Exhibit 10(kk)
EXHIBIT C
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT dated October 17, 1997, by and
between Base Ten Systems, Inc., a New Jersey corporation (together with any
successor, the "Company"), and Xxxxxx X. Xxxxxxx, residing at 00 Xxxxxxxxxxxx
Xxxx Xxxx, Xxxxxxxxx, XX 00000, (the "Executive").
W I T N E S S E T H:
WHEREAS, should the Company receive a proposal from or engage in
discussions with a third person concerning a possible business combination with
or the acquisition of a substantial portion of voting securities of the Company,
the Board of Directors of the Company (the "Board") has deemed it imperative
that it and the Company be able to rely on the Executive to continue to serve in
his position and that the Board and the Company be able to rely upon his advice
as being in the best interests of the Company and its shareholders without
concern that the Executive might be distracted by the personal uncertainties and
risks that such a proposal or discussions might otherwise create; and
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated as of October 17, 1997 (the "Employment Agreement"); and
WHEREAS, the Company desires to enhance executive morale and its
ability to retain existing management; and
WHEREAS, the Company desires to reward the Executive for his service
to the Company or one or more of its subsidiary corporations (each together with
any successor, a "Subsidiary") should his service be terminated under
circumstances hereinafter described; and
WHEREAS, the Board therefore considers it in the best interests of the
Company and its shareholders for the Company to enter into Change in Control
Agreements, in form similar to this Agreement, with certain key executive
officers of the Company; and
WHEREAS, the Executive is presently a key executive with whom the
Company has been authorized by the Board to enter into this Agreement;
WHEREAS, as of the date of this Agreement, the specialized knowledge
and skills of the Executive will be particularly needed by the Company as the
Company continues to expand its medical technology business, and stability at
the top management level is and will be critically important to the ultimate
success of the Company; and
WHEREAS, in order to provide an incentive to members of top management
not to seek and consider opportunities outside of the Company, which would
substantially impede
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the continued expansion of the Company's medical technology business, while at
the same time continuing to engage in its historic business, the Company's
independent directors have determined it to be in the best interests of the
Company to revise and amend this Agreement in order to make it consistent with
the purposes underlying the original entry of this Agreement;
NOW, THEREFORE, to assure the Company of the Executive's continued
dedication and the availability of his advice and counsel in the event of any
such proposal, to induce the Executive to remain in the employ of the Company or
a Subsidiary, and to reward the Executive for his valuable, dedicated service to
the Company or a Subsidiary should his service be terminated under circumstances
hereinafter described, and for other good and valuable consideration, the
receipt and adequacy whereof each party acknowledges, the Company and the
Executive agree as follows:
1. OPERATION, EFFECTIVE DATE, AND TERM OF AGREEMENT.
(a) This Agreement shall commence on the date hereof and continue in
effect through December 31, 1999; provided, however, that commencing on January
1, 1998 and each succeeding January 1 thereafter, the term of this Agreement
shall be extended automatically for one additional year (so that at all times
the remaining term hereof shall not be less than two (2) years) unless not later
than the September 30 preceding such automatic extension date the Company shall
have given notice that it does not wish to extend this Agreement.
(b) This Agreement is effective and binding on both parties as of the
date hereof. Notwithstanding its present effectiveness, the provisions of
paragraphs 3 and 4 of this Agreement shall become operative only when, as and if
there has been a "Change in Control of the Company." For purposes of this
Agreement, a "Change in Control of the Company" shall be deemed to have occurred
if
(X) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), or persons "acting in concert" (which for purposes
of this Agreement shall include two or more persons voting together on
a consistent basis pursuant to an agreement or understanding between
them), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company and other than a person
engaging in a transaction of the type described in clause (Z) of this
subsection but which does not constitute a change in control under
such clause, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing forty percent (40%) or more of the
combined voting power of the Company's then outstanding securities; or
(Y) individuals who, as of the date of this Amended and Restated
Agreement, constitute the Board and any new director ("New Director")
whose election by the Board, or nomination for election by the Company
shareholders, was approved by a vote of at least seventy-five percent
(75%) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved ("Continuing
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Members"), cease for any reason to constitute a majority thereof
(provided that, for purposes of this clause (Y), the term "New
Director" shall exclude (i) a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clauses (X) or (Z) of this subsection, and (ii) an
individual whose initial assumption of office as a director is in
connection with any actual or threatened contest related to the
election of any directors to the Board); or
(Z) the shareholders of the Company approve or, if no shareholder
approval is required or obtained, the Company or a Subsidiary
completes a merger, consolidation or similar transaction of the
Company or a Subsidiary with or into any other corporation, or a
binding share exchange involving the Company's securities, other than
any such transaction which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least seventy-five
percent (75%) of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after
such transaction, or the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets (excluding, for this purpose, the sale of the Company's
Government Technology division).
