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CONSULTING AGREEMENT
AGREEMENT made as of this 7th day of August 1996 by and between
CREATIVE LEARNING PRODUCTS, INC., a New Jersey corporation ("CLPI"), and XXX X.
XXXXX (the "Consultant").
WHEREAS, CLPI's Common Stock, no par value (the "Common Stock"), is
traded on the National Association of Securities Dealers Automated Quotation
("NASDAQ") System;
WHEREAS, CLPI and Xxxx X. Xxxxxxx ("Xxxxxxx") entered into a Consulting
Agreement dated as of April 16, 1996 (the "Xxxxxxx Agreement") pursuant to which
Xxxxxxx agreed, among other things, to perform certain consulting services for
CLPI through April 15, 1998, unless the Xxxxxxx Agreement was terminated sooner;
WHEREAS, subsequent to their execution of the Agreement, CLPI and
Xxxxxxx have acknowledged and agreed that Xxxxxxx is currently unable to perform
in accordance with the Xxxxxxx Agreement and that, accordingly, have agreed to
terminate the Xxxxxxx Agreement, to cancel the Common Stock purchase warrant
expiring April 15, 1999 (the "Xxxxxxx Warrant") issued pursuant thereto and to
have CLPI withdraw the Registration Statement on Form S-8 under the Securities
Act of 1933, as amended (the "Securities Act"), related thereto;
WHEREAS, the Consultant is engaged in the business of providing
consulting services with respect to financial public relations and investor
relations and also entered into a Consulting Agreement also dated as of April
16, 1996 (the "Consulting Agreement") to perform such services for CLPI;
WHEREAS, CLPI desires to engage the Consultant (1) to provide the
financial public relations services and investor relations services for CLPI
that Xxxxxxx was obligated to perform pursuant to the Agreement and in addition
to the services he is already performing pursuant to the Consulting Agreement
and (2) to assist CLPI in obtaining gaming vessels and dockage for the same, and
the Consultant is willing to render such services, on the terms and conditions
as hereinafter more fully set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. CLPI hereby engages and retains the Consultant, and the Consultant
hereby accepts such engagement and retention, to render to CLPI the consulting
services hereinafter described in Section 2 hereof for a period commencing on
the date
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hereof and terminating August 6, 1998 (the "Term"), unless terminated sooner as
provided in Section 6 hereof.
2. The Consultant's services hereunder shall consist of consultations
with the officers and directors of CLPI with respect to (a) CLPI's relationships
with its shareholders, potential investors in CLPI and industry securities
analysts and (b) assisting CLPI in obtaining gaming vessels and the dockage
therefor, as CLPI may from time to time reasonably request during the Term. The
services to be rendered by the Consultant shall include, but not be limited to,
(x) coordinating and arranging "road shows" or individual meetings at which
representatives of CLPI shall meet with its shareholders, potential investors in
CLPI and industry securities analysts, (y) assisting in the dissemination of
appropriate information with respect to CLPI and its subsidiaries; and (z)
locating appropriate gaming vessels for sale or lease to CLPI and appropriate
sites at which such vessels may be docked.
3. In full consideration for the services to be rendered by the
Consultant to CLPI, CLPI shall (a) in consideration of the Consultant assuming
what were the obligations of Xxxxxxx under the Xxxxxxx Agreement, issue to the
Consultant a Common Stock purchase warrant expiring April 16, 1999 (the
"Substitute Warrant") to purchase 2,000,000 shares of the Common Stock at $.75
per share, which were the number of shares and the exercise price subject to the
Xxxxxxx Warrant, and (b), in consideration of the Consultant performing the
services with respect to the gaming vessels, a Common Stock purchase warrant
expiring August 6, 1999 (the "New Warrant") to purchase 1,000,000 shares at $.75
per share. In consideration of the Consultant's services, CLPI also shall pay to
the Consultant a fee of $266,667, which was the cash fee payable to Xxxxxxx
under the Xxxxxxx Agreement. Pursuant to the Consulting Agreement, CLPI was
obligated to pay a fee of $133,333 and to issue a Common Stock purchase warrant
expiring April 15, 1999 (the "Consultant's Warrant") to purchase 1,000,000
shares of the Common Stock at $.75 per share. CLPI and the Consultant both
acknowledge that the Consultant's Warrant was issued to the Consultant and that
the aggregate fees of $400,000 were paid to the Consultant through a credit to
the exercise price of the Consultant's Warrant upon its exercise. CLPI shall
register the shares of the Common Stock underlying the Substitute Warrant and
the New Warrant (the "Underlying Shares") under the Securities Act in a
Registration Statement on Form S-8. The Consultant represents and warrants that
he is acquiring the Substitute Warrant and the New Warrant and, if the
Underlying Shares are issued to him before such time as the Underlying Shares
are so registered under the Securities Act, the Underlying Shares for investment
