Exhibit 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
This employment agreement between The Pathways Group, Inc. (hereinafter
the "Company") and Xxxxxxxxxxx X. Xxxxxx (hereinafter "Xxxxxx"), effective as of
November 1, 1999, is made for good and sufficient consideration, as reflected in
the mutual promises, covenants, obligations, undertakings and conditions set
forth below:
1. POSITION AND DUTIES:
The Company shall employ Xxxxxx as Senior Vice President for Business
Development and in any additional capacity or capacities as the Company's
President and Chief Executive Officer may from time to time decide. Xxxxxx shall
have the full responsibilities, duties and authorities of the Company's Senior
Vice President for Business Development. In addition, Xxxxxx shall be
responsible for implementing and complying with directives issued by the
Company's President and Chief Executive Officer.
2. TERM OF EMPLOYMENT:
Subject to earlier termination as provided in this agreement, Xxxxxx
shall be employed for a term of three (3) years, which shall be automatically
extended for additional one (1) year periods (such initial term and all extended
terms being referred to collectively herein as the "employment term") unless
either party gives notice in writing to the other not less than ninety (90) days
before the end of the initial term or extended term that the employment contract
shall not be extended.
3. COMPENSATION:
(a) BASE SALARY: Company shall pay a base salary to Xxxxxx at
the rate of One Hundred Fifty Thousand Dollars ($150,000.00) per year,
payable semi-monthly, in twenty-four (24) equal installments, subject
to all withholdings and deductions required for federal, state and
local taxes and charges and any other withholdings or deductions
authorized by Xxxxxx. In addition to the base salary established above,
and in recognition of the fact that Xxxxxx is relinquishing significant
income opportunities in the immediate future by ceasing the private
practice of law at this time, Xxxxxx will receive a one-time signing
bonus of One Hundred Thousand Dollars ($100,000.00) payable as follows:
Fifty Thousand Dollars ($50,000.00) payable at signing, Twenty Five
Thousand Dollars payable January 3, 2000 and Twenty Five Thousand
Dollars payable February 1, 2000.
(b) BONUS: Xxxxxx shall also be paid an annual discretionary
performance bonus as determined by the Chief Executive Officer and/or
Board of Directors.
(b) AUTOMOBILE ALLOWANCE: The Company shall pay to Xxxxxx an
annual Automobile Allowance in the annual amount of Seven Thousand
Eight Hundred Dollars ($7,800.00), payable semi-monthly in twenty-four
equal installments, subject to all
withholdings and deductions required for federal, state and local taxes
and charges and any other Executive Employment Agreement withholdings
authorized by Xxxxxx.
(c) STOCK OPTION: The Company shall issue to Xxxxxx options to
purchase One Hundred Thousand (100,000) shares of the Company's common
stock, which options shall vest equally over three (3) years, at an
exercise price of $3.00 per share, pursuant to a stockholders plan
intended to be qualified under Section 422 of the Internal Revenue Code
of 1986 and the regulations promulgated in relation thereto. The plan
will expire November 1, 2004. Unexercised options awarded to Xxxxxx
hereunder shall be subject to forfeiture as provided in Paragraphs 6
and 7 of this agreement.
4. EMPLOYMENT BENEFITS:
Throughout the employment term, Xxxxxx shall be entitled to receive the
employment benefits generally offered to all other executive employees,
including, but not limited to, medical, dental, optical, prescription drugs and
life insurance for Xxxxxx and his family, at Company expense, and:
(a) EXECUTIVE COMPENSATION PACKAGE: Enrollment in
Executive Compensation Package.
(b) VACATION: The Company waives its policy on vacations,
to allow for four weeks per year.
(c) LIFE INSURANCE: The Company shall provide and pay for
life insurance on the life of Xxxxxx in the amount of
three (3) times his annual salary provided for in
this agreement. The beneficiary shall be Xxxxxx'x
estate, unless otherwise directed by Xxxxxx in
writing at any time prior to his death.
(d) STOCK ISSUANCE: The Company and Xxxxxx may agree from
time to time, with the approval of the Board of
Directors, to issue to Xxxxxx Common Stock of the
Company in consideration of such services or
contributions of property as may be deemed
appropriate, and at a value determined by the Board
of Directors in good faith and in compliance with
applicable law. Any such issuance of stock may, at
the request of Xxxxxx, and subject to the approval of
the Company which may not be unreasonably withheld,
be issued by the Company to such party or entity,
including without limitation, an irrevocable trust or
similar entity, as Xxxxxx may at the time of issuance
direct.
