EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of July
1, 1996 by and between Young Minds, Inc., a California corporation (the
"Company"), and Andrew J. Young ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee desire to enter into this Agreement to
assure the Company of the continuing and exclusive service of Employee and to
set forth the terms and conditions of Employee's employment with the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. TERM. The Company agrees to employ Employee and Employee hereby
accepts such employment, in accordance with the terms of this Agreement,
commencing as of July 1 1996 (the "Effective Date") and ending June 30, 1999,
unless this Agreement is earlier terminated as provided herein.
2. SERVICES AND EXCLUSIVITY OF SERVICES. So long as this Agreement
shall continue in effect, Employee shall devote Employee's substantial
business time, energy and ability exclusively to the business, affairs and
interests of the Company and its affiliates or subsidiaries ("Affiliates")
and matters related thereto, shall use Employee's best efforts and abilities
to promote the Company's interests, and shall perform the services
contemplated by this Agreement in accordance with policies established by and
under the direction of the board of directors of the Company (the "Board").
Without the prior express written authorization of the Board, Employee
shall not, directly or indirectly, during the term of this Agreement, engage
in any activity competitive with or adverse to the Company's business,
whether alone, as a partner, officer, director, employee or significant
investor of or in any other entity. (An investment of greater than 5% of the
outstanding capital or equity securities of an entity shall be deemed
significant for these purposes.)
Employee represents to the Company that Employee has no other
outstanding commitments inconsistent with any of the terms of this Agreement
or the services to be rendered hereunder.
3. DUTIES AND RESPONSIBILITIES. Employee shall serve as Chairman of the
Board and Secretary of the Company for the duration of this Agreement. In
the performance of Employee's duties, Employee shall report directly to the
Board and shall be subject to the supervision and direction of the Board and
to such limits on Employee's authority as the Board may from time to time
impose. Employee's responsibilities in his capacity as Chairman of the Board
and Secretary shall include
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such rights and responsibilities as are generally possessed by a chairman of
a board of directors and a secretary of a corporation. Employee shall have
such corporate power and authority as shall reasonably be required to enable
Employee to perform the duties required in any office that may be held.
Employee agrees to observe and comply with the rules and regulations of
the Company as adopted by the Board respecting the performance of Employee's
duties and agrees to carry out and perform orders, directions and policies of
the Company and its Board as they may be, from time to time, stated either
orally or in writing.
4. COMPENSATION.
4.1 BASE COMPENSATION. Subject to increase as provided in
subsection 4.2 hereof, Employee will be paid an annual base salary of One
Hundred Twenty Thousand Dollars ($120,000) ("Base Salary") for the fiscal
year ending June 30, 1997. The Base Salary shall be payable in accordance
with established Company practices.
4.2 ANNUAL SALARY INCREASE. Employee shall receive an increase in
Base Salary on July 1, 1997 and July 1, 1998, in an amount determined by the
Board, provided, however, that any such annual increase shall not be less
than ten percent (10%) of Employee's Base Salary in effect for the fiscal
year ended on the preceding June 30.
4.3 INCENTIVE COMPENSATION. Employee shall be entitled to receive
for each fiscal year during the term of this Agreement such bonus or
incentive compensation in addition to Employee's Base Salary ("Bonus") as
shall be determined in the sole discretion of the Board, provided, however,
that if the Company records net profits, as determined by its independent
accountants, for the fiscal year ending June 30, 1997, such Bonus for such
fiscal year shall not be less than Thirty Thousand Dollars ($30,000).
4.4 VACATION. During the period for which Employee is employed by
Company, Employee shall be entitled to (a) Personal Time Off ("Personal Time
Off") of five (5) weeks per year and (b) up to ten additional holidays
customarily observed by companies similar to Company, and during such time,
Employee's compensation shall be paid in full. Unused Personal Time Off may
accrue to a subsequent period.
4.5 CAR ALLOWANCE. During the period for which Employee is
employed by Company, Company shall pay Employee an automobile allowance of
$750.00 per month.
4.6 ADDITIONAL BENEFITS. Employee shall also be entitled to all
rights and benefits for which Employee is otherwise eligible under any bonus
plan, incentive, participation or extra compensation plan, profit-sharing
plan, life, medical, dental, disability, or insurance plan or policy or
other plan or benefit that the Company may provide for executive officers or
(provided Employee is eligible to participate therein) for employees of the
Company generally, as from time to time in effect, during the term of this
Agreement (collectively, "Additional Benefits").
