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 David H. Cote ("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 President and
Chief Executive Officer 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 President and Chief Executive
Officer
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shall include such rights and responsibilities as are generally possessed by
a president and chief executive officer 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 Fifty
Thousand Dollars ($150,000) ("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.
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").
5. TERMINATION. This Agreement and all obligations hereunder (except the
obligations
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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 notice
specifying such breach and such breach has not been cured within thirty (30)
days after such
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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.
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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, 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.
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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 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.
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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.
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:
David H. Cote
1540 Barton Rd., #343
Redlands, CA 92373
or at such other address as the Company or Employee may from time to time in
writing designate.
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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 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
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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:
_____________________________
David H. Cote
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