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EXHIBIT 10.29: EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND MICHAEL L. LANEY
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is effective as of January 6,
1997, between Children's Wonderland, Inc. ("Employer") and Michael L. Laney
("Executive").
RECITALS
A. Executive is a member of the Board of Directors of Employer (the
"Board"). Employer wishes to employ Executive as its President and
Chief Financial Officer.
B. Employer desires assurance of the continued association and services of
Executive in order to retain his experience, skills, abilities,
background, and knowledge, and is therefore willing to engage his
services on the terms and conditions set forth below.
C. Executive wishes to enter the employ of Employer and is willing to do
so on those terms and conditions.
NOW, THEREFORE, in consideration of the above recitals and of the
mutual promises and conditions in this Agreement, it is agreed as follows:
AGREEMENT
1. EXECUTIVE'S DUTIES AND AUTHORITY.
Employer shall employ Executive as President and Chief Financial
Officer or such other positions as Employer and Executive may agree upon.
Employer shall include Executive as a management nominee to the Board each year
during the term of this Agreement and shall use its best efforts to cause
Executive to be elected as a Director.
2. TIME AND EFFORT REQUIRED.
During his employment, Executive shall devote his full business time,
attention and energy to Employer exclusively and he will give his best efforts
and skills to further the best interests of the Company. Executive shall be
allowed to teach for approximately one week per year for the American Management
Association and to serve on the Advisory Board for the California State
University System. Executive shall also be allowed to serve on other boards of
directors to the extent that this service does not substantially interfere with
his duties for Employer.
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3. COVENANT NOT TO COMPETE DURING EMPLOYMENT TERM.
During the employment term, Executive shall not, directly or
indirectly, whether as a partner, owner, employee, consultant, creditor,
shareholder, or otherwise, promote, participate, or engage, directly or
indirectly, in any activity or other business competitive with Employer's
business; provided, however, that Executive shall have not violated this
covenant if Executive owns a nominal amount of stock of any publicly-traded
corporation that competes with Employer's business, provided Executive does not
serve as an employee, director, consultant or any other similar active
participant in such corporation.
4. TERM OF EMPLOYMENT.
Executive's term of employment will begin on January 6, 1997 and will
end on January 5, 2000, subject to earlier termination as provided in this
Agreement.
5. SALARY.
Employer shall pay a basic salary to Executive at the rate of
$160,000 per year, payable in equal semi-monthly installments. The basic salary
shall increase to at least $175,000 when Employer's annualized sales are
reasonably expected to equal or exceed $10,000,000, but no such increase shall
take effect until July 1, 1997. The basic salary payable to Executive under this
section shall be reviewed annually by the Compensation Committee of the Board,
and the Board in its sole discretion may increase (but not decrease) the basic
salary.
6. INCENTIVE COMPENSATION.
Executive and Employer agree that in addition to his basic salary,
Executive shall be entitled to receive incentive compensation for each year of
the term of this Agreement, but Executive and Employer have not agreed on an
appropriate incentive compensation plan. During the first 90 days of the term of
this Agreement, Executive and Employer will consult with each other and will
formulate an appropriate incentive compensation plan for Executive, satisfactory
to both Executive and Employer. Any incentive compensation that is paid on the
basis of a fiscal year of Employer will be prorated for any period less than a
full a fiscal year that Executive is employed by Employer. When the plan is
agreed on, the plan will be reflected in an amendment to this Agreement, signed
by both Executive and Employer.
7. STOCK OPTION.
Upon commencement of his employment Employer shall grant to Executive
a stock option to purchase 175,000 shares of Employer's common stock. The
purchase price under the stock option shall be $7.00 per share. The option shall
vest immediately as to 50,000 shares and the balance shall vest in three equal
installments on January 5, 1998, January 5, 1999 and January 5, 2000, provided
this Agreement is in effect on the date the installments vest. The vesting of
the option will accelerate upon a "change in control" as defined in paragraph 19
below.
8. SIGNING BONUS.
In consideration for Executive's agreement to forego other
opportunities and to accept employment by Employer, Employer shall pay to
Executive a signing bonus of $85,000 upon commencement of Executive's
employment.
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9. ADDITIONAL BENEFITS.
During the employment term, Executive shall be entitled to receive all
other benefits of employment generally available to Employer's other executive
and managerial employees when and as he becomes eligible for them, including
group health and life insurance benefits and an annual vacation of four weeks.
