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BUSDOCS:705358.3
Employment Agreement
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the
1st day of October 1998 and effective the 31st day of December 1998, by and
between CHANCELLOR CORPORATION, a Massachusetts corporation (the "Company"), and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Employee").
R E C I T A L S
The Company desires to obtain the services of the Employee in the
employment of the Company on the terms and subject to the conditions set forth
in this Agreement, and the Employee desires to make his services available to
the Company on the terms and subject to the conditions set forth in this
Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, agreements and mutual
covenants set forth herein, the parties hereto, intending to be bound legally,
hereby agree as follows:
1. DEFINITIONS. The following terms when used herein, unless the context
otherwise requires, shall be defined as follows:
1.1. "Cause" shall have the meaning set forth in Section 5.1 hereof.
1.2. "Confidential Information" shall have the meaning set forth in Section
7.1 hereof.
1.3. "Term" shall have the meaning set forth in Section 3 hereof.
2. EMPLOYMENT.
2.1. General. The Company hereby agrees to employ the Employee as President
and Chief Operating Officer of the Company during the Term on the terms and
subject to the conditions contained in this Agreement, and the Employee hereby
agrees to accept such employment on the terms and subject to the conditions
contained in this Agreement.
2.2. Duties of Employee. During the Term, the Employee shall diligently
perform all duties and responsibilities as may be assigned to him by the
Chairman of the Board and Chief Executive Officer, and shall exercise such power
and authority as may from time to time be delegated to him thereby. The
Employee shall devote his full business time and attention to the business and
affairs of the Companies as necessary to perform his duties and responsibilities
hereunder, render such services to the best of his ability, and use his best
efforts to promote at all times the interests of the Companies.
3. TERM.
3.1. Subject to the provisions of Section 5 of this Agreement, the Company
shall employ the Employee for a term of three (3) years (the "Term") commencing
as of the date first written above (the "Effective Date").
3.2. The Term of this Agreement may automatically renew for a period of two
(2) years (the "Renewal Term") upon the Employee satisfactorily fulfilling the
duties as described in the above Section 2.2 hereof.
3.3. The Term of this Agreement shall accelerate and any and all
compensation due to the Employee under Section 4.1 and Section 4.5 hereof,
including the Renewal Term as described in the above Section 3.2 hereof and all
stock options granted to the Employee pursuant to the Incentive Stock Option
Agreement, dated June 30, 1998, by and between the Company and the Employee
("ISO Agreement"), shall become immediately due and payable to the Employee if
an event whereby any new person (within the meaning of Section 13(b) of the 1934
Securities Exchange Act) becomes the beneficial owner (directly or indirectly)
of securities of the Company representing Fifty (50%) percent or more of the
combined voting of the Company's then outstanding securities entitled to vote
generally in the election of directors.
3.4. The Employee's continued employment with the Company after the Term and
Renewal Term will have no specific duration and that either the Employee or the
Company may terminate the Employee at any time, with or without cause.
4. COMPENSATION.
4.1. Salary. The Employee shall receive an annual salary of Three Hundred
Fifty Thousand Dollars ($350,000.00) during the Term, and such salary shall be
payable in equal installments consistent with the Company's normal payroll
schedule commencing on either the first or fifteenth day of the month, as the
case may be, following the Effective Date. The Employee's annual salary shall
be subject to such increases as shall be approved by the Company's Board of
Directors in its sole discretion.
4.2. Benefits. During the Term, the Employee shall be entitled to
participate in all plans adopted for the general benefit of the Company's
employees, such as stock option plans, 401(k) plans, pension plans, profit
sharing plans, medical plans, group or other insurance plans and benefits, to
the extent that the Employee is and remains eligible to participate therein and
subject to the eligibility provisions of such plans in effect from time to time.
For each calendar year during the Term, the Employee shall be entitled to four
(4) weeks of paid vacation at such times as shall be mutually acceptable to the
Employee and the Company, and to sick and holiday time as prescribed by the
established Chancellor policies in effect from time to time.
