but
not limited to, the right to the recovery of monetary damages from the
Executive, the Company shall be entitled, and the Executive hereby consents, to
issuance by any court of competent jurisdiction of temporary, preliminary and
permanent injunctions, without bond, enjoining any such breach or threatened
breach by the Executive. In the event that the Company obtains injunctive relief
against the Executive in respect of a violation of this Section 8, the
Executive's remedies shall be limited to, dissolution of any injunction or
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order, if warranted, upon a duly held hearing in a court of competent
jurisdiction and damages for wrongful issuance of any such injunction.
(d) The parties hereto hereby agree and acknowledge,
after adequate opportunity to consult with counsel, that the duration, scope and
geographic area applicable to the restrictions set forth in this Section 8 are
fair, reasonable and necessary. The consideration provided for in Sections 4, 5
and 6 hereof is sufficient and adequate to compensate the Executive for agreeing
to the restrictions contained in this Section 8. If, however, any court
determines that the foregoing restrictions are not reasonable, such restrictions
shall be modified, rewritten or interpreted to include as much of their nature
and scope as will render them enforceable.
9. Miscellaneous.
(a) Each notice or other communication relating to
his Agreement (hereinafter a "notice") shall be in writing and delivered in
person, by registered or certified mail, return receipt requested, or by
reputable overnight courier to the applicable party hereto at the address of
such party set forth below, or to such other address as either party hereto
shall designate by notice to the other party hereto. Each notice shall be deemed
to have been effectively given when delivered in person or, if mailed, on the
third business day after mailing to the proper address, or if sent by overnight
courier, on the second business day after deposit with such courier.
If to the Company:
Creative Learning Products, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
If to Executive:
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxx Xxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
(b) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey applicable to
contracts executed and to be fully performed therein, without regard to
principles of conflicts of laws.
(c) This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and each successor of the Company. The
Executive may not assign, delegate or hypothecate in any manner any of his
obligations hereunder.
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(d) Except as specifically provided in Section 8(d)
hereof, if any term, condition or provision of this Agreement, or the
application thereof to any person or circumstance, shall be invalid or
unenforceable, the remainder hereof, or the application of such term, condition
or provision to persons or circumstances other than those as to which it is held
invalid, shall be unaffected thereby, and each term, condition and provision of
this Agreement shall be enforced to the fullest extent permitted by law.
(e) This Agreement may not be modified or amended
except in a writing signed by the party hereto against whom such amendment or
modification is sought to be enforced.
(f) The agreements contained in Section 8 hereof
shall survive the termination of the Employment Period.
(g) The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
(h) This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter contained herein and
supersedes and replaces any and all prior negotiations, understandings and
agreements, written or oral, between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day, month and year first above written.
CREATIVE LEARNING PRODUCTS, INC.
By:___________________________
CHIEF FINANCIAL OFFICER
____________________________
XXXXX X. XXXXX
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