EXHIBIT 10.7
(SECOND AGREEMENT)
CORPORATE OFFICER EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made between THE PATHWAYS
GROUP, INC., as Employer and XXXXX X. XXXX, XX, as an officer of THE PATHWAYS
GROUP, INC. ("Pathways" or the "Corporation") , effective November 1, 1996. The
terms and conditions of this Agreement are stated below.
I. EMPLOYMENT PROVISION.
1. Employment Positions; Responsibility, Duties and Authority.
This Corporate Officer Employment Agreement is made and
entered into between THE PATHWAYS GROUP, INC., a corporation
organized under the laws of the State of Washington,
hereinafter referred to as the "Corporation" and XXXXX X.
XXXX, XX, its President, Chief Executive Officer and Chairman
of the Board of Directors of the Corporation, hereinafter
referred to as "Xxxx." The Corporation and Xxxx each agree
that the Corporation shall employ Xxxx as the President, Chief
Executive Officer and Chairman of the Board of Directors and
Xxxx shall perform the responsibilities and duties of, and
shall have the full authority of the officer positions of
President, Chief Executive Officer and Chairman of the Board
of Directors of the Corporation for the term stated in Section
II. of this Agreement, unless sooner terminated pursuant to
the provisions of Section X. of this Agreement.
2. Responsibilities, Duties and Authority of Xxxx. Xxxx shall
have the full responsibilities and duties and authority of the
President and of the Chairman of the Board of the Corporation
as provided in the Bylaws of the Corporation, as approved at a
meeting of the Board of Directors of the Corporation on
October 26, 1996, and the applicable Washington State
Corporation statutes pertaining to business corporations.
II. TERM OF THIS AGREEMENT.
This Agreement shall have a term of three (3) years beginning November
1, 1996, and shall end October 31, 1999, unless sooner terminated
pursuant to the provisions of Section X. of this Agreement.
III. LIMITATION ON OUTSIDE ACTIVITIES.
Xxxx shall devote his full employment energies and abilities to
performance of his responsibilities and duties described in Section
1.2. of this Agreement and shall not, without the consent of the
Corporation based on a resolution of the Board of
Directors of the Corporation perform service of any kind for
compensation for the benefit of other corporations, except those
corporations which are related to, or are a part of or become a part of
the Pathways family of companies. Pathways hereby expressly gives
permission for Xxxxx X. Xxxx, XX to remain as President, Chief
Executive officer and Chairman of the Board and Director of the
following companies:
Pathways International, Ltd.
Sprinticket, Inc.
Pathways Systems, Inc.
Nothing in this provision shall prevent Xxxx from doing software design
and/or software programming for his own use. Such software design or
software programming by Xxxx for his own use shall not be made
available for a commercial use or a business use by license or sale by
other corporations unless it has first been offered at a fair and
reasonable price to this Employer unless and until this Agreement is
terminated pursuant to Section X.
IV. COMPENSATION.
1. Basic Salary. As consideration for all services to be rendered
by Xxxx to Pathways, Xxxx shall be paid the following listed
annual salary amounts per year as follows:
First Year 11/01/96 - 10/31/97 $200,000.00
Second Year 11/01/97 - 10/31/98 $200,000.00
Third Year 11/01/98 - 10/31/99 $200,000.00
2. Payment of Salary.
A. Salary. The annual salary provided for in Section
IV.1. shall be due and payable in installments by the
corporation semi-monthly on the fifteenth (15th) day
and the first business day after the last day of each
month, which shall be established by this Agreement
as the regular payday, unless such day is a weekend
or holiday, in which event, the salary shall be due
and payable on the next business day after the
regular payday.
B. Accruals of Unpaid Salary
(1) Salaries. Any salary payments and bonus
payments not paid by the Corporation when
due shall accrue as a corporate debt payable
to Xxxx, and shall be paid as soon as
possible by the Corporation and in any
event, accrued salary
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shall be paid to the fullest extent possible
whenever a payroll is disbursed to other
employees of Pathways.
(2) Deductions From Compensation. The
Corporation shall have the right and
responsibility to deduct all federal, state
and local government taxes and other charges
as are now in effect, if any, or which may
hereafter be enacted or required by
applicable government laws and regulations,
if any, required as deductions from
compensation of Xxxx as an employee.