Up to one year's unused vacation time may be carried over from one year to the
next.
If Executive so elects, in lieu of participating in Employer's medical
plan, Executive may continue his coverage under the medical insurance plan he
has participated in prior to his employment with Employer and Employer will
reimburse Executive for the periodic cost of such continued coverage.
Included in the benefits for Executive will be (i) an automobile
allowance consistent with Employer's current policies and practice, and (ii)
reimbursement Executive's reasonable legal fees in connection with this
Agreement and any renegotiation or extension thereof.
10. EXPENSES.
During the employment term, Employer shall reimburse Executive for
reasonable out-of-pocket expenses incurred in connection with Employer's
business, including, without limitation, travel expenses, food, lodging while
away from home, telephone expenses, and automobile expenses, subject to such
policies as Employer may from time to time reasonably establish for its
executive and managerial employees.
11. INDEMNIFICATION BY EMPLOYER.
Employer shall, to the maximum extent permitted by law, indemnify and
hold Executive harmless against expenses, including reasonable attorney's fees
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Executive's
employment by Employer or his service on the Board of Directors. Employer shall
advance to Executive any expense incurred in defending any such proceeding to
the maximum extent permitted by law.
12. INDEMNITY INSURANCE.
Employer shall purchase and maintain indemnity insurance on behalf of
Executive against any liability asserted against or incurred by Executive
arising out of his employment by Employer or his service on the Board.
13. TERMINATION FOR CAUSE.
(a) Employer (acting through the Board) may terminate this Agreement
at any time without notice if Executive commits any material act of dishonesty.
Employer (acting through the Board) may terminate this Agreement at any time
upon sixty days notice if Executive (i) breaches this Agreement (including a
breach of the confidential information provisions of paragraph 20), (ii) is
guilty of gross carelessness or misconduct, or unjustifiably neglects his duties
under this Agreement, or (iii) acts in any way that has a direct, substantial,
and adverse effect on Employer's reputation. The notice shall specify the
grounds upon which Employer proposes to terminate this Agreement, and Executive
shall have sixty days to cure any of such grounds. If such grounds are not
susceptible of being cured in sixty days, Employer may not terminate this
Agreement if Executive makes a good faith continuing effort to cure such
grounds, provided they are capable of cure.
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(b) Executive may terminate this Agreement at any time upon ten (10)
days notice if Employer breaches this Agreement The notice shall specify the
grounds upon which Executive proposes to terminate this Agreement, and Employer
shall have ten days to cure any of such grounds. If such grounds are not
susceptible of being cured in ten days, Executive may not terminate this
Agreement if Employer makes a good faith continuing effort to cure such grounds
provided they are capable of cure.
(c) If Employer breaches this Agreement, Employer does not cure the
breach and Executive terminates this Agreement, in addition to any other damages
Executive is entitled to by law, Executive shall also be entitled to severance
pay in the amount set forth in paragraph 0 below.
14. TERMINATION ON RETIREMENT.
This Agreement may be terminated by Executive's voluntary retirement,
which retirement shall be effective on the last day of any fiscal year, provided
that day occurs after Executive's 60th birthday, and provided three months'
prior written notice of the retirement shall have been given by Executive to
Employer.
15. TERMINATION ON DISABILITY.
If Executive is unable due to mental or physical illness or injury to
perform the essential functions of his job for a continuous period of six months
with reasonable accommodations under this Agreement, this Agreement shall be
then terminated.
16. DISABILITY INSURANCE.
Employer shall obtain and maintain disability insurance covering
Executive, to the extent such insurance is available at reasonable cost, during
the term of this Agreement.
17. TERMINATION ON DEATH.
If Executive dies during the initial term or during any renewal term
of this Agreement, this Agreement shall be terminated on the last day of the
calendar month of his death.
18. EARLY TERMINATION BY EXECUTIVE.
(a) Executive shall have the right to terminate this Agreement at any
time after the end of the second year of the term of this Agreement if the
aggregate salary and bonus paid to him with respect to the second year of the
term does not equal or exceed the sum of the first year's salary set forth in
paragraph 5 and the signing bonus set forth in paragraph 8.
(b) Executive shall have the right to terminate this Agreement at any
time if neither Debby Bitticks nor Kenneth Bitticks is serving as Chief
Executive Officer or Chairman of the Board, respectively, of Employer.
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19. CHANGE IN CONTROL.
