EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made as of the 13th day of May, 2017 between CREATIVE LEARNING
CORPORATION ("Company") and KARLA KRETSCH ("Executive").

In consideration of the promises and the respective covenants and agreements of
the parties contained herein, and intending to be legally bound hereby, the
parties to this Agreement agree as follows:

1.

Employment.  The Company hereby employs the Executive and the Executive hereby
accepts employment by the Company for the period and upon the terms and
conditions contained in this Agreement.  This Agreement shall replace and
supersede the previous employment agreement of the Executive.

2.

Term of Agreement.

The term of this Agreement will begin on the date first written above (the
"Effective Date") and shall continue until July 1, 2018 unless terminated
earlier in accordance with the terms of this Agreement (“Term”).  On or about
June 30, 2018, the Company and the Executive shall review and evaluate renewal
of this Agreement, and possible amendment of terms, including compensation.
Unless terminated on or before June 30, 2018, this Agreement shall automatically
renew on an annual basis thereafter.

3.

Position and Duties.

During the Term of this Agreement, the Executive shall serve as President of the
Company.  The Executive shall have such duties and responsibilities as are set
forth on the Job Description attached hereto as Exhibit “A”, and such other
duties as the Chairman of the Board of the Company may reasonably assign from
time to time.  During the Term of this Agreement, the Executive shall devote
substantially all her working time and efforts to the business and affairs of
the Company and shall work in good faith to perform her duties, provided however
that the Executive may engage in activities relating to personal matters
(including personal financial matters) and in such corporate, industry, civic
and charitable activities, so long as such service does not materially interfere
with the performance of her duties hereunder or violate her obligations under
Section 6 below.

4.

Compensation and Related Matters.

4.1

Compensation.  

(i)

Cash Compensation.  The Company shall pay the Executive for the term of this
Agreement cash compensation amounting to the equivalent of an annual Base Salary
figure of $95,000, paid in equal semi-monthly installments, and pro-rated for
partial periods;

(ii)

Stock Compensation.

The Company shall also pay the Executive for the term of this Agreement stock
compensation. For purposes of this section, “Average Selling

Page 1 of 8

--------------------------------------------------------------------------------

 

Price” shall mean the average closing value of the stock over the 30-day period
prior to the date of the grant of stock or stock options at issue.  The stock
compensation under this Agreement shall be compensation amounting to the
equivalent of the following and pro-rated for partial periods:

(a) stock grants: grants of common shares of Creative Learning Company stock
issued on the last day of each quarter (e.g., June 30, 2017, September 30, 2017,
December 31, 2017, March 31, 2018 and June 30, 2018), in the amount $2,500 for
each quarter the Executive is employed and based upon the Average Selling Price;
and

(b) stock options: issuance of 5-year options to purchase common shares of
Creative Learning Company stock issued on the last day of each quarter (e.g.,
June 30, 2017, September 30, 2017, December 31, 2017, March 31, 2018 and June
30, 2018), in the amount $8,750 for each quarter the Executive is employed and
based upon the Average Selling Price.  

(iii)

Stock Compensation Issuance Acceleration.  In the event that the Company is
taken private during the Term of this Agreement and all Company stock is
redeemed, the Executive shall be entitled to acceleration of the foregoing stock
compensation to occur prior to the time any such stock redemption would occur.

(iv)

Year-end Bonus and/or Salary Possibility.  Prior to December 31, 2017, the
Chairman of the Board shall evaluate the Executive’s performance from the prior
year, and consider the propriety of a year-end bonus and/or salary increase
considering three factors:  (1) meeting budgeted earnings; (2) meeting budgeted
sales growth; and (3) enhancement of franchisee support and sales programs.  The
foregoing shall also consider as a factor supporting a bonus any detrimental
impact the proxy contest may have upon the Executive’s ability to achieve the
three factors.  

4.2

Work Hours.

  As it is understood that Executive will be working primarily remotely from
Phoenix, Arizona, the Executive shall make herself available to address Company
affairs during the Company’s EST/EDT business hours.

4.3

Vacation.  During the Term of this Agreement, the Executive shall be entitled to
vacation in accordance with the Company’s current policies and practices.  To
the extent that the Executive wishes to deviate from the Company’s policies and
practices, the Executive shall make written request to the Chairman of the
Board.

5.

Termination.