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5. TERMINATION. This Agreement and all obligations hereunder (except
the obligations contained in Sections 7, 8, 9, 10, 11 and 12 (Confidential
Information, Inventions and Patents, Non-Competition, Non-Solicitation of
Customers, Noninterference with Employees and Assistance in Patent
Applications), which shall survive any termination hereunder) shall terminate
upon the earliest to occur of any of the following:
5.1 EXPIRATION OF TERM. The expiration of the term provided for
in Section 1 or the voluntary termination by Employee or retirement from the
Company in accordance with the normal retirement policies of the Company.
5.2 DEATH OR DISABILITY OF EMPLOYEE. The death or disability of
Employee. For the purposes of this Agreement, disability shall mean the
absence of Employee performing Employee's duties with the Company on a
full-time basis for a period of six (6) consecutive months as a result of
incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to Employee or Employee's legal representative (such agreement as
to acceptability not to be withheld unreasonably). If Employee shall become
disabled, Employee's employment may be terminated by written notice from the
Company to Employee.
5.3 TERMINATION BY COMPANY FOR CAUSE. The Company may terminate
Employee's employment and all of Employee's rights to receive the Base Salary
(except accrued and unpaid Base Salary and Personal Time Off, accrued ratably
during the year for termination purposes only), Bonus and any Additional
Benefits hereunder for cause. For purposes of this Agreement, the term
"cause" shall be defined as any of the following:
(i) Employee's material breach of any of the duties and
responsibilities under this Agreement (other than as a result of incapacity
due to Employee's disability), provided that the Company has given Employee
not less than thirty (30) days' written notice specifying such breach and
such breach has not been cured within thirty (30) days after such notice has
been provided to Employee; or
(ii) Employee's conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent jurisdiction for a felony.
5.4 TERMINATION BY COMPANY WITHOUT CAUSE. The Board shall have
the right to terminate Employee's employment with the Company without cause
at any time, but any such early termination other than as expressly provided
in Section 5.3 shall be without prejudice to Employee's rights to receive the
Base Salary, Bonus, Personal Time Off and the Additional Benefits provided
under this Agreement for the remainder of the term specified in Section 1.
5.5 TERMINATION BY EMPLOYEE WITH CAUSE. Employee may terminate
Employee's employment under this Agreement for cause. For purposes of this
Agreement, the term "cause" shall be defined as a material breach by the
Company of any of its duties and responsibilities under this Agreement,
provided that the Employee has given the Company not less than ten (10) days'
written
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notice specifying such breach and such breach has not been cured within
thirty (30) days after such notice has been provided to the Company. In the
event of termination by Employee of his employment for cause, Employee shall
be entitled to receive the Base Salary Bonus, Personal Time Off and the
Additional Benefits provided under this Agreement for the remainder of the
term specified in Section 1.
5.6 TERMINATION BY EMPLOYEE WITHOUT CAUSE. Employee shall have
the right to terminate his employment with the Company without cause at any
time by giving not less than sixty (60) days' prior written notice to the
Company. In the event of such early termination by Employee without cause,
all of Employee's rights to receive the Base Salary (except accrued and
unpaid Base Salary and Personal Time Off, accrued ratably during the year for
termination purposes only), Bonus and any Additional Benefits hereunder shall
cease upon such termination.
5.7 EXCLUSIVE REMEDY. Employee agrees that the payments expressly
provided and contemplated by this Agreement shall constitute the sole and
exclusive obligation of the Company in respect of Employee's employment with
and relationship to the Company and that the payment thereof shall be the
sole and exclusive remedy for any termination of Employee's employment.
Employee covenants not to assert or pursue any other remedies, at law or in
equity, with respect to any termination of employment.
6. BUSINESS EXPENSES.
During the term of this Agreement, to the extent that such
expenditures satisfy the criteria under the Internal Revenue Code for
deductibility by the Company (whether or not fully deductible by the Company)
for federal income tax purposes as ordinary and necessary business expenses,
the Company shall reimburse Employee promptly for reasonable business
expenditures made and substantiated in accordance with policies, practices
and procedures established from time to time by the Company and incurred in
the pursuit and furtherance of the Company's business and good will.
