EXHIBIT 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
This employment agreement between The Pathways Group, Inc.
(hereinafter the "Company") and Xxxxxx Xxxxxxx (hereinafter "Executive"),
effective as of November 16, 1997, 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 Executive as a Senior Vice President,
Business Development and in any additional capacity or capacities as the
Company's President and Chief Executive Officer may from time to time decide.
Executive shall have the full responsibilities, duties and authorities of the
Company's Senior Vice President, Business Development. In addition, Executive
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,
Executive shall be employed for an initial 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 basic salary to Executive
at the rate of One Hundred Thousand Dollars ($100,000.00) 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 Executive.
Executive's salary shall annually increase in a percentage amount equal to the
most recent annual increase, if any, in the consumer price index, as published
in the Wall Street Journal.-
b. Sales Over-Ride: Three percent (3%) over-ride on Gross
Sales, which will include, but not be limited to Custom Programming, PC Sales,
TIKITBOX Sales, Terminal Sales and Card Sales. This over-ride shall not include
processing revenue.
c. Stock Option: The Company shall issue to Executive 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
$15.00 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, 2001. Unexercised options
awarded to Executive hereunder shall be subject to forfeiture as provided in
Paragraphs 6 and 7 of this agreement.
4. EMPLOYMENT BENEFITS:
Throughout the employment term, Executive 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 Executive and his family, at Company expense, and:
a. Executive Compensation Package: Enrollment in
Executive Compensation Package to be announced in early 1998.
b. Vacation: The Company waives its policy on vacations,
to allow for three year treatment.
c. Disability Compensation:
(1) If Executive becomes disabled at any time,
and for any number of times, due to any
cause so that he is physically unable to
perform his ordinary duties and
responsibilities under this agreement, then
Executive 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 Executive's 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) Executive's 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, " Executive
was determined to be disabled and unable to
perform the ordinary and usual duties as
Vice President, Business Development of
Pathways, beginning [date] and Executive's
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
Executive's disability ends and he is able
to return to work full time or his
disability compensation benefit has been
fully used, whichever occurs first.
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5. EXPENSE REIMBURSEMENT:
During the employment term, the Company shall reimburse
Executive 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, Executive 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. Executive 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.
Executive shall not take any action to establish, form, assist or become
employed by any such competing business on termination of Executive's
employment. Executive's 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 Executive might otherwise be entitled under
this agreement.
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
may be terminated without cause in the sole and absolute discretion of the
Company upon written notice by the Company to Executive; provided, however, that
if this agreement is terminated pursuant to this subparagraph, Executive shall
receive from Company all salary and benefits provided under this agreement for
twelve (12) 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 Executive
arising out of or in connection with Executive's employment or the termination
thereof.
b. Termination Without Cause by the Executive: The employment
may be terminated without cause in the sole and absolute discretion of Executive
upon six (6) months' written notice by Executive to the Company, provided,
however, that if this agreement is terminated pursuant to this subparagraph,
Executive shall forfeit any unexercised, vested stock options under this
agreement.
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c. Termination For Cause by the Company: The Company may
terminate the employment at any time upon written notice to Executive 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 Executive's
employment services; or Executive's
continued employment would not confer to the
Company the substantial benefit intended to
be gained by the employment; or
(2) Executive 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.
Such termination shall be effective immediately upon notice of
termination under the terms of paragraph 7(A.) herein.
d. Termination For Cause by Executive: Executive may terminate
the employment at any time upon written notice to Executive, if, in the sole and
absolute determination of Executive, 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 Executive; improperly discloses any personal or private
information of Executive protected by any Constitutional or statutory right to
privacy; acts in a manner constituting constructive discharge of Executive; or
the Company's actions or business circumstances or Executive's personal or
family circumstances make it impossible or impracticable for Executive to
continue performing employment services to the Company. Such termination shall
be effective immediately upon notice of termination.
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e. Termination In The Event of Disability: If Executive 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, Executive 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, sales methods and
plans, marketing methods and plans, business development plans and techniques,
business methods and plans, technologies, technology applications, products
(developed and under development), services, product research, processes,
techniques, inventions, discoveries, formulae, patterns, devices, know-how,
sales figures, sales projections, estimates, accounting records, accounting
procedures, customer lists, proposals, price lists, and other customer
information (collectively referred to as "Confidential Information"). Except as
required in the course of his employment by Company, Executive 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. Executive 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, Executive shall immediately return
and deliver to the Company.
b. No Solicitation of Employees: Executive 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 Executive 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 Executive shall have no right,
title or interest of any kind or nature therein or thereto, or in and to any
results and proceeds therefrom.
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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, Executive shall
immediately return and deliver to the Company all of the Company's property,
including all items used by Executive in rendering services hereunder and all
originals and copies of the Company's documents and data, including, but not
limited to, all Confidential Information.
9. NON-COMPETITION AFTER TERMINATION OF EMPLOYMENT:
Executive 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 future marketing
proposals and plans for those products and services. Executive agrees, as part
of the consideration for this Employment Agreement, that Executive 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 one (1) 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
Executive 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:
Executive 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, Executive 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 Executive
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 terms of those paragraphs. In any action to enforce the
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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
Executive 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 Executive 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 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 Executive 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 cost s', expenses and attorneys' fees in
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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:
Executive 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 in writing 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 Executive before the date of this
agreement. The Company and Executive 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.
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 Executive, his heirs, estate,
executors, administrators and all others claiming through or on behalf of
Executive, 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.
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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.
/s/ X. Xxxxxxx /s/ Xxxxx X. Xxxx XX
Xxxxxx Xxxxxxx The Pathways Group, Inc.
Xxxxx X. Xxxx XX
President & CEO