4.3. Withholding. Notwithstanding any provision in this Agreement to the
contrary, all payments required to be made by the Company hereunder to the
Employee in connection with the Employee's employment hereunder shall be subject
to withholding of such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, in whole or in part, the Company may, in its
sole discretion, accept other provisions for the payment of taxes, provided that
the Company is satisfied that all requirements of law affecting its
responsibilities to withhold have been satisfied.
4.4. Reimbursement of Expenses. The Company agrees to reimburse the
Employee for all reasonable business expenses (including, without limitation,
reasonable travel and entertainment expenses) incurred by the Employee in the
discharge of his duties hereunder, subject to the Company's reimbursement
policies in effect from time to time. The Employee agrees to maintain reasonable
records of his business expenses in such form and detail as the Company may
request and to make such records available to the Company as and when requested.
4.5. Bonus. The Company agrees to pay the Employee a minimum annual bonus
("Bonus") in the amount of Three Hundred and Fifty Thousand Dollars
($350,000.00) based on performance of the Employee pursuant to his duties as
described in Section 2.2 hereof. The Employee's Bonus shall be based on the
profits of the Company, its stock price and/or at the discretion of the
Company's Chairman and Chief Executive Officer.
5. TERMINATION.
5.1. Termination by the Company for Cause. Notwithstanding any provision in
this Agreement to the contrary, this Agreement may be terminated by the Company
for "Cause" at any time during the Term hereof, and such termination shall be
effective immediately upon written notice to the Employee. For purposes of this
Agreement, "Cause" for the termination of the Employee's employment hereunder
shall be deemed to exist only if, in the reasonable judgment of the Company's
Board of Directors: (a) the Employee commits fraud, theft or embezzlement
against any of the Companies; (b) the Employee commits a felony or a crime
involving moral turpitude; (c) the Employee discloses trade secrets or other
proprietary information of Chancellor or any subsidiary or affiliate thereof to
any unauthorized person or entity; (d) the Employee breaches any non-competition
or non-solicitation agreement with Chancellor or any subsidiary or affiliate
thereof; (e) the Employee breaches any of the terms of this Agreement (other
than those referenced in clauses (c) and (d) of this Section 5.1) and fails to
cure such breach within twenty (20) days after the receipt of written notice of
such breach from the Company; or (f) the Employee engages in gross negligence or
willful misconduct that causes harm (or could reasonably be expected to cause
harm) to the business and operations of Chancellor or a subsidiary or affiliate
thereof. Upon any termination pursuant to this Section 5.1, the Employee shall
be entitled to be paid solely the Employee's salary then in effect through the
effective date of termination, and the Company shall have no further liability
or other obligation of any kind whatsoever to the Employee hereunder.
5.2. Termination by the Company Without Cause. The Company may, in its sole
and absolute discretion, terminate the employment of the Employee hereunder at
any time without "Cause" (as such term is defined in Section 5.1 above), or
otherwise without any cause, reason or justification, provided that the Company
provides to the Employee at least ninety (90) days' prior written notice (the
"Termination Notice") of such termination. In the event of any such termination
by the Company, (a) the Employee's employment with the Company shall cease and
terminate on the date specified in the Termination Notice (or, if no date is so
specified, on the date which is ninety (90) days following the date of such
notice), and (b) the Employee shall be entitled to receive and be paid (i) in
the case of a termination under this Section 5.2 at any time prior to or on the
third anniversary of the Effective Date, the Employee's entire salary, at the
rate in effect as of the effective date of such termination and in equal monthly
installments, through such third anniversary, and thereafter fifty percent (50%)
of the Employee's salary, at the rate in effect as of the effective date of such
termination and in equal monthly installments, during the then remaining Term,
and (ii) in the case of termination under this Section 5.2 at any time after the
third anniversary of the Effective Date, fifty percent (50%) of the Employee's
salary, at the rate in effect as of the effective date of such termination and
in equal monthly installments, during the then remaining Term, payable in either
of the cases set forth in clauses (i) and (ii) over the applicable period at the
Company's regular and customary intervals for the payment of salaries as then in
effect and in equal monthly installments, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee hereunder.