3. Stock Options.
In consideration of Xxxx entering into this agreement, the
Corporation agrees to issue option to purchase 200,000 shares
of common stock. The options will have an exercise price of
$3.00 per share and will vest equally over three years. The
options will be issued under a stockholders plan intended to
be qualified pursuant to Section 422 of the Internal Revenue
Code of 1986 and the regulations related thereto. The plan
will expire November 1, 2001.
V. EMPLOYMENT BENEFITS IN ADDITION TO CASH COMPENSATION.
1. Participation In Existing Company Benefit Programs.
A. Medical and Health Care Benefit Program. Xxxx, as an
executive employee shall be entitled to receive and
shall receive all medical and health care benefits
provided by Employer to its executive employees. Such
benefits shall be paid for by the Employer for Xxxx
and for Xxxx'x dependents, if any, on the terms and
provisions provided in the medical and health care
benefit plan, however, if for any reason Xxxx cannot
qualify for the current medical and health care
benefits, then Xxxx shall be entitled to obtain
medical and health care benefits coverage from
whatever source is available and the Employer shall
pay the premium charges for that coverage as an
executive employee benefit for Xxxx.
B. Life Insurance. The Corporation shall provide and pay
for life insurance on the life of Xxxx in the amount
of three (3) times his annual salary provided for in
this agreement. The beneficiary shall be Xxxx'x
estate, unless otherwise directed by Xxxx in writing
at any time prior to his death.
C. Vacation and Holiday Benefits. Xxxx shall be entitled
to have a paid vacation for thirty (30) days each
calendar year; plus all paid
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holidays observed by the Employer. Xxxx shall use
reasonable care in scheduling the vacation time so as
to not interfere unreasonably with Employer's
business, and Xxxx'x performance of his
responsibilities and duties.
2. Participation in Other Employment Benefits. Xxxx shall be
entitled to receive all other benefits and conditions of
employment which may become available to all other executives
of the Corporation, including by way of illustration, but not
limited to, any life insurance benefits, any disability income
continuation and any profit sharing and any retirement income
plans of any kind, whether qualified or non-qualified, whether
pre-funded or not, if any are established after the inception
date of this Agreement, and before it expires pursuant to
Section II. or sooner terminated pursuant to Section X. of
this Agreement.
3. Stock Issuance. The Corporation and Xxxx may agree, from time
to time and with the approval of the Board of Directors of the
Corporation, to issue to Xxxx Common Stock of the Corporation
in consideration of such services or contributions of property
as may be deemed appropriate, and at a value determined by the
Board of Directors of the Corporation in good faith and in
compliance with applicable law. Any such issuance of stock
may, at the request of Xxxx, and subject to the approval of
the Corporation which may not be unreasonably withheld, be
issued by the Corporation to such party or entity, including
without limitation, an irrevocable trust or similar entity, as
Xxxx may at the time of issuance direct.
VI. EXPENSE REIMBURSEMENT AND AUTOMOBILE EXPENSE ALLOWANCE.
1. Expense Reimbursement Generally. Xxxx will be reimbursed in
accordance with the Employees company policies for traveling,
entertainment and any other expenses reasonably incurred and
related to the performance of Xxxx'x duties and
responsibilities on behalf of Employer.
2. Automobile Allowance Plus Expenses. In addition, Xxxx shall
receive $500.00 per month for automobile expense allowance for
use of his automobile in business, plus additional
reimbursement for insurance, servicing, and operation of his
automobile in business. This allowance shall be reviewed each
contract anniversary date for adequacy and shall be increased
for the following year by the amount Xxxx'x expenses exceed
the allowance, subject to approval by the Corporation's Board
of Directors.
VII. DISABILITY COMPENSATION.
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1. If Xxxx 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 of President
and CEO, pursuant to this Agreement, then Xxxx 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
Xxxx'x salary is paid provided however, that this benefit
shall be limited to not more than a total of twelve months
during the term of the Agreement.
2. Xxxx'x entitlement to disability income pursuant to this
Section VII. shall begin and end as determined by a
certificate issued by a qualified M.D. or D.O. licensed by the
State of Washington to practice in this state. The certificate
shall state in substance that Xxxxx X. Xxxx, XX was determined
to be disabled and unable to perform the ordinary and usual
duties of President and CEO of Pathways beginning with [date]
and Xxxx'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 Xxxx'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.