7. CONFIDENTIAL INFORMATION. Employee acknowledges that the nature of
Employee's engagement by the Company is such that the Employee has and shall
have access to information of a confidential and/or trade secret nature which
has great value to the Company and which constitutes a substantial basis and
foundation upon which the business of the Company is based. Such information
includes financial, manufacturing and marketing data, techniques, processes,
formulas, developmental or experimental work, work in process, methods, trade
secrets (including, without limitation, customer lists and lists of customer
sources), or any other secret or confidential information relating to the
products, services, customers, sales or business affairs of the Company (the
"Confidential Information"). Employee shall keep all such Confidential
Information in confidence during the term of this Agreement and at any time
thereafter and shall not disclose any of such Confidential Information to any
other person, except to the extent such disclosure is (i) necessary to the
performance of this Agreement and in furtherance of the Company's best
interests, (ii) required by applicable law, (iii) lawfully obtainable from
other sources, or (iv) authorized in writing by the Company. Upon
termination of Employee's employment with the Company,
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Employee shall deliver to the Company all documents, records, notebooks, work
papers, and all similar material containing any of the foregoing information,
whether prepared by Employee, the Company or anyone else.
8. INVENTIONS AND PATENTS. Except as may be limited by Section 2870 of
the California Labor Code, all inventions, designs, improvements, patents,
copyrights and discoveries conceived by Employee during the period in which
Employee has been an employee or officer of the Company, whether prior to or
during the term of this Agreement, which are useful in or directly or
indirectly related to the business of the Company or to any experimental work
carried on by the Company, shall be the property of the Company. Employee
will promptly and fully disclose to the Company all such inventions, designs,
improvements, patents, copyrights and discoveries (whether developed
individually or with other persons) and shall take all steps necessary and
reasonably required to assure the Company's ownership thereof and to assist
the Company in protecting or defending the Company's proprietary rights
therein.
Employee acknowledges hereby receipt of written notice from the Company
pursuant to California Labor Code Section 2872 that this Agreement (to the
extent it requires an assignment or offer to assign rights to any invention
of Employee) does not apply fully to an invention which qualifies fully under
California Labor Code Section 2870.
9. NON-COMPETITION. In order to protect the Confidential Information,
Employee agrees that during the term of Employee's employment, and for a
period of one year thereafter, Employee shall not, directly or indirectly,
whether as an owner, partner, shareholder, agent, employee, creditor, or
otherwise, promote, participate or engage in any activity or other business
competitive with the Company's business if such activity or other business
involves any use by the Employee of any of the Confidential Information.
10. NON-SOLICITATION OF CUSTOMERS. Employee agrees that for a period
of one year after the termination of employment with the Company, Employee
will not, on behalf of Employee or on behalf of any other individual,
association or entity, call on any of the customers of the Company for
purpose of soliciting or inducing any of such customers to acquire (or
providing to any of such customers) any product or service provided by the
Company, nor will Employee in any way, directly or indirectly, as agent or
otherwise, in any other manner solicit, influence or encourage such customers
to take away or to divert or direct their business to Employee or any other
person or entity by or with which Employee is employed, associated,
affiliated or otherwise related.
11. NONINTERFERENCE WITH EMPLOYEES. In order to protect the
Confidential Information, Employee agrees that during the term hereof and for
a period of one year thereafter, Employee will not, directly or indirectly
induce or entice any employee of the Company with access to or possession of
Confidential Information to leave such employment or cause anyone else to
leave such employment.
12. ASSISTANCE IN PATENT APPLICATIONS. Employee agrees to assist the
Company in obtaining United States or foreign letters patent and copyright
registrations covering inventions assigned
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hereunder to the Company and that Employee's obligation to assist the Company
shall continue beyond the termination of Employee's employment. If the
Company is unable because of Employee's mental or physical incapacity or for
any other reason to secure Employee's signature to apply or to pursue any
application for any United States or foreign letters patent or copyright
registrations covering inventions assigned to the Company, then Employee
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as Employee's agent and attorney-in-fact to
act for and in Employee's behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by Employee. Employee
thereby waives and quitclaims to the Company any and all claims of any patent
or copyright resulting from any such application for letters patent or
copyright registrations assigned hereunder to the Company. Employee will
further assist the Company in every way to enforce any copyrights or patents
obtained including, without limitation, testifying in any suit or proceeding
involving any of the copyrights or patents or executing any documents deemed
necessary by the Company, all without further consideration but at the
expense of the Company.