2. EMPLOYMENT OF EXECUTIVE.
Nothing herein shall affect any right which the Executive or the
Company or a Subsidiary may otherwise have to terminate the Executive's
employment by the Company or a Subsidiary at any time in any lawful manner,
subject always to the Company's providing to the Executive the payments and
benefits specified in paragraphs 3 and 4 of this Agreement to the extent
hereinbelow provided.
In the event any person commences a tender or exchange offer,
circulates a proxy statement to the Company's shareholders or takes other steps
designed to effect a Change in Control of the Company as defined in paragraph 1
of this Agreement, the Executive agrees that, subject to the provisions of
Section 5(a)(iii), (c) and (j) of the Employment Agreement, he will not
voluntarily leave the employ of the Company or a Subsidiary, and will continue
to perform his regular duties and to render the services specified in the
recitals of this Agreement, until such person has abandoned or terminated his
efforts to effect a Change in Control of the Company or until a Change in
Control of the Company has occurred. Should the Executive voluntarily terminate
his employment before any such effort to effect a Change in Control of the
Company has commenced, or after any such effort has been abandoned or terminated
without effecting a Change in Control of the Company and no such effort is then
in process, this Agreement shall lapse and be of no further force or effect.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) If any of the events described in paragraph 1 hereof constituting
a Change in Control of the Company shall have occurred, the Executive shall be
entitled to the benefits provided in paragraph 4 hereof upon the termination of
his employment within the applicable period set forth in paragraph 4 hereof
unless such termination is (i) due to the Executive's death; or (ii) by the
Company or a Subsidiary by reason of the Executive's Disability or for Cause; or
(iii) by the Executive other than for Good Reason.
(b) If following a Change in Control of the Company the Executive's
employment is terminated by reason of his death or Disability, the Executive
shall be entitled to death or long-term disability benefits, as the case may be,
from the Company no less favorable than the maximum benefits to which he would
have been entitled had the death or termination for Disability occurred during
the six month period prior to the Change in Control of the Company. If prior to
any such termination for Disability, the Executive fails to perform his duties
as a result of incapacity due to physical or mental illness, he shall continue
to receive his Salary less any benefits as may be available to him under the
Company's or Subsidiary's disability plans until his employment is terminated
for Disability.
(c) If the Executive's employment shall be terminated by the Company
or a Subsidiary for Cause or by the Executive other than for Good Reason, the
Company shall pay to the Executive his full Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
and the Company shall have no further obligations to the Executive under this
Agreement.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the Executive's incapacity due to
physical or mental illness such that the Executive shall have become
qualified to receive benefits under the Company's or Subsidiary's
long-term disability plans or any equivalent coverage required to be
provided to the Executive pursuant to any other plan or agreement,
whichever is applicable.
(ii) "Cause" shall mean:
(A) the conviction of the Executive for a felony, or the willful
commission by the Executive of a criminal or other act that in
the judgment of the Board causes or will probably cause
substantial economic damage to the Company or a Subsidiary or
substantial injury to the business reputation of the Company or a
Subsidiary;
(B) the commission by the Executive of an act of fraud in the
performance of such Executive's duties on behalf of the Company
or a Subsidiary that causes or will probably cause economic
damage to the Company or a Subsidiary; or
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(C) the continuing willful failure of the Executive to perform
the duties of such Executive to the Company or a Subsidiary
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in reasonable
detail) and a reasonable opportunity to be heard and cure such
failure are given to the Executive by the Compensation Committee
of the Board with the approval thereof by a majority of the
Continuing Directors.
For purposes of this subparagraph (d)(ii), no act, or failure to act,
on the Executive's part shall be considered "willful" unless done, or omitted to
be done, by him not in good faith and without reasonable belief that his action
or omission was in the best interests of the Company or a Subsidiary.