VIII. ISSUANCE OF STOCK OF THE PATHWAYS GROUP, INC. TO XXXX IN CONNECTION
WITH GUARANTEES OF CORPORATE DEBTS.
Xxxx and Xxxx X. Xxxx, his wife and or the marital community have
and/or will have granted personal guarantees of payment to various
lenders of funds to or credit to the Corporation and/or various related
corporations listed in Exhibit "B" attached hereto and in this
Employment Agreement. In lieu of any addition to other compensation,
the Corporation agrees to may issue to Xxxx one-half (1/2) share for
each dollar of principal debt guaranteed by Xxxx, and/or by Xxxx and
Xxxx X. Xxxx, and/or their marital community for the Corporation and/or
any corporation listed on Exhibit "B" attached hereto; plus any
corporations which hereafter become affiliated with Pathways either by
acquisition or partial common ownership.
IX. PAYMENT OF CORPORATE DEBTS PERSONALLY GUARANTEED BY XXXX,
OR RELEASE OF XXXX FROM GUARANTEES BY CORPORATE CREDITORS.
Xxxx and Xxxx X. Xxxx, his wife, and/or their marital community, has
granted personal guarantees of payment to various lenders of funds or
credit to the Corporation and various related corporations listed in
Exhibit "B", entitled XXXX'X PERSONAL GUARANTEES OF CORPORATE DEBT,
which Exhibit "B" is attached hereto, and hereby incorporated by
reference into this Employment Agreement. Xxxx may be required to sign
further or renew personal guarantees of payment of the debts owed to
various lenders of funds or credit to the
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Corporation and/or its various related corporations in the future.
Those existing guarantees were required mainly because Xxxx was the
President and Chief Executive Officer and a significant shareholder of
the Corporation or the various related corporations. Any new guarantees
or extensions of existing guarantees will be given mainly for the same
reason, namely that Xxxx is the President and CEO of the Corporation,
and a significant shareholder of the Corporation. It is the express
intent and agreement of the parties that the Corporation shall pay all
debts personally guaranteed by Xxxx, or shall, in the alternative,
obtain a specific written release of Xxxx'x personal guarantee by and
from each creditor whose debt Xxxx has personally guaranteed no later
than the date this Employment Agreement is terminated, or expires.
X. TERMINATION OF XXXX'X EMPLOYMENT.
1. Termination By The Corporation. Xxxx'x employment as President
and Chairman of the Board of Directors may be terminated by
the Board of Directors of the Corporation with cause. Cause is
defined as the Committing of acts of gross negligence and
willful malfeasance in the performance of the aforementioned
duties as officer.
2. Terms and Provisions of Termination of Xxxx'x Employment.
Regardless of the reasons or purpose of the termination of
Xxxx'x Employment, the Corporation shall not and may not
terminate Xxxx'x employment as President, Chief Executive
Officer and Chairman of the Board of Directors unless and
until the Corporation has fully arranged for and commenced
performance of the following:
A. Payment by the Corporation of all sums then due and
owing, if any, as compensation, pursuant to Section
IV., Compensation, and/or Section VII., Disability
Compensation of this Employment
Agreement.
B. Payment by the Corporation of all sums then due and
owing, if any, pursuant to Section VI., Reimbursement
of the Employment Agreement.
C. Complete unconditional release by the creditors of
the corporations listed below, of Xxxx and/or his
wife, Xxxx X. Xxxx, and/or their marital community,
from any personal guaranties and the complete release
of any and all of Xxxx'x property, whether real,
personal, tangible or intangible, from any form deed
of trust, security agreement, pledge or other
encumbrance of any kind given by Xxxx and/or his
wife, Xxxx X. Xxxx, and/or their marital community,
given to secure payment of or performance of any
obligations of The Pathways Group, Inc., or any of
its related companies, including
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but not limited to Pathways International Ltd.,
Sprinticket, Inc. and PT Link, Corporation.
D. Payment by the Corporation for buyout of Remainder of
the Employment Agreement at the rate of fifty percent
(50%) of the regular salary in effect under Section
IV., above, of this Agreement.
3. Effective Date of Xxxx'x Employment Termination. The effective
date of Xxxx'x employment termination pursuant to this
Agreement shall be the latest of the following dates:
A. The date of Xxxx'x employment termination provided
for in the written notice of his employment
termination;
B. The Ninety-first (91st) day after receipt by Xxxx of
the written notice of his employment termination;
C. The date of fulfillment of all the terms and
provisions of Part X.2, above, entitled Terms and
Provisions of Termination of Xxxx'x Employment by the
Corporation.