5.1

Termination by Company for Cause. The Company may terminate this Agreement for
Cause.  For purposes of this Agreement, "Cause" shall mean any one of the
following:

(i)

the failure by the Executive to work in good faith to perform Executive’s duties
hereunder if such failure is not cured by Executive within 30 days after a
written demand for cure is delivered to Executive by the Chairman of the Board.

Page 2 of 8

--------------------------------------------------------------------------------

 

(ii)

the Executive willfully engaging in misconduct with regard to the Company which
is materially injurious to the Company, monetarily or otherwise, including but
not limited to fraud, misappropriation or embezzlement by the Executive.

(iii)

the Executive's conviction other than a minor traffic violation (or entering
into a plea bargain admitting guilt or plea of nolo contendere) of any felony or
any misdemeanor involving moral turpitude.

If the Executive is terminated for Cause, the Company shall pay to the Executive
her Base Salary through the date of termination, and the Executive shall not be
entitled to any further compensation.

5.2

Termination by Company without Cause.  The Company may terminate Executive’s
employment at any time without Cause.  Should the Company terminate this
Agreement without Cause, the Executive shall be paid her salary through the date
of termination,  any unreimbursed expenses, and any stock grants or stock
options due for the quarter in which termination occurs, and paid as scheduled
at quarter-end.  Notwithstanding the foregoing, Executive shall be due
compensation as fixed by operation of Section 5.3 of this Agreement if the
Executive is terminated without Cause: (A) within six months of a Change in
Control of the Company (as defined in Section 5.3 (iii)); or (B) the Company is
taken private.

5.3

Termination by Executive for Good Reason.  The Executive may terminate this
Agreement for Good Reason.  For purposes of this Agreement, "Good Reason" shall
mean any one of the following:

(i)

a material breach of this Agreement by the Company (including change in Position
under Paragraph 3), which is not cured by the Company after the Executive has
provided 60 days written notice to cure.

(ii)

a reduction by the Company in the Executive's Base Salary as in effect on the
date hereof or as the same may be increased from time to time.

(iii)

a Change in Control of the Company.  For purposes of this paragraph, Change in
Control shall include: (i) any change in board members amounting to a change in
the majority of seats on the Company board, including without limitation the
success of the current proxy challenge by Blake Furlow; or (ii) the ascension of
any individual associated with Brian Pappas to the Board of Directors of or to a
position within senior management of the Company. For purposes of this
paragraph, “any individual associated with Brian Pappas” shall include but not
be limited to any individual whom Mr. Pappas has previously supported for a seat
on the Company’s board (other than current board members) and any other
individual who Executive reasonably believes may be associated with Mr. Pappas.
The failure of the Executive to exercise her rights under this provision in any
one instance does not waive the right of the Executive to exercise her rights
under this provision in the case of future events that trigger it.  

Page 3 of 8

--------------------------------------------------------------------------------

 

If the Executive terminates this Agreement with Good Reason, the Executive shall
be paid an amount equivalent to her Base Salary through three months following
the date of termination, any unreimbursed expenses, and any stock grants and
stock options due for the quarter in which termination occurs as well as the
immediately following three quarters, and paid as scheduled at quarter-end. The
payment of Base Salary shall be made in equal amounts every two weeks.

5.4

Disability.  The Company may terminate the Executive’s employment because of the
Executive’s Disability.  For purposes of this Agreement, the term "Disability"
shall mean the Executive’s inability to substantially perform the essential
functions of her job, with or without reasonable accommodation, due to a
physical or mental impairment, for a period of six consecutive months or a
period of nine months in any 12 month period.

5.5

Death.  This Agreement shall terminate in the event of Executive’s death.

5.6

Termination by Executive Without Good Reason.  Should the Executive terminate
this Agreement without Good Reason, the Executive shall be paid her salary
through the date of termination and any unreimbursed expenses, but otherwise
shall not be entitled to any further salary, bonus or other compensation or
benefits.

6.

Restrictive covenants.

6.1

Non-solicitation of employees.  During the Executive’s employment with the
Company and for a period of six months immediately following termination of such
employment for whatever reason, the Executive shall not, directly or indirectly,
solicit or attempt to induce any employee or independent contractor employed by
the Company in any capacity to terminate his or her employment with the Company,
or hire any such employee or independent contractor.