purposes only, and not with a view to, or in connection with the resale or
distribution thereof. CLPI represents that, upon issuance, the Underlying Shares
shall be fully paid and non-assessable and shall be free and clear of all
security interests, liens and encumbrances
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arising from acts of CLPI. The Substitute Warrant, the New Warrant and/or the
Underlying Shares shall not be subject to termination or forfeiture upon
termination of this Agreement under Section 6 thereof, except that CLPI may
prorate the number of shares of the Underlying Shares if CLPI terminates this
Agreement for Cause under Section 6 thereof. The number of shares of the
Underlying Shares as to which the Substitute Warrant or the New Warrant may be
exercised after any such termination by CLPI shall be the product of (a), in the
case of the Substitute Warrant, 2,000,000 and (b), in the case of the New
Warrant, 1,000,000 and a fraction, the numerator of which shall be the number of
days of the Term which have elapsed prior to the effective date of termination
and the denominator of which shall be 730.
4. The Consultant shall be entitled to reimbursement by CLPI for such
reasonable out-of-pocket expenses as the Consultant may incur in performing
services under this Agreement and for which it furnishes appropriate
documentation to CLPI in accordance with the regulations of the Internal Revenue
Service and the policies of CLPI.
5. All final decisions with respect to actions to be taken by CLPI
based upon the Consultant's advice shall be those of CLPI.
6. This Agreement shall terminate prior to the expiration of the Term
upon the earliest of the events specified below:
a. by CLPI, upon notice to the Consultant, for Cause, which
shall be defined, for purposes of this subsection (a), as (i) the Consultant
being convicted of a felony under the laws of any state or the United States,
whether directed toward CLPI or otherwise, or (ii) committing larceny,
embezzlement or other act of fraud or dishonesty against CLPI, or (ii) using
CLPI's facilities or premises for the conduct of illegal or unlawful activities,
transactions or businesses; or
b. by either party, upon notice to the other, for Cause, which
shall be defined for purposes of this subsection (b) as the other party's
material breach of any of its covenants and agreements hereunder and the failure
to cure such breach within 30 days after notice thereof.
7. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to any principles
of conflict of laws. Any controversy or claim arising out of, or relating to,
this Agreement, or the breach thereof, shall be settled by arbitration in New
York, New York in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having
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jurisdiction thereof. The parties hereto consent to the personal jurisdiction of
the Federal and State courts located in the County of New York, State of New
York.
8. This Agreement may not be, and shall not be deemed or construed to
have been, modified, amended, rescinded, canceled or waived in whole or in part,
except by written instruments signed by the parties hereto.
9. Any and all notices or other communications or deliveries required
or permitted to be given or made shall be in writing and delivered personally,
or sent by certified or registered mail, return receipt requested and postage
prepaid, or sent by overnight courier service as follows:
If to CLPI, at:
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxx,
Chairman, President and Chief Executive Officer
With a copy to:
Gold & Xxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Consultant, at:
00000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxx, XX 00000
or at such other address as any party may specify by notice given to such other
party in accordance with this Section 9. The date of giving of any such notice
shall be the date of hand delivery, two (2) days after the date of the posting
of the mail or the date when deposited with the overnight courier.
10. Each party will be and act as an independent contractor and not as
agent or partner of, or joint venturer with, the other party for any purpose,
and no party by virtue of this Agreement shall have any right, power or
authority to act or create any obligation, express or implied, on behalf of the
other parties.
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11. No waiver of the provisions hereof shall be effective unless in
writing and signed by the party to be charged with such waiver. No waiver shall
be deemed a continuing waiver or waiver in respect of any subsequent breach or
default, either of similar or different nature, unless expressly so stated in
writing.
12. This Agreement shall inure to the benefit of, be enforceable by,
and shall be binding upon the parties and their respective legal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement as of the day and year first above written.
CREATIVE LEARNING PRODUCTS, INC.
By:_______________________________________________
Chairman, President and Chief Executive Officer
_______________________________________________
XXX X. XXXXX
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