XI. PROPERTY RIGHTS.
1. Intellectual Property Rights. All rights, title and interest
of every kind and nature whatsoever, in and to any
intellectual property, including any inventions, patents,
trademarks, copyrights, films, scripts, ideas, creations and
properties invented, created, written, developed, furnished,
produced or disclosed by Xxxx in the course rendering his
services to the corporation under this Agreement shall, as
between the parties hereto, be and remain the sole and
exclusive property of the Corporation for any and all purposes
and uses whatsoever, and Xxxx shall have no right, title or
interest of any kind or nature therein or thereto, or in and
to any results and proceeds therefrom.
2. Return of All of the Corporation's Property. Upon termination
of this Agreement, regardless of how termination may be
effected or whenever requested by the Corporation, Xxxx shall
immediately turn over to the Corporation all of the
Corporation's property, including all items used by Xxxx in
rendering services hereunder or otherwise, that may be in
Xxxx'x possession or under his control.
XII. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION.
1. During Employment. Xxxx agrees that during the entire term of
his employment as an executive officer of this corporation, he
will not disclose
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to any other person, partnership, company or corporation any
confidential information about this Corporation or its related
corporations, or the business activities or interests of this
Corporation or its related corporations, including, but not
limited to, the following, which is agreed as between the
parties to be confidential information: customer data,
customer lists, sales figures, sales projections, estimates of
any kind, sales proposals, price lists, accounting procedures,
any and all accounting records, any technology and
applications of technology developed by the Corporation before
or during, his employment, EXCEPT such disclosure as is for
the benefit of or the furthering the intent of the
Corporation, or is expressly disclosed as part of the
performance of his duties and responsibilities as President,
Chief Executive Officer or Chairman of the Board of Directors.
2. Surrender of All Confidential Information On Termination of
Employment. Xxxx agrees at the time his employment with the
Corporation terminates, to turn over to the Corporation any
and all confidential information which may be in possession,
including any and all copies thereof.
3. Following Termination of Employment. Xxxx agrees that
following the termination of his employment with the
Corporation he will not disclose any confidential information,
as described in Section XII.1, above, which he obtained about
the Corporation or its related corporations to any other
person, partnership, company or corporation at any time or for
any purpose.
4. Injunctive Protection of Confidential Information. The parties
recognize and agree that if Xxxx were to make any unauthorized
disclosure of any confidential information of the kind
described in Section XII.1 above, whether during employment or
following termination of employment, whether directly or
indirectly, and whether voluntarily or under compulsion by
subpoena or other legal process, that the disclosure would
cause irreparable harm to the Corporation and or its related
corporations. Therefore, Xxxx and the Corporation agree that
if the Corporation believes in good faith that Xxxx may be
making an unauthorized disclosure or about to make an
unauthorized disclosure of confidential information as
described in Section XII.1.1 above, whether during his
employment or after termination of his employment, and whether
voluntarily or involuntarily, then the Corporation shall be
entitled to obtain a temporary restraining order without
delay, and proceed to obtain a preliminary injunction and
permanent injunction to prevent such unauthorized disclosure.
XIII. NON-COMPETITION AFTER TERMINATION OF EMPLOYMENT.
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1. Non-Competition Period--Duration and Geographic Scope. Xxxx
and the Corporation recognize and acknowledge that in his
employment as President, Chief Executive Officer and Chairman
of the Board of Directors, he will become familiar with all of
the Corporation's technology, intellectual property,
intellectual property under development, products and all of
the geographic areas throughout the United States and Canada
in which the corporation already has made marketing efforts
and sales of products and services, and he will become
knowledgeable about present and future marketing proposals and
plans for those products and services in those geographic
areas. Xxxx agrees, as part of the consideration for this
Employment Agreement that Xxxx will not engage directly or
indirectly in the business of manufacture or sale of any
products or services which compete with the products or
services provided by the Corporation or its related
corporations for a period of two (2) years within the
geographic limits of any state of the United States, or any
province of Canada. The parties agree that the phrase "engage
directly or indirectly in the business of manufacture or sale
of any products or services which compete with the products or
services of the Corporation or its related Corporations" shall
include any situation or circumstance in which Xxxx shall be
owner, partner, officer, director or shareholder of a
corporation, or agent or employee or consultant of any
business entity engaged or about to become engaged in
competition with the Corporation.