13. INDEMNITY. To the fullest extent permitted by applicable law and
the bylaws of the Company, as from time to time in effect, the Company shall
indemnify Employee and hold Employee harmless for any acts or decisions made
while performing services for the Company.
14. REMEDIES. The parties hereto agree that the services to be
rendered by Employee pursuant to this Agreement, and the rights and
privileges granted to the Company pursuant to this Agreement, are of a
special, unique, extraordinary and intellectual character, which gives them a
peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in any action at law, and that a breach by Employee of
any of the terms of this Agreement will cause the Company great and
irreparable injury and damage. Employee hereby expressly agrees that the
Company shall be entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach of this Agreement by Employee.
This Section 14 shall not be construed as a waiver of any other rights or
remedies which the Company may have for damages or otherwise.
15. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the parties to the extent possible. In
any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the extent possible.
16. SUCCESSION. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and any such
successor or assignee shall be deemed substituted for the Company under the
terms of this Agreement for all purposes. As used herein, "successor" and
"assignee" shall include any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly
or indirectly acquires the stock of the Company or to which the Company
assigns this Agreement by operation of law or otherwise. The obligations
and duties of Employee hereunder are personal and otherwise not assignable.
Employee's obligations and representations under this Agreement will survive
the termination of Employees employment, regardless of the manner of such
termination.
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17. NOTICES. Any notice or other communication provided for in this
Agreement shall be in writing and delivered in person or sent by registered
or certified mail to the address set forth below.
If to the Company:
Young Minds, Inc.
1906 Orange Tree Lane, Suite 220
Redlands, California 92374
Attention: Secretary
If to the Employee:
Andrew J. Young
27769 Norwood St.
Highland, CA 92346
or at such other address as the Company or Employee may from time to time in
writing designate. Each such notice or other communication shall be
effective (i) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as
aforesaid or (ii) if given by any other means, when actually delivered at
such address.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes any prior
agreements, undertakings, commitments and practices relating to Employee's
employment by the Company.
19. AMENDMENTS. No amendment or modification of the terms of this
Agreement shall be valid unless made in writing and duly executed by both
parties.
20. WAIVER. No failure on the part of any party to exercise or delay
in exercising any right hereunder shall be deemed a waiver thereof or of any
other right, nor shall any single or partial exercise preclude any further or
other exercise of such right or any other right.
21. GOVERNING LAW. This Agreement, and the legal relations between the
parties, shall be governed by and construed in accordance with the laws of
the State of California without regard to conflicts of law doctrines and any
court action arising out of this Agreement shall be brought in any court of
competent jurisdiction within the State of California, County of San
Bernardino.
22. ARBITRATION. Any dispute, controversy or claim arising out of or
in respect to this Agreement (or its validity, interpretation or
enforcement), the employment relationship or the subject matter hereof shall
at the request of either party be submitted and settled by arbitration
conducted in San Bernardino County, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration of such issues, including the determination of any
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amount of damages suffered, shall be final and binding upon the parties to
the maximum extent permitted by law. Judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof. The
arbitration shall award reasonable expenses (including reimbursement of the
arbitration costs) to the prevailing party upon application therefor.
23. WITHHOLDING. All compensation payable hereunder, including salary,
bonus and other benefits, shall be subject to applicable taxes and required
withholdings.
24. COUNTERPARTS. This Agreement and any amendment hereto may be
executed in one or more counterparts. All of such counterparts shall
constitute one and the same agreement and shall become effective when a copy
signed by each party has been delivered to the other party.
25. HEADINGS. Section and other headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
26. REPRESENTATION BY COUNSEL; INTERPRETATION. The Company and
Employee each acknowledge that each party to this Agreement has had the
opportunity to be represented by counsel in connection with this Agreement
and the matters contemplated by this Agreement. Accordingly, any rule of
law, including but not limited to Section l654 of the California Civil Code,
or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived. The provisions of this Agreement shall
be interpreted in a reasonable manner to effect the intent of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
Young Minds, Inc.
By___________________________
Its
EMPLOYEE:
____________________________
Andrew J. Young
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