6.2

Definitions.  For the purposes of this section 6: the term “directly or
indirectly” shall include either as an individual or as a partner, joint
venturer, employee, agent, executive, independent contractor, officer, director,
stockholder or otherwise.

6.3  Non-disclosure of Confidential Information.  The Executive shall not,
directly or indirectly, whether while employed by the Company or afterwards,
retain, disclose or use for the benefit of himself or herself or any other
person, corporation, partnership, joint venture, association, or other business
organization, any of the trade secrets or confidential business information of
the Company (“Confidential Information”).

For purposes of this Agreement, “Confidential Information” shall mean

(i)  customer lists and prospect lists, specific information on customers and
prospective customers (including information on purchasing preferences and
pricing for those customers), pricing lists (including item and customer
specific pricing information); proprietary purchasing and sales methods and
techniques; pricing methods and strategies; computer software design and/or
improvements; market feasibility studies; proposed or existing marketing
techniques or plans; future company business plans; project files; design
systems, information on current and potential vendors, the identity of various
suppliers/vendors of products and services, and personal information about the
Company’s executives, officers and directors; and

Page 4 of 8

--------------------------------------------------------------------------------

 

(ii)  any information that is of value or significance to the Company that
derives independent economic value, actual or potential, from not being
generally know to, and not being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use, including
information not generally known to the competitors of the Company nor intended
by the Company for general dissemination.

In the event the Executive is requested or becomes legally compelled by
subpoena, Court order or other legal process to disclose any Confidential
Information of the Company, the Executive shall immediately provide notice to
the Company so that the Company may interpose an objection and seek an
appropriate protective order, and the Executive shall cooperate with the Company
in its efforts to obtain such protection.

6.6

Meaning of directly or indirectly.  For purposes of this section 6, the phrase
“directly or indirectly” shall include the Executive acting either as an
individual on her own account or the account of another, or as a partner, joint
venturer, employee, agent, independent contractor, officer, director,
stockholder or otherwise.

6.7

Need for restrictions.  The Executive acknowledges and agrees that each of the
restrictive covenants contained in this paragraph 6 is reasonable and necessary
to protect the legitimate business interests of the Company, including without
limitation the need to protect the Company’s trade secrets and confidential
information and the need to protect its relationships with its customers.

6.8

Breach of restrictive covenants.  In the event of a breach by the Executive of
any restrictive covenant set forth in paragraph 6, the Executive agrees that
such a breach would cause irreparably injury to Company, and that if the Company
shall bring legal proceedings against the Executive to enforce any restrictive
covenant, the Company shall be entitled to seek all available civil remedies, at
law or in equity, including without limitation an injunction, damages, attorneys
fees and cost.

6.9

Construction, survival.  If any period of time, area or scope specified in this
section 6 should be adjudged unreasonable in any proceeding, then the period of
time or area or scope shall be reduced by elimination of such portion deemed
unreasonable so that such restrictions may be enforced to the extent adjudged to
be reasonable.  If the Executive violates any of the restrictions contained in
this section, the restrictive period shall be extended by the period of time
that such violation exists.   All the provisions of this section 6 shall survive
the term of this Agreement and the Executive’s employment with the Company.

6.10

Subsidiaries and affiliates.  For purposes of this section 6, the term “Company”
includes the Company’s subsidiary and affiliated entities.  All such subsidiary
and affiliated entities shall be deemed third party beneficiaries of this
Agreement, and shall be entitled to enforce the provisions of this section 6.

7.

Return of Company property.  All the Company’s products, customer
correspondence, internal memoranda, products and designs, sales brochures,
training manuals, project files, price lists, customer and vendor lists,
prospectus reports, customer or vendor information, sales literature, territory
printouts, call books, notebooks, textbooks e-mails and

Page 5 of 8

--------------------------------------------------------------------------------

 

Internet access, computer programs and data, and all other like information or
products, including all copies, duplications, replications and derivatives of
such information or products, and all laptops, pagers, beepers, keys, access
cards and other similar property, acquired by the Executive while in the employ
of the Company (“Company Property”), shall be the exclusive property of the
Company and shall be returned to the Company promptly upon the Executive’s
separation from the Company.  During the Executive’s employment with the
Company, no Company Property shall be removed from the Company’s premises unless
authorized by Company management and necessary for the Executive to perform her
duties for the Company.

8.