(e) DISABILITY COMPENSATION:
(1) If Xxxxxx becomes disabled at any time, and
for any number of times, due to any cause so
that he is physically unable to perform
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his ordinary duties and responsibilities
under this agreement, then Xxxxxx shall be
entitled to receive, in lieu of salary, an
amount equal to his salary, payable at the
same time and in the same manner as Xxxxxx'x
salary is paid, provided however, that this
benefit shall be limited to not more than a
total of twelve (12) months during the term
of the agreement.
(2) Xxxxxx'x entitlement to disability income
pursuant to this subparagraph shall begin
and end as determined by a certificate
issued by a qualified M.D. or D.O. licensed
by the State of California. The certificate
shall state in substance that, " Xxxxxx was
determined to be disabled and unable to
perform the ordinary and usual duties as
Senior Vice President, Business Development
of Pathways, beginning [DATE] Xxxxxx'x
disability continues as of this [DATE ."
Such a certificate shall be submitted every
three (3) months beginning with the date of
disability and continuing thereafter until
Xxxxxx'x disability ends and he is able to
return to work full time or his disability
compensation benefit has been fully used,
whichever occurs first.
5. EXPENSE REIMBURSEMENT:
During the employment term, the Company shall reimburse Xxxxxx for
reasonable out-of pocket expenses incurred in connection with the Company's
business, including travel expenses, food, and lodging when away from home,
subject to such policies as the Company may from time to time reasonably
establish for its employees.
6. LIMITATION ON OUTSIDE ACTIVITIES:
During his employment, Xxxxxx shall devote his full occupational time,
energies, abilities, knowledge and experience to the performance of his duties
under this agreement and shall not render to others services of any kind for
compensation or engage in any other business activity without the Company's
prior written consent. Notwithstanding the foregoing, it is understood and
agreed that for a transitional period of time, not to exceed one year, Xxxxxx
shall remain as Of Counsel to Xxxxxxx & Xxxxxxx LLP in order to wind up certain
matters for which he is presently responsible. Xxxxxx shall not, directly or
indirectly, whether as a partner, employee, creditor, shareholder or otherwise,
promote, participate or engage in any business activity competitive with the
Company or its subsidiaries, affiliates, co-venturers, customers or assigns.
Xxxxxx shall not take any action to establish, form, assist or become employed
by any such competing business on termination of Xxxxxx'x employment. Xxxxxx'x
breach of any of the provisions of this paragraph shall give the Company the
right, in addition to all other remedies the Company may have, to terminate the
employment and to cancel and/or terminate any and all compensation and benefits
to which Xxxxxx might otherwise be entitled under this agreement.
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7. TERMINATION OF EMPLOYMENT:
The employment created by this agreement may be terminated during the
employment term in accordance with the following provisions of this paragraph:
(a) TERMINATION WITHOUT CAUSE BY THE COMPANY: The employment
maybe terminated without cause in the sole and absolute discretion of
the Company upon written notice by the Company to Xxxxxx; provided,
however, that if this agreement is terminated pursuant to this
subparagraph, Xxxxxx shall receive from Company all salary and benefits
provided under this agreement for six (6) months after the effective
date of the termination. Such salary and benefits shall constitute the
complete and exclusive obligation of the Company for termination of the
employment and for any and all claims of Xxxxxx arising out of or in
connection with Xxxxxx'x employment or the termination thereof.
(b) TERMINATION WITHOUT CAUSE BY XXXXXX: The employment may be
terminated without cause in the sole and absolute discretion of Xxxxxx
upon six (6) months' written notice by Xxxxxx to the Company, provided,
however, that if this agreement is terminated pursuant to this
subparagraph, Xxxxxx shall forfeit any unexercised, vested stock
options under this agreement.
(c) TERMINATION FOR CAUSE BY THE COMPANY: The Company may
terminate the employment at any time upon written notice to Xxxxxx if
the Company ceases a substantial portion of its business operation, in
the event of the sale or change of ownership of the Company or a
substantial portion of its assets, or if, in the sole and absolute
determination of the Company:
(1) Its business circumstances change so materially that
it is impracticable for the Company to continue using
Xxxxxx'x employment services; or Xxxxxx'x continued
employment would not confer to the Company the
substantial benefit intended to be gained by the
employment; or
(2) Xxxxxx breaches his duty of loyalty to the Company or
any material term, promise, covenant, condition,
obligation, undertaking or commitment set out in this
agreement or the Company's operational policies or
procedures, personnel policies or procedures or work
rules; commits any material act of dishonesty or
illegality; commits any act or omission creating an
unreasonable risk of civil or criminal legal action
against the Company; discloses any trade secret or
confidential or proprietary information of the
Company, its subsidiaries, affiliates, co-venturers,
customers or assigns; is guilty of carelessness,
misconduct, neglect of duty or unsatisfactory work
performance; or acts in any way that significantly
impedes or creates a risk of significant detriment to
the Company's operations, profits, reputation or
other business interests.
