EMPLOYMENT AGREEMENT
AMENDMENT I
THIS EMPLOYMENT AGREEMENT, made as of this 1st day of August, 1999, by and
between:
PACEL CORP. a Virginia corporation having its executive office at 0000
Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as
"PACEL")
AND
XXXXX X. XXXXXXX, an adult individual residing at 0000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000 (hereinafter "XXXXXXX")
WITNESSETH THAT:
WHEREAS, XXXXXXX is a founder of PACEL and has been employed by PACEL
since its organization, and the parties desire to replace the original written
agreement with an amended employment agreement so as to assure potential
investors of the continuity of his employment and PACEL" continuing access to
his experience, background, know-how and contacts which will continue to be
useful and helpful to PACEL in its business;
WHEREAS, the parties have agreed upon the terms of such employment, based
upon the preceding agreement, and desire a modified, formal contract to evidence
their agreements;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
forbearances contained herein, and intending to be legally bound, the parties
have agreed as follows:
1. EMPLOYMENT. For the term provided in Paragraph 2, PACEL hereby employs
XXXXXXX, and XXXXXXX hereby accepts that employment, upon the terms
and conditions hereinafter set forth.
2. TERM.
(a) This Agreement shall become effective as of August 1, 1999.
(b) This Agreement, subject to the provisions of Paragraphs 16 and 17
below, shall continue and exist for an initial period from such
effective date for a period of twenty-four (24) months, i.e.,
until July 31, 2001 (initial term).
(c) If, four (4) months prior to the expiration date of the initial
term, neither party is then in default under this Agreement,
PACEL may request that EMPLOYEE agree to extend the term of this
Agreement for an additional one (1) year period. Such request
shall be transmitted by PACEL to XXXXXXX, in writing, on or
before three (3) months prior to the expiration date of the
initial term, of its intention to so extend the Agreement.
XXXXXXX shall accept or reject such requested extension within
thirty (30) days after receipt of PACEL's request; if XXXXXXX
shall not respond within such thirty days, the request shall be
deemed denied. If PACEL shall not give notice of its desire to
renew this Agreement on or before the three months prior to the
expiration date of the initial term, this Agreement shall
terminate as provided.
(d) This Agreement shall be subject to a further one (1) year
extension under the procedure provided in subparagraph (C),
provided that at May 30 of the then existing extension year
neither party is then in default under this Agreement.
(e) Notwithstanding the foregoing, the term of this Agreement is
otherwise subject to the various termination provisions contained
hereafter.
3. COMPENSATION-BASE. (a) For all services rendered under this Agreement,
XXXXXXX shall be paid, as base compensation, such annual salary as
shall be determined by PACEL's Board of Directors from time to time,
but in no event shall such compensation be at a rate of less than One
Hundred Twenty-five Thousand Dollars ($125,000) per year. Such base
compensation shall be subject to a Cost-of-Living Adjustment (COLA)
annually based upon the percentage increase in the cost-of-Living
Index, All commodities, for the Washington, D.C. area (if available,
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otherwise the New York City area). Such base compensation is to be
payable in equal installments at intervals no longer than monthly.
Such base compensation shall be in addition to such incentive
compensation, fringe benefits and bonuses as provided elsewhere
herein.
(b) At the end of each calendar year, PACEL's Board of Directors
shall review the performance of XXXXXXX for such year and, based
upon such evaluation, establish any increase in the base
compensation payable to XXXXXXX for the succeeding calendar year,
as adjusted by subparagraph (a) above. PACEL shall not be
obligated to provide any increase, in excess of the increase in
the cost-of-living Index, All Commodities, for the Washington,
D.C. area (if available, otherwise the New York City area) during
the prior calendar year.
(c) In recognition of previous compensations owed to XXXXXXX but not
taken, the company has agreed to offset that debt by providing a
one time stock option for two and a half million shares (2.5) of
PACEL CORP common stock at Four Cents ($.04) a share option
price.