5.3. Death of the Employee. In the event that the Employee shall die during
the Term, the Employee's employment with the Company shall immediately cease and
terminate and the Employee's estate, heirs (at law), devisees, legatees or other
proper and legally entitled descendants, or the personal representative,
executor, administrator or other proper legal representative on behalf of such
descendants, shall be entitled to receive and be paid solely the Employee's
salary through the date of death, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee hereunder.
Additionally, they shall also be entitled to elect to exercise all vested stock
options pursuant to the ISO Agreement. In the event that this Section 5.3 shall
conflict with any provision of the ISO Agreement then this Agreement and the
provisions as described in this Section 5.3 shall prevail.
5.4. Disability of the Employee. In the event that the Employee becomes
incapacitated during the Term by reason of sickness, accident or other mental or
physical disability such that he is substantially unable to perform his duties
and responsibilities hereunder for a period of ninety (90) consecutive days, or
for shorter or intermittent periods aggregating one hundred twenty (120) days
during any 12-month period (a "Disability"), the Company thereafter shall have
the right, in its sole and absolute discretion, to terminate the Employee's
employment under this Agreement by sending written notice of such termination to
the Employee or his legal guardian or other proper legal representative and
thereupon his employment hereunder shall immediately cease and terminate;
provided, however, that notwithstanding the foregoing, the Employee's employment
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shall not be terminated as aforesaid if the Company's Board of Directors
determines, in its reasonable judgment, that after the termination of such
Disability, the Employee is able to resume his duties and responsibilities to
the Company in accordance with the terms hereof in the manner theretofore
provided. In the event of any such termination, the Employee shall be entitled
to receive and be paid the Employee's salary then in effect through the
effective date of termination, as well as the amount of Fifty (50%) percent of
the remaining amount due under this Agreement, including the Renewal Term as
described in the above Section 3.2 hereof in monthly installments.
5.5. Termination by the Employee. Provided that the Company does not have
"Cause" to terminate the Employee pursuant to Section 5.1 above, the Employee
may terminate the Employee's employment with the Company hereunder at any time
and for any reason. Employee must provide to the Company written notice of such
termination not less than ninety (90) days prior to the date such termination is
to be effective. Upon any termination pursuant to this Section 5.5, the Employee
shall be entitled to be paid solely the Employee's salary then in effect through
the effective date of termination, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee hereunder.
6. AGREEMENT NOT TO COMPETE. The Employee agrees that in the event that the
Employee's employment with the Company is terminated either (a) at the
expiration of the full five (5) year Term, or (b) at any time during the fifth
year of the Term (the actual effective date of such employment termination being
referred to herein as the "Termination Date"), the Employee shall not, for an
additional one (1) year period commencing as of the Termination Date, without
the prior written consent of the Company, (a) engage anywhere in the United
States, directly or indirectly, alone or as a shareholder (other than as a
holder of less than 3% of the capital stock of any publicly traded corporation),
member, partner, manager, officer, director, employee or consultant, in any
business that is engaged or becomes engaged in the business of Chancellor as
existing on the Effective Date, (b) divert or attempt to divert to any
competitor of Chancellor or any Affiliate of any such competitor, any customer
or client, or prospective customer or client, of Chancellor, or (c) solicit or
encourage, or attempt to solicit or encourage, any employee of Chancellor to
leave its employ for employment by or with either Employee or Employee's
Affiliates, or any competitor of Chancellor or any of any such competitor's
Affiliates. If at any time the provisions of this Section 6 shall be determined
to be invalid or unenforceable, by reason of being vague or unreasonable as to
area, duration or scope of activity, this Section 6 shall be considered
divisible and shall become and be immediately amended to only such area,
duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Employee agrees that this Section 6 as so amended shall be valid and binding
as though any invalid or unenforceable provisions had not been included therein.