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Such termination shall be effective immediately upon written notice of
termination.
(d) TERMINATION FOR CAUSE BY XXXXXX: Xxxxxx may terminate the
employment at any time upon written notice to Company, if, in the sole
and absolute determination of Xxxxxx, the Company breaches any material
term, promise, covenant, condition, obligation, undertaking or
commitment set out in this agreement; commits any material act of
dishonesty or illegality; commits any act or omission creating an
unreasonable risk of civil or criminal legal action against Xxxxxx;
improperly discloses any personal or private information of Xxxxxx
protected by any Constitutional or statutory right to privacy; acts in
a manner constituting constructive discharge of Xxxxxx; or the
Company's actions or business circumstances or Xxxxxx'x personal or
family circumstances make it impossible or impracticable for Xxxxxx to
continue performing employment services to the Company. Such
termination shall be effective immediately upon written notice of
termination.
(e) TERMINATION IN THE EVENT OF DISABILITY: If Xxxxxx is
unable, due to mental or physical illness or injury, to substantially
perform his duties under this agreement in a satisfactory manner for a
period of twelve (12) months, the employment shall terminate at the end
of such period.
8. CONFIDENTIALITY, PROPERTY RIGHTS AND NO SOLICITATION:
(a) CONFIDENTIAL INFORMATION: In the course of his employment
by the Company, Xxxxxx will have access to trade secrets and
confidential and proprietary information of the Company, its
subsidiaries, affiliates, co-venturers and customers, including, but
not limited to, personnel, products (developed and under development),
proposals, services, operations, procedures, customers, customer lists,
customer needs, customer contacts, customer relations, customer data
and information, marketing areas, marketing proposals, marketing
methods and plans, business development plans and techniques, business
methods and plans, sales methods and plans, sales figures, sales
projections, price lists, pricing formulae and information, inventions,
discoveries, formulae, patents, trademarks, copyrights, films, scripts,
ideas, creations, concepts, theories, technologies, technology
applications, data, product research, prototypes, models, designs,
system design documents, specifications and requirements, schematics,
software, codes, program components and documentation, processes,
techniques, tools, devices, know-how, estimates, accounting records,
and accounting procedures (collectively referred to as "Confidential
Information"). Except as required in the course of his employment by
Company, Xxxxxx will not, without Company's prior consent, either
during his employment by Company or after termination of the
employment, directly or indirectly disclose to any third person any
Confidential Information. Xxxxxx acknowledges and agrees that all such
Confidential Information, regardless of who discovered, created or
developed it, is the property of the Company, solely and exclusively,
and is valuable proprietary information of the Company. Upon
termination of the employment, whether with or without cause, XXXXXX
shall immediately return and deliver to the Company.
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(b) NO SOLICITATION OF EMPLOYEES: Xxxxxx agrees that, during
his employment and for two (2) years thereafter, he will not solicit
any of the Company's employees for a competing business and will not
induce or attempt to induce any of the Company's employees to leave
their employment with the Company.
(c) INTELLECTUAL PROPERTY RIGHTS: All rights, title and
interest of every kind and nature whatsoever in and to any intellectual
property, including, but not limited to, any inventions, patents,
trademarks, copyrights, films, scripts, ideas, creations, concepts,
theories, technologies, technology applications, products (developed
and under development), product research, prototypes and models,
whether or not invented, created, written, developed, furnished,
produced or disclosed by Xxxxxx in the course of rendering his services
to the Company under this Agreement shall, as between the parties
hereto, be and remain the sole and exclusive property of the Company
for any and all purposes and uses whatsoever, and Xxxxxx shall have no
right, title or interest of any kind or nature therein or thereto, or
in and to any results and proceeds therefrom.
(d) RETURN OF ALL OF THE COMPANY'S PROPERTY. Whenever
requested by the Company during the employment, and without request
upon termination of the employment, whether termination is with or
without cause, Xxxxxx shall immediately return and deliver to the
Company all of the Company's property, including all items used by
Xxxxxx in rendering services hereunder and all originals and copies of
the Company's documents and data, including, but not limited to, all
Confidential Information.