Prior Agreements.  The Executive represents to the Company (a) that there are no
restrictions, agreements or understandings whatsoever to which the Executive is
a party which would prevent or make unlawful the Executive’s execution of this
Agreement or employment hereunder, (b) that the Executive’s execution of this
Agreement and employment hereunder shall not constitute a breach of any
contract, agreement or understanding, oral or written, to which the Executive is
a party or by which the Executive is bound, and (c) that the Executive is free
and able to execute this Agreement and to enter into employment by the Company.

9.

Miscellaneous.

9.1

Right to review and seek counsel.  The Executive hereby acknowledges that he has
been provided with a copy of this Agreement for review prior to signing it, that
he has been given the opportunity to have this Agreement reviewed by her own
attorney prior to signing it, that he understands the purposes and effects of
this Agreement, and that he has been given a signed copy of this Agreement for
her records.

9.2

Waiver.  No modification or waiver of this Agreement will be valid unless the
modification or waiver is in writing and signed by both of the parties.  The
failure of either party at any time to insist upon the strict performance of any
provision of this Agreement will not be construed as a waiver of the right to
insist upon the strict performance of the same provision at any future time.

9.3

Entire agreement; amendments.  This Agreement, together with any schedules
and/or exhibits attached, constitutes the entire agreement between the Executive
and the Company pertaining to the subject matters of the Agreement, and
supersedes all negotiations, preliminary agreements, and all prior and
contemporaneous discussions and understandings of the parties hereto. Any
amendments to this Agreement must be in writing and signed by both the Executive
and the Company.

9.4

Governing Law.  This Agreement shall be governed and construed in accordance
with the laws of the State of Florida without regard to conflicts of law.

9.5

Severability.  If any part of this Agreement or the application of any part is
held invalid by a court of competent jurisdiction, the remainder of this
Agreement shall not be affected and shall be construed and enforced to the
fullest extent allowed by law.

9.6

Consent to Personal Jurisdiction and Venue.  The parties hereby consent to
exclusive personal jurisdiction and exclusive venue in the state and federal
courts in

Page 6 of 8

--------------------------------------------------------------------------------

 

and for Phoenix, Arizona, for any action between the Company and the Executive
arising out of or in connection with this Agreement or the Executive’s
employment with the Company.

9.7

Headings and Captions; counterparts.  The titles and captions of sections and
subsections contained in this Agreement are provided for convenience of
reference only, and shall not be considered terms or conditions of this
Agreement. This Agreement may be executed in counterparts, all of which shall be
considered one agreement.

9.8

Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, and the Executive agrees
that this Agreement may be assigned by the Company.  This Agreement is not
assignable by the Executive.

9.9

Survival.  The provisions of section 6 shall survive the termination of the
Executive’s employment with the Company and the termination this Agreement.

9.10

Attorney's Fees. In the event of any dispute arising out of or in connection
with this Agreement, the prevailing party in any ensuing litigation shall be
entitled to recover all court costs and reasonable attorneys’ fees, including
attorneys’ fees on appeal, from the non-prevailing party.

9.11

Directors and Officers Insurance Policy.

The Company represents that it has in place a $5,000,000 Directors & Officers
insurance policy, and that the Executive will be added to that policy as a named
insured.

9.12

Waiver of Jury Trial.  In any legal action between the Executive and the Company
arising out of or in connection with this Agreement, the Company and the
Executive hereby expressly waive trial by jury.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.

 

CREATIVE LEARNING CORPORATION

 

 

 

 

By:

/s/ Charles Grant

 

 

Charles Grant

 

Its:

Chairman of the Board

 

 

 

 

5/13/17

 

 

Date

 

 

 

 

/s/ Karla Kretsch

 

KARLA KRETSCH

 

 

 

 

5/13/17

 

 

Date

Page 7 of 8

--------------------------------------------------------------------------------

 

EXHIBIT A

As President, the Executive shall be responsible for duties and responsibilities
including without limitation oversight and execution of the following:

1.

Oversee and supervise all daily operations of the Company excluding the
responsibilities exclusively assigned to the Chief Financial Officer;

2.

Franchise sales domestically and internationally;

3.

Strategic Planning with corporate board;

4.

Supervision and improvement of franchisee operations including profitability and
educational offerings;

5.

Curriculum development and implementation;

6.

Marketing;

7.

Technology, including internal IT and franchise management capabilities.

Page 8 of 8