2. Injunctive Relief From Competition By Xxxx The parties agree
that if Xxxx were to violate the provisions of Section
XIII.1., above, the use by Xxxx of the information he learned
while employed by the Corporation could enable him to enable
him to engage in basically unfair competition with the
Corporation and its related corporations, and that such
competition in violation of Section XIII. 1., above, probably
would cause irreparable harm to the marketing and sales
success of the corporation and its related corporations.
Therefore, if Xxxx violates Section XIII.1., above, the
Corporation shall be entitled to obtain a temporary
restraining order without delay, and proceed to obtain a
preliminary injunction and permanent injunction against such
violations by Xxxx and any person, partnership, company or
corporation through which or for which he acts, directly or
indirectly to violate Section XIII.1., above.
XIV. NOTICES.
1. How Sent or Delivered. Any notices sent by any party which is
intended to give written notice required by this Employment
Agreement shall be sent or delivered by sender to the intended
recipient by one or more of the Following methods:
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A. By certified mail, return receipt requested, postage
prepaid, to the last known address of the intended
recipient; or
B. By delivery personally to the intended recipient.
2. Effective Date of Notice. If a written notice is sent or
delivered by either of the above methods, then the effective
date of the notice for purposes of considering it to have been
received by the intended recipient shall be the earliest of
the following:
A. If by certified mail, return receipt requested, which
is delivered, then or on the date the recipient, or
anyone signing for the recipient, signed the return
receipt;
B. If by certified mail, return receipt requested, which
is not delivered, then on the date five business days
after the date the notice was sent.
C. If by personal delivery to the intended recipient,
then on the date the written notice was delivered
personally to the recipient.
3. Proof of Delivery of Notice.
A. Certified Mail, Return Receipt Requested. If the
written notice was sent by certified mail return
receipt requested, proof of sending may be shown by
the U.S. Post Office receipt for the certified mail,
return receipt requested and proof of delivery may be
shown by the signed returned receipt and proof of
attempted delivery sufficient for effective date of
notice without delivery may be shown by the returned
envelope with U.S. Post Office notations showing
attempted delivery dates and notices to the intended
recipient.
B. Personal Delivery. Personal delivery of a written
notice may be shown by a signature of the intended
recipient on a copy of the notice, together with the
legend on the copy of the notice which will read,
"Received," with the date received noted thereafter.
Personal delivery may also be shown by a sworn
statement of the person who delivered the notice,
stated that the notice was delivered to the recipient
or representative of recipient on the date of
delivery, and attaching a copy of the notice, with
reference in the sworn statement to the attached copy
of the notice.
XV. REMEDIES AVAILABLE IN EVENT OF BREACH OF AGREEMENT; VENUE.
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In the event that any party breaches this Employment Agreement, the
other party shall have the right to pursue any remedies available to
the party claiming breach, including, but not limited to damages,
injunctive relief and declaratory judgment, which may be available
under the laws of the State of Washington. The parties agree that any
claims shall be brought in the appropriate court(s) located in King
County, Washington, which may have jurisdiction pursuant to Washington
Law.
XVI. APPLICABLE LAW.
This Employment Agreement shall be construed and interpreted and
enforceable pursuant to the laws of the State of Washington.
XVII. ENTIRE AGREEMENT.
This Employment Agreement states the entire agreement between the
parties with respect to the employment of Xxxx by the Corporation. This
Agreement cannot be modified by any oral agreement or course of conduct
by either or both parties and any attempt at such modification shall be
null and void. This Agreement may be modified only by a written
document signed by each party.
Dated this_____ day of November, 1996.
EXECUTIVE OFFICER:
/s/ Xxxxx X. Xxxx, XX.
--------------------------------
Xxxxx X. Xxxx, XX.
THE CORPORATION:
THE PATHWAYS GROUP, INC.
By: /s/ Xxxxx X. Xxxx, XX.
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XXXXX X. XXXX, XX., President and
Chief Executive Officer
By: /s/ Xxxxx X. Xxxx
---------------------------
XXXXX X. XXXX, Director acting per
Board of Directors authority
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