(e) PROTECTION OF OTHER COMPANIES' TRADE SECRETS AND
CONFIDENTIAL INFORMATION: Xxxxxx understands that state and federal
laws provide severe penalties for misappropriation and unauthorized
disclosure of trade secrets and confidential, proprietary business
information belonging to Employee's previous employers or to any other
Company. Xxxxxx agrees and warrants that, in connection with his/her
employment by Pathways, he/she will not misappropriate, use or disclose
any trade secret or confidential, proprietary information belonging to
any previous employer or any other Company. Xxxxxx agrees and warrants
that, if he/she has any question or uncertainty about whether
particular information might be a trade secret or confidential,
propriety business information of a previous employer or another
Company, Xxxxxx will immediately contact Pathways' General Counsel.
9. NON-COMPETITION AFTER TERMINATION OF EMPLOYMENT:
Xxxxxx and the Company recognize and acknowledge that in his
employment, he will become familiar with all of the Company's sales methods and
plans, marketing, marketing and development, technologies, applications of
technologies, products (developed and under development), product research,
business methods and plans, data, processes, techniques, inventions,
discoveries, formulae, patterns, devices, know-how, services, products, and
other customer information (collectively referred to as "Confidential
Information"), in all of the geographic areas throughout the world in which the
Company already has made marketing efforts and/or sales of products and
services, and he will become knowledgeable about present and
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future marketing proposals and plans for those products and services. Xxxxxx
agrees, as part of the consideration for this Employment Agreement, that Xxxxxx
will not engage, directly or indirectly, nor solicit employees of the Company to
engage in the development, distribution, manufacture or sale of any products or
services which compete with the products or services provided by the Company or
its related companies, for a period of two (2) years. The parties agree that the
phrase "engage, directly or indirectly, nor solicit employees of the Company to
engage in the development distribution, manufacture or sale of any products or
services which compete with the products or services provided by the Company or
its related companies" shall include any situation or circumstance in which
Xxxxxx shall be owner, partner, officer, director or shareholder of a
corporation, or an agent, employee or consultant of any business entity engaged,
or about to become engaged, in competition with the Company.
10. INJUNCTIVE RELIEF:
Xxxxxx acknowledges and agrees that any breach of the terms of
Paragraphs 8 or 9 above would irreparably injure the Company and that it would
be impossible to measure in money the resulting injury to the Company, and, in
any action to enforce this the terms of Paragraphs 8 or 9 or to enjoin any
breach of those paragraphs, Xxxxxx waives any claim or defense that the Company
has an adequate remedy at law or that the Company would not be irreparably
injured by breach of the terms of Paragraphs 8 or 9, and Xxxxxx acknowledges and
agrees that the Company will be entitled to temporary, preliminary and permanent
injunctive relief and restraining orders, without any delay whatsoever, in
connection with any breach, or threatened or impending breach, of any of the
ten-ns of those paragraphs. In any action to enforce the Company's rights under
Paragraphs 8 through 10 of this agreement, the party prevailing in such action
shall be entitled to recover as damages reasonable attorneys' fees and all other
reasonable expenses incurred in the action and in any efforts prior to or during
the action to secure compliance with the terms of this agreement.
11. ARBITRATION:
Except for claims, disputes and causes of action arising out of or in
connection with Paragraphs 8 through 10 above, the Company and Xxxxxx agree to
arbitrate any and all disputes and claims, including discrimination claims,
arising out of or in connection with the employment or the termination thereof,
if the amount in controversy is more than $5,000.00. This arbitration agreement
applies to all disputes between the parties and any and all claims by Xxxxxx
against the Company and any officer, director, employee, agent or representative
of the Company, against any corporate parent or subsidiary of the Company,
and/or against any person or company affiliated with the employer (e.g., a
person or company involved in a joint venture, partnership or other similar
business relationship with the employer or one having an owner, partner or
parent or subsidiary corporation in common with the employer). The arbitration
award shall be final and binding on all parties to the arbitration proceeding.