4. COMPENSATION-INCENTIVE. (a) The base compensation for each year of
this Agreement, including any extensions to this Agreement, shall be
subject to an additional increase, based upon performance as
determined by the Board of Directors. This additional increase, if any
should occur, is not a bonus but a merit adjustment to the base
compensation.
(b) COMPENSATION - STOCK INCENTIVE: Pacel desires to recognize the
importance of attaining certain milestones for the company's
continued operation and success. Accordingly, the following
stock-option incentives have been allocated pending achievement
of these goals: (not in any particular order)
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o Registration of the Company with NASDAQ in accordance with
requirements specified as of June 30, 1999
...................................................... 10% of
outstanding shares.
o Full listing of the Company's stock on the NASDAQ Board for
trading (not OTC BB) ................... 10% of outstanding
shares.
o Achieving profitability for the Company during the term of
this contract ..................................... 10% of
outstanding shares.
o The salary shall be grossed up to cover tax liability.
5. COMPENSATION-FRINGE BENEFITS. XXXXXXX shall receive at least the
following additional benefits, which may be extended or increased, but
not reduced, by PACEL:
(a) Vacation - XXXXXXX shall be entitled to paid vacation of four (4)
weeks during the initial term and any extension of this
Agreement. Unused vacation time may be accumulated from year to
year if unused. XXXXXXX shall not be compensated for any unused
vacation time.
(b) Medical Insurance - XXXXXXX shall receive such medical, surgical,
dental and/or hospitalization insurance as PACEL shall provide,
consistent with that provided by PACEL under the preceding oral
Employment Agreement.
(c) Other - XXXXXXX shall receive such other fringe benefits as are
available to any other officers/employees/consultants. Nothing
contained in this Agreement shall be in lieu of any rights,
benefits and privileges to which XXXXXXX may be entitled under
any 401(k) , retirement, pension, profit-sharing, insurance,
ESOT/ESOP, hospitalization, medical, surgical, dental, legal or
other plans which may now be in effect or which may hereafter be
adopted, either by PACEL or any subsidiary or affiliate of PACEL.
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XXXXXXX shall have the same rights and privileges to participate
in such plans and benefits as any other employee during his
period of employment and XXXXXXX shall be entitled to participate
on a parity with executives of equal rank.
6. COMPENSATION-BONUS. After the end of each calendar year, Pacel's Board
of Directors shall determine the net profits before taxes of PACEL for
such prior year and shall determine any bonus for such year payable to
XXXXXXX. PACEL shall not be obligated to provide any bonus. Any bonus
awarded shall be paid at such time or times, in such amounts or
installments, as PACEL's Board of Directors may determine.
7. COMPENSATION-DEFERRED. (a) PACEL desires to recognize the
contributions of XXXXXXX from the date of incorporation to the date of
this Agreement, particularly the performance of services as little or
no compensation during the formative years. Accordingly, the following
deferred benefits have been granted in consideration of such prior
services and are not dependent upon completion of the terms of this
Agreement.
(b) Following termination of XXXXXXX' employment hereunder, whether
early or upon completion of the term hereof, and whether early
termination is for cause, without cause, or for reasons of
disability, PACEL shall provide XXXXXXX with the following
benefits:
i. PACEL, at PACEL's cost and expense, shall continue XXXXXXX
medical, surgical, dental and hospitalization insurance
coverage, as in effect on the date of termination, for a
period of ten (10) years following the date of termination.
Thereafter, XXXXXXX shall have the option to continue such
insurance coverage at his expense. And
ii.If, during the term of XXXXXXX' employment PACEL shall have
obtained insurance on XXXXXXX' life for a specific business
purpose (e.g., collateralization of institutional financing or
key man replacement insurance) and such insurance shall no
longer be needed for that purpose (e.g., upon repayment of the
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loan collateralized or upon termination of XXXXXXX' position
as a key employee), then PACEL, at its cost and expense, shall
continue such insurance in force for the benefit of one or
more beneficiaries designated from time to time by XXXXXXX,
for a period of up to ten (10) years following the date of
termination. It is the intent of the parties that this
provision shall apply to any insurance obtained during
XXXXXXX, employment. In such event the period of continued
coverage would be from the date the insurance need is obviated
to a date ten (10) years from the date of termination of
XXXXXXX' employment. Thereafter, XXXXXXX shall have the option
to continue such insurance coverage at his expense.
