EXHIBIT 10.29
CHILDREN'S WONDERLAND, INC.
X.X. XXX 0000
XXXXXX, XX 00000-0000
June 9, 2000
Xxxxx Xxxxxxxx
and Xxxxxxx Xxxxxxxx
c/o Children's Wonderland, Inc.
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Dear Xxxxx and Xxx:
Reference is made to that certain Settlement Agreement and Release of All
Claims ("Settlement Agreement"), dated in or about March, 2000, pursuant to
which certain litigations initiated by Children's Wonderland, Inc, (the
"Company") and the two of you ("Xxxxx" and "Xxx"), in your capacity as officers
of the Company, against the Royce Parties, as defined in the Settlement
Agreement, were settled and general releases were agreed to among the parties as
part of such Settlement Agreement. As used in this letter, "you" refers to Xxxxx
and Xxx.
The Company and you agree as follows:
1. The Company indemnifies and holds you harmless and agrees to defend
you from and against any loss, damage or liability as set forth in
this paragraph 1. In furtherance thereof, the Company will pay you for
all reasonable costs, fees and expenses, including reasonable legal
expenses, which you may incur in the future in connection with the
defense of any lawsuit initiated by any of the Royce Parties or any of
the Company's shareholders or creditors against either of you, except
for (1) lawsuits based on claims unrelated to the subject matter of
the Settlement Agreement, the litigations covered by the Settlement
Agreement or this Agreement and (2) lawsuits which would not have
arisen but for the gross negligence or willful misconduct of either of
you.
2. The Company will use certain proceeds, described below, to reimburse
either of you, but in any event at a minimum reimbursement rate of
$15,000 per month, for $350,000 of accountable credit card debt
("Credit Card Debt") which you have incurred to date to pay for
expenses of the Company and, after the date hereof until the amount of
the Credit Card Debt is reimbursed to you in full, the Company will
use such proceeds to pay all of the interest and penalty charges
accruing on the outstanding Credit Card Debt. The Company will apply
the following proceeds toward reimbursement to you of the Credit Card
Debt and the interest and penalty charges accruing thereon (as
described in the preceding sentence): (a) promptly upon receipt, 100%
of the proceeds received by the Company (net of expenses related
thereto) from the sale by the Company of up to three
Xx. Xxxxx Xxxxxxxx
and Xxxxxxx Xxxxxxxx
June 9, 2000
Page 2
care centers located in California which the Company, after the date
hereof, acquires from an entity named Aloha Pacific; and (b) 10% of
the proceeds received by the Company (net of expenses related thereto)
from any equity or debt (to the extent permitted by the Lender(s))
financing transaction completed by the Company after the date hereof.
The Company agrees to use best efforts to immediately re-sell one or
more care centers located in California which the Company acquires
from Aloha Pacific. With respect to the possible acquisitions by the
Company of the care centers from Aloha Pacific, Xxxxxx Xxxxxx and Xxxx
Xxxxxx, by signing below, agree to fund the difference between
$400,000 and the funds available to the Company (if less than
$400,000) at the time the Company decides to acquire such three care
centers from Aloha Pacific.
3. The Company will issue to Xxxxx the number of shares of the Company's
common stock ("Common Stock"), after giving effect to a reverse split
of the Common Stock, which is equal to 5.0% of the total outstanding
Common Stock on the date hereof on a fully diluted basis after taking
into account the conversion of all of the Company's Series A
Convertible Preferred Stock outstanding but not taking into account
the conversion of any other convertible securities which the Company
has outstanding or is obligated to issue, including the Company's
Series B Preferred Stock. The Company will not be obligated to issue
the shares of Common Stock to you as contemplated in the preceding
sentence until such time as the Company has amended its Restated
Articles of Incorporation to authorize a sufficient number of shares
of Common Stock to permit the conversion of the Company's outstanding
convertible securities, or any other convertible securities which it
is obligated to issue and to permit such issuance of shares to you. In
addition, the Company will permit the cashless exercise of all of
Ken's outstanding options and warrants to purchase Common Stock.
4. The obligations of the Company set forth in the foregoing paragraphs
1, 2 and 3 are conditioned upon (i) the completion of the exchange for
Units (consisting of the Company's Series B Convertible Preferred
Stock and Warrants to purchase its Common Stock) of all of the
Company's outstanding debt to you (jointly or severally held) (the
"Total Debt"), except for the Credit Card Debt (the Total Debt minus
the Credit Card Debt is referred to herein as the "Primary Debt"),
upon the terms set forth in that certain Confidential Subscription
Agreement of the Company, dated Xxxxx 0, 0000, (xx) the execution and
delivery by each of you of General Releases relating to all
obligations of the Company other than the Credit Card Debt and the
Company's obligations under this Agreement, and (iii) the execution
and filing by each of you of appropriate UCC-3 and/or other
termination statements to release the liens relating only to the
Primary Debt against the Company.
5. You agree that, once we have reimbursed you for the Credit Card Debt
and paid all penalty and interest charges as provided above, you will
promptly execute and deliver to the Company each of your General
Releases of all obligations of the Company and
Xx. Xxxxx Xxxxxxxx
and Xxxxxxx Xxxxxxxx
June 9, 2000
Page 3
execute and file appropriate UCC-3 and/or other termination statements
so that all liens held by either of you against the Company will be
terminated.
6. Promptly upon execution of this Agreement, the Company will negotiate
with Xxxxx in good faith the terms of a two-year employment agreement
to serve as the Company's President, pursuant to which it is currently
contemplated that, in return for your services to the Company, Xxxxx
will be entitle to an ANNUAL salary or of a MINIMUM of $100,000 per
year accruing until Company has raised $2,000,000 or sufficient funds.
You and we agree that the terms set forth in this Agreement will have no
force or effect unless this Agreement is executed by both Xxxxxx Xxxxxx and Xxxx
Xxxxxx below.
Very truly yours,
CHILDREN'S WONDERLAND, INC.
By: /s/
-----------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman and CEO
APPROVED BY:
/s/
--------------------------------
Name: Xxxxxx Xxxxxx
Title: Director
/s/
--------------------------------
Name: Xxxxxx Xxxxxx
Title: Principal Shareholder
/s/
--------------------------------
Name: Xxxx Xxxxxx
Title: Principal Shareholder
Xx. Xxxxx Xxxxxxxx
and Xxxxxxx Xxxxxxxx
June 9, 2000
Page 4
ACCEPTED AND AGREED ON THE
DATE FIRST WRITTEN ABOVE:
/s/ /s/
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XXXXX XXXXXXXX XXXXXXX XXXXXXXX