The arbitration shall be conducted in Santa Rosa, California, pursuant to the
California Arbitration Act and the terms of this agreement. Arbitration may not
be initiated after expiration of any statute of limitation for the commencement
of any civil or administration proceeding on the claim or dispute. Arbitration
shall be initiated by written notice by one party to the other, specifying the
nature of each claim
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or dispute at issue and the amount and manner of calculation of each item of
damages. The parties shall each appoint one arbitrator, and the parties'
arbitrators shall together select a third neutral arbitrator. If the three
arbitrators determine that the claims or disputes specified in the notice
collectively involve an amount in controversy more than $5,000.00, they shall
hear and determine the dispute(s) or claim(s) according to applicable laws, this
arbitration agreement and the Company's work rules and policies in effect at the
time of the events which gave rise to the arbitration. The three arbitrators
shall issue a written decision determining each dispute, claim and item of
damages submitted to the arbitrators. Determination of each dispute, claim and
item of damages shall require the concurrence of at least two arbitrators, but
it is not necessary that the same two arbitrators concur on every dispute, claim
or item of damages. The arbitration decision shall attest that the requisite
concurrence existed as to each dispute, claim and item of damages. THE COMPANY
AND XXXXXX UNDERSTAND AND EXPRESSLY AGREE THAT, BY ENTERING INTO THIS
ARBITRATION AGREEMENT, THEY ARE GIVING UP THE RIGHT TO BRING IN ANY COURT ANY
CLAIM, CAUSE OF ACTION OR DISPUTE ARISING OUT OF OR IN CONNECTION WITH THE
EMPLOYMENT OR THE TERMINATION THEREOF, INCLUDING THE RIGHT TO A JURY TRIAL. The
arbitration award may be confirmed by any court having jurisdiction of the
matter, and judgment may be entered on the confirmed award. Charges and expenses
of the neutral arbitrator shall be borne by the parties equally, and the parties
shall deposit their respective shares of the neutral arbitrator's estimated
charges prior to the arbitration hearing. The parties shall each bear their own
costs, expenses and attorneys' fees in connection with the arbitration, unless a
statute or contract applicable to the claim or dispute expressly provides for
recovery of attorneys' fees by the prevailing party.
12. INCORPORATION AND INTEGRATION:
Xxxxxx shall comply with and enforce all of the Company's operational
policies and procedures, personnel policies and procedures and work rules, as
they may be promulgated and announced from time to time. Except for such
operational policies and procedures, personnel policies and procedures and work
rules, this written agreement contains the entire agreement between the parties
and supersedes all prior oral, written and/or implied agreements, promises,
covenants, obligations, undertakings, commitments, representations and
understandings by or between the parties, including all prior employment
agreements, whether or not fully performed by Xxxxxx before the date of this
agreement. The Company and Xxxxxx acknowledge and agree that there are no terms,
conditions, covenants, obligations or promises, express or implied, applicable
to the employment except those set out in this agreement. There shall be no
amendment, modification, change or enlargement of this agreement except by a
writing signed by the party to be charged with performance of the amendment,
modification, change or enlargement. In the event of any conflict or difference
between this agreement and Company's current or future operational policies and
procedures, personnel policies and procedures and work rules, the provisions of
this agreement shall control.
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13. SURVIVAL, GOVERNING LAW, VENUE AND SEVERABILITY:
The representations, warranties, covenants, promises and restrictions
set out in this agreement shall operate continuously and shall survive
termination of the employment created by the agreement The agreement shall inure
to the benefit of and be binding upon Xxxxxx, his heirs, estate, executors,
administrators and all others claiming through or on behalf of Xxxxxx, and upon
Company, its subsidiaries, affiliates, successors and assigns. The agreement
shall be construed and governed in accordance with the laws of the State of
California. All actions, arbitrations and proceedings arising from or in
connection with the agreement or the employment it creates shall be commenced
and maintained in Sonoma County, State of California. If any term, covenant,
condition, clause or provision of this agreement is held to be invalid or
unenforceable, then such clause or provision shall be severed herefrom, and such
invalidity or unenforceability shall not affect any other provision of this
agreement, the balance of which shall remain in full force and effect; provided,
however, that if any such term, covenant, condition, clause or provision may be
modified so as to be valid or enforceable as a matter of law, then such term,
covenant condition, clause or provision shall be deemed modified so as to be
enforceable to the maximum extent permitted by law.
14. NOTICES:
Any notices to be given hereunder by any party to another party shall
be in writing and delivered in person or mailed registered or certified mail,
postage prepaid with return receipt requested.
The Pathways Group, Inc.
By
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Xxxxxxxxxxx X. Xxxxxx Xxxxx X. Xxxx XX
President & CEO
By
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Xxxxx Xxxxxx, Director acting under
authority of the Board of Directors
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