8. DUTIES. (a) XXXXXXX is engaged as the President and Chief Executive
Officer of PACEL. XXXXXXX shall perform all usual and customary
services as such an executive, including but not limited to those set
forth on Exhibit A, attached hereto and made a part hereof. XXXXXXX'
performance shall be subject to the supervision of PACEL's President
and Board of Directors, provided, however, that any definition,
interpretation, curtailment, or extension is consistent with the
status of, and/or educational experience required for, the
responsibilities for which XXXXXXX has been initially engaged
hereunder. It is the intent of this provision to provide PACEL with
flexibility in assigning responsibilities to XXXXXXX and/or promoting
XXXXXXX and this provision shall not be used to discipline, embarrass,
humiliate or harass XXXXXXX.
(b) In addition, XXXXXXX agrees to serve as a director of PACEL so
long as so elected by PACEL's shareholders.
9. EXTENT AND PLACE OF SERVICES. XXXXXXX agrees that this employment
constitutes his primary employment and understands that his primary
loyalty and responsibility is to PACEL. Accordingly, XXXXXXX shall
devote such adequate, reasonable, and proper time, attention, and
energies to the business of PACEL as shall be necessary or consistent
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with such understanding and XXXXXXX shall not, during the term of this
Agreement be engaged in any other business activity (whether or not
such business activity is pursued for gain, profit, or other pecuniary
advantage), which conflicts with XXXXXXX' employment responsibilities
hereunder, without prior, written authorization of PACEL's Board of
Directors. However, nothing contained herein shall be construed as
preventing XXXXXXX from investing his assets in such form or manner as
XXXXXXX may select, whether or not such investment will require any
services on XXXXXXX' part in the operation of the affairs of the
companies in which such investments are made.
10. WORKING FACILITIES. XXXXXXX shall be furnished, at PACEL's expense,
with all necessary working facilities, including but not limited to an
equipped office, clerical help, and telephone/facsimile/copying
services, suitable to his position and adequate for the performance of
his duties.
11. EXPENSES. XXXXXXX is not authorized to incur expenses on behalf of, or
chargeable to, PACEL, with respect to his business travel, including
transportation, lodging, food, entertainment, etc. except within such
guidelines as may be established from time to time by PACEL's
Management. PACEL shall reimburse XXXXXXX for authorized expense
within such guidelines upon presentation by XXXXXXX from time to time,
of an itemized account of such expenditures in such form as PACEL may
require , together with receipts or other proofs of the expenditures
as may be required.
12. NON-DISCLOSURE OF INFORMATION. (a) XXXXXXX recognizes and acknowledges
that, during the course of his employment, he will have access to
valuable "Proprietary Information" as defined in subparagraph (b)
below, including, but not limited to Inventions, Work Product and/or
Trade Secrets, contractual arrangements and compensation arrangements
with suppliers, manufacturers, sub-contractors and customers of PACEL;
compensation arrangements with sub-contractors, vendors, and outside
personnel; costing, pricing and bidding methods, procedures, and
amounts; management and operating procedures and software; management
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information systems, etc.; marketing plans and strategy; personnel
policies and contractual arrangements, including job assignments and
compensation; and that such information constitutes unique assets of
the business of PACEL and of which PACEL is the sole and exclusive
owner. XXXXXXX will treat such Proprietary Information on a
confidential basis and will not, during or after his employment,
personally use or disclose all, or any part of, such Proprietary
Information to any person, firm, corporation, association, agency, or
other entity except as properly required in the conduct of the
business of PACEL, or except as authorized in writing by PACEL,
publish, disclose or authorize anyone else to publish or disclose, any
Proprietary Information of PACEL with which XXXXXXX' service may in
any way acquaint XXXXXXX. XXXXXXX shall surrender possession of all
Proprietary Information, including especially all Trade Secrets, to
PACEL upon any suspension or termination of XXXXXXX' employment with
PACEL. In the event of a breach, or threatened breach, by XXXXXXX, of
the provisions of this paragraph, PACEL shall be entitled to a
preliminary, temporary and permanent injunction restraining XXXXXXX
from disclosing in whole or in part, any such Proprietary Information
and/or from rendering any services to any person, firm, corporation,
association, agency, or other entity to whom such information, in
whole or in part, has been disclosed or is threatened to be disclosed.