7. OWNERSHIP AND NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION.
7.1. As used in this Agreement, "Confidential Information" shall mean all
customer sales and marketing information, customer account records, proprietary
receipts and/or processing techniques, information regarding vendors and
products, training and operations memoranda and similar information, personnel
records, pricing information, financial information and trade secrets concerning
or relating to the business, accounts, customers, employees and affairs of
Chancellor, or any subsidiary or affiliate thereof, obtained by or furnished,
disclosed or disseminated to the Employee, or obtained, assembled or compiled by
the Employee or under his supervision during the course of his employment by the
Company, and all physical embodiments of the foregoing, all of which are hereby
agreed to be the property of and confidential to Chancellor, but Confidential
Information shall not include any of the foregoing to the extent the same is or
becomes publicly known through no fault or breach of this Agreement by the
Employee.
7.2. The Employee acknowledges and agrees that all Confidential Information,
and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of Chancellor. Upon request by any of the
Company, and in any event upon termination of the Employee's employment with the
Company for any reason whatsoever, as a prior condition to the Employee's
receipt of any final salary or benefit payments hereunder, the Employee shall
deliver to the Company all property belonging to Chancellor or any of its
subsidiaries or affiliates, including, without limitation, all Confidential
Information (and all embodiments thereof), then in his custody, control or
possession, but any forfeiture of such salary or benefit shall not be considered
a satisfaction or a release of or liquidated damages for any claim(s) for
damages against the Employee which may accrue to the Company, as a result of any
breach of this Section 7 by the Employee.
7.3. The Employee agrees that he will not, either during the Term or at any
time thereafter, without the prior written consent of the Company, use, disclose
or make available any Confidential Information to any person or entity, nor
shall he use, disclose, make available or cause to be used, disclosed or made
available, or permit or allow, either on his own behalf or on behalf of others,
any use or disclosure of such Confidential Information other than in the proper
performance of the Employee's duties hereunder. Notwithstanding anything to the
contrary set forth herein, after the expiration of the non-competition period
set forth herein, the Employee shall be permitted to utilize the customer lists
of the Company for any purpose whatsoever.
8. INVENTIONS. The Employee shall disclose promptly to the Company any and
all conceptions and ideas for inventions, improvements, business methods and
systems, and valuable discoveries, whether patentable or not, that are conceived
or made by the Employee, solely or jointly with another, during the Term and
that are directly related to the business or activities of the Company and that
the Employee conceives as a result of his employment by the Company, regardless
of whether or not such ideas, inventions, or improvements qualify as "works for
hire." The Employee hereby assigns and agrees to assign all his interests
therein to the Company or their nominees. Whenever requested to do so by
Chancellor, the Employee shall execute any and all applications, assignments or
other instruments that such Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect Chancellor's interest therein.
9. AGREEMENT NOT TO SOLICIT OR HIRE EMPLOYEES. The Employee agrees that,
during the Term, or Renewal Term as the case may be, and for two (2) years
thereafter, he will not, either directly or indirectly, on his own behalf or in
the service or on behalf of others, solicit, divert or hire, attempt to
solicit, divert or hire or induce or attempt to induce to discontinue employment
with the Company or any subsidiary or affiliate thereof, any person employed by
the Company or any subsidiary or affiliate thereof, whether or not such employee
is a full time employee or a temporary employee of the Company or any subsidiary
or affiliate thereof and whether or not such employment is for a determined
period or is at will.
10. REASONABLENESS OF RESTRICTIONS. In the event that any provision
relating to time period or geographic area of any restriction set forth in
Sections 6, 7, 8 or 9 shall be declared by a court of competent
jurisdiction to exceed the maximum time period or area of restriction that
the court deems reasonable and enforceable, the time period or area of
restriction which the court finds to be reasonable and enforceable shall be
deemed to become, and thereafter shall be, the maximum time period or geographic
area of such restriction.