Executive shall have the right to terminate this Agreement prior to
the end of its term at any time after a "change in control" of Employer has
occurred. For purposes of this Agreement, a "change in control" of Employer
means:
(a) the acquisition by any person or group of persons (as such terms are used
in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) directly or indirectly of securities of Employer representing 50%
or more of the combined voting power of Employer's then outstanding securities;
(b) the consummation of a merger or consolidation of Employer with or into
another corporation (other than a merger or consolidation in which Employer is
the surviving corporation and which does not result in any capital
reorganization or reclassification or other change in Employer's then
outstanding shares of common stock);
(c) the consummation of a sale or disposition of all or substantially all of
Employer's assets; or
(d) the liquidation or dissolution of Employer.
If Executive acts to terminate this Agreement pursuant to this
paragraph 19, Employer or the surviving business entity or the business entity
to which such assets shall be transferred, as the case may be, shall pay
Executive severance pay equal to the compensation Executive would have received
for the balance of the term of this Agreement if this Agreement were to be
continued for a term of two years following the "change in control". The
severance pay shall not exceed the threshold that would make it an "excess
parachute payment" and thus non-deductible under Section 280G of the Internal
Revenue Code.
If Executive does not act to terminate this Agreement pursuant to
this paragraph 19, the provisions of this Agreement shall be binding on and
inure to the benefit of Employer or the surviving business entity or the
business entity to which such assets shall be transferred, as the case may be.
20. DISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS PROHIBITED.
In the course of his employment, Executive may have access to
confidential information and trade secrets relating to Employer's business.
Confidential information includes but is not limited to inventions, processes,
designs, improvements, programs, specifications, techniques, data relating to
creation, manufacture and marketing of any product or product concept, customer
and prospective customer names and addresses, sales records, vendor names and
addresses, financial data, information provided by third parties that Employer
is required to keep confidential, and any other proprietary information of
Employer (unless such information is lawfully obtainable from other sources).
Except (a) as required in the course of his employment by Employer and in
furtherance of Employer's best interests, (b) is required by applicable law, (c)
authorized by Employer, Executive will not, without Employer's prior written
consent, either during his employment by Employer or for five years after
termination of that employment, directly or indirectly disclose to any person or
entity any such confidential information or trade secrets.
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21. INTEGRATION.
This Agreement contains the entire agreement between the parties and
supersedes all prior oral and written agreements, understandings, commitments,
and practices between the parties, including all prior employment agreements,
whether or not fully performed by Executive before the date of this Agreement.
No amendments to this Agreement may be made except by a writing signed by both
parties.
22. APPLICABLE LAW AND ARBITRATION.
This Agreement will be governed by the laws of the State of
California, and all controversies relating to it, including work-related
controversies between Executive and other the Company employees, will be settled
by final and binding arbitration held in Los Angeles, pursuant to the Model
Employment Arbitration Procedures of the American Arbitration Association, by an
arbitrator chosen by the parties from the AAA Labor Arbitrators Panel. Any such
arbitration must be requested in writing not later than one year from the date
the controversy arose. The losing party will pay all reasonable attorneys' fees
incurred by the prevailing party.
23. NOTICES.
Any notice to Employer required or permitted under this Agreement
shall be given in writing to Employer, either by personal service or by
registered or certified mail, postage prepaid, addressed to the Chief Executive
Officer of Employer at its then principal place of business. Any such notice to
Executive shall be given in a like manner and, if mailed, shall be addressed to
Executive at his home address then shown in Employer's files. For the purpose of
determining compliance with any time limit in this Agreement, a notice shall be
deemed to have been duly given (a) on the date of service, if served personally
on the party to whom notice is to be given, or (b) on the second business day
after mailing, if mailed to the party to whom the notice is to be given in the
manner provided in this section.
24. RENEGOTIATION.
Employer and Executive agree to negotiate an extension of this
Agreement (or a new agreement to take effect when this Agreement terminates) by
the end of the second year of the term of this Agreement. Neither Employer nor
Executive will be bound to such extension (or new agreement), until each has
executed it.
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25. SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable,
the remainder of this Agreement shall nevertheless remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall nevertheless remain in full force and effect
in all other circumstances.
Executed by the parties as of the day and year first above written.
Children's Wonderland, Inc.
By: ________________________
Its:________________________
(Employer)
_____________________________
Michael L. Laney
(Executive)
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