Furthermore, nothing herein shall be construed as prohibiting PACEL
from pursuing any other equitable or legal remedies available to it
for such breach or threatened breach, including the recovery from
XXXXXXX.
(b) For purposes hereof, "Proprietary Information" shall not include
information which (i) is publicly available from a source other
than XXXXXXX or can be lawfully obtained from a third party or
parties in lawful possession thereof, or (ii) is publicly
released in writing by PACEL, or (iii) is required to be
disclosed pursuant to the authority of any court or public
agency.
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(c) Nothing contained herein shall prohibit XXXXXXX form continuing
to use information known to XXXXXXX prior to the execution of
this Agreement; however, XXXXXXX shall not publish or disclose
any such information which as a result of XXXXXXX' services
hereunder shall have become Proprietary Information of PACEL.
(d) The parties recognize that the Proprietary Information of PACEL
most probably derives from the services of XXXXXXX. Nothing
contained herein shall prohibit XXXXXXX from continuing to use
information developed by XXXXXXX during the term of this
Agreement, provided that such information is not used by XXXXXXX
for competitive purposes; however, XXXXXXX shall not publish or
disclose any such information which as a result of XXXXXXX'
services hereunder shall have become Proprietary Information of
PACEL.
13. RESTRICTIVE CONVENANT. (a) During the term of this Agreement and for a
period of twelve (12) months after the termination/of this Agreement
and any extension thereof, XXXXXXX will not, within the United States
or any other area of the world in which PACEL is then operating,
directly, compete with, own, manage, operate, control, be employed by,
consult for, participate in, perform services for, or be connected in
any manner with the ownership, management, operation or control of any
business engaged in development and sales of LAN interactive
electronic document and data acquisition and management software
programs. Nothing contained herein shall prohibit XXXXXXX from
engaging in the management, operation, control, employment by,
consultation for, participation in, performance of services for, or
connection with a software development and sales entity which is not
in competition with the specific programs of PACEL.
(b) XXXXXXX agrees that the "time", "geographic area", and "Scope of
Business" provisions of this restrictive covenant are reasonable
and proper and have been negotiated in connection with his
employment hereunder.
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(c) PACEL and XXXXXXX agree, that if any court of competent
jurisdiction shall, for any reason, conclude that any portion of
this covenant shall be too restrictive, the court shall determine
that some such restrictions shall be applicable for the
protection of PACEL and its shareholders.
14. OWNERSHIP OF WORK PERFORMED. XXXXXXX hereby grants, bargains, sells,
conveys, transfers and delivers and agrees to grant, bargain, sell,
convey, transfer and deliver, without further consideration other than
the base compensation provided above, to PACEL, all right, title and
interest in and to all work performed, underlying programs (including
but not limited to HTML, C++, Visual Basic, and any and all other
codes and source codes) and documentation for same which shall be
and/or have been performed by him. XXXXXXX hereby acknowledges that
PACEL is and shall be entitled to secure any and all patents,
copyrights, and trademarks with respect to all of such work, work
product, programs, etc. and XXXXXXX covenants, warrants and represents
that he shall execute all assignments, documents, filings,
acknowledgements and other papers which may be required to assure,
establish, confirm, and document PACEL's sole and exclusive ownership
to all of such (including HTML, C++, Visual Basic, and any and all
other codes and source codes) and documentation for same and the Work
Product. "Work Product" shall mean all documentation, software,
programs, systems, source codes, Hardware Signatures, know-how and
information created, in whole or in part, by XXXXXXX during the
performance of his services hereunder whether or not copyrightable or
otherwise protectable. XXXXXXX, for himself, his successors and
assigns, covenants and agrees with PACEL to warrant and defend title
to the property hereby sold to PACEL, its successors and assigns
against all and every person and persons whomsoever.