11. ENFORCEABILITY. Any provision of Sections 6, 7, 8 or 9 which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, but shall be enforced to the
maximum extent permitted by law, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
12. INJUNCTION. It is recognized and hereby acknowledged by the parties hereto
that a breach or threat of breach by the Employee of any of the covenants
contained in Sections 6, 7, 8 or 9of this Agreement will cause irreparable harm
and damage to the Company, the monetary amount of which may be virtually
impossible to ascertain. As a result, the Employee recognizes and hereby
acknowledges that the Company shall be entitled to an injunction fromany court
of competent jurisdiction enjoining and restraining any violation or threatened
violation of any or all of the covenants contained in Sections 6, 7, 8 or 9 of
this Agreement by the Employee or any of his affiliates, associates, partners or
agents, either directly or indirectly, and that such right to injunction shall
be cumulative and in addition to whatever other remedies the Company may
possess.
13. ASSIGNMENT; BINDING EFFECT. The Employee shall not assign any of his rights
or obligations pursuant to this Agreement to any other person without the prior
written consent of the Company, which consent may be unreasonably withheld or
delayed. Subject to the foregoing, this Agreement shall be for the benefit of
and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns.
14. EMPLOYER'S AUTHORITY. The relationship between the parties hereto is
that of employer and employee. The Employee agrees to observe and comply with
the rules and regulations of the Company, as adopted by the Company from time to
time with respect to the performance of the duties of the Employee. The Employee
acknowledges that he has no authority to enter into any contracts or other
obligations that are binding upon the Company unless such contracts or
obligations are authorized by the Board of Directors of Chancellor. The Company
shall have the power to direct, control and supervise the duties to be performed
by the Employee, the manner of performing said duties, and the time of
performing said duties.
15. GOVERNING LAW. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
excluding the choice of law rules thereof.
16. ARBITRATION OF DISPUTES. The Employee agrees that any legal disputes that
may occur between him and the Company, and that arise out of, or are related in
any way to his employment with the Company and his performance of services under
this Agreement or the termination of this Agreement, and which disputes cannot
be resolved informally, shall be resolved exclusively through final and binding
private arbitration before an arbitrator mutually selected by the Employee and
the Company, with each party to bear its own costs and attorney's fees. If the
Employee and the Company are not able to agree upon an arbitrator within
twenty-one (21) days after either the Employee or the Company has made a demand
for arbitration, the matter will be submitted for arbitration to the Boston
office of the American Arbitration Association pursuant to the rules governing
employee dispute resolution in effect as of October 1, 1998. Notwithstanding
the foregoing, in no event shall a demand for arbitration be made after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statues of
limitation.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified or amended in any way, unless by a written
instrument signed by both the Company and the Employee.
18. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given upon
receipt or actual delivery by hand or after sent by certified United States
mail, return receipt requested, postage prepaid, or by a reputable overnight
courier service, addressed as follows:
i) If to the Employee:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
c/o Chancellor Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
ii) If to the Company:
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Clerk
Chancellor Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other addresses as either party hereto may from time to time
give notice of to the other party hereto in the aforesaid manner.
19. DAMAGES. Nothing contained herein shall be construed to prevent
Chancellor or the Employee from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the non-prevailing party shall pay all reasonable court costs
and attorneys' fees of the other party.
20. SECTION HEADINGS. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than the parties hereto and their respective heirs, personal
representative, legal representative, successors and assigns any rights or
remedies under or by reason of this Agreement.
22. WAIVER. No delay or failure at any time on the part of Chancellor in
exercising any right, power or privilege under this Agreement, or in enforcing
any provision of this Agreement, shall impair any such right, power or
privilege, or be construed as a waiver of any default or as any acquiescence
therein, or shall affect the right of Chancellor thereafter to enforce each and
every provision of this Agreement in accordance with its terms. The waiver by
either party hereto of a breach or violation of any term or provision of this
Agreement shall neither operate nor be construed as a waiver of any subsequent
breach or violation.
IN WITNESS WHEREOF, the undersigned have executed this Agreement under seal
as of the date first above written.
CHANCELLOR CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board, Chancellor Corporation
EMPLOYEE
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