15. NONSOLICITATION COVENANT. (a) For a period of twelve (12) months after
the termination of this Agreement (including any extension thereof)
(the "Post Termination Period") XXXXXXX shall not, solicit, directly
or indirectly, by any means, any of the clients, customers, accounts,
employees or "leads" of PACEL during the Post Termination Period.
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(b) PACEL and XXXXXXX agree, that if any court of competent
jurisdiction shall, for any reason conclude that any portion of
this covenant shall be too restrictive, the court shall determine
and apply lesser restrictions, it being the intent of the parties
that some such restrictions shall be applicable for the
protection of PACEL and its shareholders.
16. OWNERSHIP OF INVENTIONS AND DEVELOPMENTS. (a) For purposes of this
Agreement, the following definitions shall apply:
"Inventions" shall mean:
A. All inventions, improvements, modifications, and enhancements,
whether or not patentable, made by XXXXXXX during XXXXXXX'
employment by PACEL; and
B. All inventions, improvements, modifications and enhancements
made by XXXXXXX, during a period of six (6) months after any
suspension or termination of XXXXXXX' employment by PACEL,
which relate, directly or indirectly, to the products of
PACEL.
i. "Work Product" shall mean all documentation, software,
programs, systems, source codes, Hardware Signatures, know-how
and information created, in whole or in part, by XXXXXXX
during XXXXXXX' employment by PACEL, whether or not
copyrightable or otherwise protectable, excluding inventions.
ii."Trade Secrets" shall means all documentation, software, and
information relating to the functionality of the products of
PACEL or any plans therefor, or relating to the business of a
third party or plans therefor that are disclosed to PACEL,
which PACEL does not disclose to third parties without
restrictions on use or further disclosure.
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(b) XXXXXXX shall promptly disclose to PACEL all Inventions and keep
accurate records relating to the conception and reduction to
practice of all Inventions. Such records shall be the sole and
exclusive property of PACEL, and XXXXXXX shall surrender
possession of such records to PACEL upon any suspension or
termination of XXXXXXX' employment with PACEL.
(c) XXXXXXX hereby assigns to PACEL, without further consideration to
XXXXXXX, the entire right, title and interest in and to the
Inventions and Work Product and in and to all proprietary rights
therein or based thereon. XXXXXXX agrees that the Work Product
shall be deemed to be a "work made for hire". XXXXXXX shall
execute all such assignments, oaths, declarations and other
documents as may be prepared by PACEL to effect the foregoing.
(d) XXXXXXX shall provide PACEL with all information, documentation,
and assistance PACEL may request to perfect, enforce, or defend
the proprietary rights in or based on the Inventions, Work
Product or Trade Secrets. PACEL, in its sole discretion, shall
determine the exact extent of the proprietary rights, if any, to
be protected in or based on the Inventions and Work Product. All
such information, documentation and assistance shall be provided
at no additional expense or cost to PACEL, except for
out-of-pocket expenses which XXXXXXX incurs at PACEL's request.
17. DISABILITY. (a) PACEL desires to recognize the contributions of
XXXXXXX during the period from incorporation to the date of this
Agreement. Accordingly, if XXXXXXX is unable to perform his services
by reason of illness or incapacity for a period of up to six (6)
months, PACEL shall continue XXXXXXX' full compensation. If XXXXXXX is
unable to perform his services after such six (6) months, PACEL shall
continue to compensate XXXXXXX during the period of such illness or
incapacity but such compensation may, at the option of PACEL, be
reduced by twenty-five percent (25%). If such illness or incapacity
shall continue for a period of twelve (12) months, payment of
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compensation thereafter may, at the option of PACEL, be stopped
altogether. The full compensation shall be reinstated upon XXXXXXX'
return to service and the discharge of his full duties hereunder.
Notwithstanding anything herein to the contrary, PACEL may, at its
option, terminate this Agreement at any time after XXXXXXX shall be
absent from his employment, for whatever cause, for a continuous
period of more than eighteen (18) months, and all obligations of PACEL
hereunder shall cease upon any such termination.
(b) PACEL may elect to continue the payment of full compensation
notwithstanding the foregoing. Such payments shall be in the sole
discretion of PACEL, may be discontinued at any time, and if
initiated shall not thereby become a requirement.
18. TERMINATION OF EMPLOYMENT. (a) PACEL can terminate XXXXXXX' employment
at any time for good cause. Without intending to limit the definition
of good cause hereby, good cause will include:
(1) XXXXXXX' death;
(2) The occurrence of one of the following events:
(i) XXXXXXX is convicted of a felony or any crime involving
moral turpitude or unethical conduct which in the good
faith opinion of PACEL could impair his ability to
perform his duties; or
(ii) XXXXXXX commits an act, or fails to take action in bad
faith and to the detriment of PACEL
(b) The termination of XXXXXXX' services shall not constitute a
termination of the restrictive obligations and duties under
Paragraphs 11, 12, 13, 14 and 15.
(c) In the event of the bankruptcy (Chapter 7), reorganization
(Chapter 11) or other termination of the business of PACEL, the
provisions of Paragraph 12 shall continue in full force and
effect only so long as full base compensation by PACEL shall
continue.
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19. ARBITRATION. Any controversy or claim arising out of, or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
in Manassas, Virginia in accordance with the rules then pertaining of
the American Arbitration Association, but with all rights of discovery
provided by the Virginia Rules of Civil Procedure, and judgment upon
the award rendered may be entered in any court having jurisdiction
thereof. Cost of the arbitration shall be borne by PACEL, regardless
of who initiates the proceeding. The losing party shall reimburse the
reasonable attorney's fees of the prevailing party.
20. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by such other party.
The failure of a party to exercise any rights or privileges under this
Agreement shall not be deemed to be a waiver or extinguishment of such
rights or privileges, all of which shall continue to be exercisable.
21. BENEFIT. The rights and obligations of PACEL under this Agreement
shall inure to the benefit of, and shall be binding upon, its
successors and assigns. The protection of Paragraphs 11, 12, 13, 14
and 15 shall inure to the benefit of PACEL and any successors and
assigns. The rights and obligations of XXXXXXX under this Agreement
shall inure to the benefit of, and shall be binding upon, his heirs,
administrators, executors, successors and assigns.
22. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if either personally
delivered or sent by certified mail, to his residence in the case of
XXXXXXX, or to its principal office in the case of PACEL.
23. LIFE INSURANCE. PACEL and/or one or more of it subsidiaries may, in
its discretion at any time after the execution of this Agreement,
apply for and procure, as owner and for its own benefit, insurance on
the life of XXXXXXX, in such amounts and in such forms as PACEL may
choose. PACEL shall not be required to give XXXXXXX any interest
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whatsoever in any such policy or policies, (although nothing contained
herein shall be deemed to prohibit any such arrangement) but XXXXXXX
shall, at the request of PACEL, subject himself to such medical
examination, supply such information, and execute such information
releases and documents as may be required by the insurance company or
companies to whom PACEL has applied for such insurance.
24. ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties and may be modified only by agreement in writing signed by the
party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
25. APPLICABLE LAW. This Agreement shall be governed for all purposes by
the laws of the State of Virginia. If any provision of this Agreement
is declared void, such provision shall be deemed severed from this
Agreement, which shall otherwise remain in full force and effect.
26. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including facsimile counterparts, any one of which shall
be deemed to be an original.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto set their hands and seals as of the day and year herein above
written.
PACEL CORP.
ATTEST:
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
President
/s/ F. Xxx Xxxxxxx
-----------------------
Secretary
WITNESS: XXXXXXX
/s/ Xxxxx X. Xxxx /s/ Xxxxx X. Xxxxxxx
------------------------- ---------------------------
XXXXX X. XXXXXXX
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