(iii) "Good Reason" shall mean:
(A) The assignment by the Company or a Subsidiary to the
Executive of duties without the Executive's express written
consent, which (i) are materially different or require travel
significantly more time consuming or extensive than the
Executive's duties or business travel obligations measured from
the point in time one (1) year prior to the Change in Control of
the Company, or (ii) result in either a significant reduction in
the Executive's authority and responsibility as a senior
corporate executive of the Company or a Subsidiary when compared
to the highest level of authority and responsibility assigned to
the Executive at any time during the one (1) year period prior to
the Change in Control of the Company, or, (iii) without the
Executive's express written consent, the removal of the Executive
from, or any failure to reappoint or reelect the Executive to,
the highest title held since the date one (1) year before the
Change in Control of the Company, except in connection with a
termination of the Executive's employment by the Company or a
Subsidiary for Cause, or by reason of the Executive' death or
Disability;
(B) A reduction by the Company or a Subsidiary of the Executive's
Salary, or the failure to grant increases in the Executive's
Salary on a basis at least substantially comparable to those
granted to other executives of the Company or a Subsidiary of
comparable title, salary and performance ratings made in good
faith;
(C) The relocation of the Company's principal executive offices
(or in the case of an employee of a Subsidiary, the principal
executive offices of such Subsidiary) to a location outside the
State of New Jersey, or the Company's requiring the Executive to
be based anywhere other than the Company's principal executive
offices (or in the case of an employee of a Subsidiary, the
principal executive officer of such Subsidiary) except for
required travel on the Company's or a Subsidiary's business to an
extent
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substantially consistent with the Executive's business travel
obligations measured from the point in time one (1) year prior to
the Change in Control of the Company, or in the event of any
relocation of the Executive with the Executive's express written
consent, the failure by the Company or a Subsidiary to pay (or
reimburse the Executive for) all reasonable moving expenses by
the Executive relating to a change of principal residence in
connection with such relocation and to indemnify the Executive
against any loss realized in the sale of the Executive's
principal residence in connection with any such change of
residence, all to the effect that the Executive shall incur no
loss upon such sale on an after tax basis;
(D) The failure by the Company or a Subsidiary to continue to
provide the Executive with substantially the same welfare
benefits (which for purposes of this Agreement shall mean
benefits under all welfare plans as that term is defined in
Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended), and perquisites, including participation on a
comparable basis in the Company's or a Subsidiary's stock option
plan, incentive bonus plan and any other plan in which executives
of the Company or a subsidiary of comparable title and salary
participate and as were provided to the Executive measured from
the point in time one (1) year prior to such Change in Control of
the Company, or with a package of welfare benefits and
perquisites that is substantially comparable in all material
respects to such welfare benefits and perquisites; or
(E) The failure of the Company to obtain the express written
assumption of and agreement to perform this Agreement by any
successor as contemplated in subparagraph 5(d) hereof.
(iv) "Dispute" shall mean (i) in the case of termination of employment
of the Executive with the Company or a Subsidiary by the Company or a
Subsidiary for Disability or Cause, that the Executive challenges the
existence of Disability or Cause and (ii) in the case of termination
of employment of the Executive with the Company or a Subsidiary by the
Executive for Good Reason, that the Company or the Subsidiary
challenges the existence of Good Reason.
(v) "Salary" shall mean, with respect to any year, the greater of (A)
$300,000 and (B) the Executive's compensation as reported on Form W-2.
(vi) "Incentive Compensation" in any year shall mean the amount the
Executive has elected to defer in such year pursuant to any plan,
arrangement or contract providing for the deferral of compensation.
(e) Any purported termination of employment by the Company or a
Subsidiary by reason of the Executive's Disability or for Cause, or by the
Executive for Good Reason, shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice given by the
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Executive or the Company or a Subsidiary, as the case may be, which shall
indicate the specific basis for termination and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for determination
of any payments under this Agreement. The Executive shall not be entitled to
give a Notice of Termination that the Executive is terminating his employment
with the Company or a Subsidiary for Good Reason more than six (6) months
following the later to occur of (i) the Change in Control and (ii) the
occurrence of the event alleged to constitute Good Reason. The Executive's
actual employment by the Company or a Subsidiary shall cease on the Date of
Termination specified in the Notice of Termination, even though such Date of
Termination for all other purposes of this Agreement may be extended in the
manner contemplated in the second sentence of Paragraph 3(f).
(f) For purposes of this Agreement, "Date of Termination" shall mean
the date specified in the Notice of Termination, which shall be not more than
ninety (90) days after such Notice of Termination is given, as such date may be
modified pursuant to the next sentence. If within thirty (30) days after any
Notice of Termination is given, the party who receives such Notice of
Termination notifies the other party that a Dispute (as heretofore defined)
exists, the Date of Termination shall be the date on which the Dispute is
finally determined, either by mutual written agreement of the parties, or by a
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected);
provided that the Date of Termination shall be extended by a notice of Dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such Dispute with reasonable diligence and provided
further that pending the resolution of any such Dispute, the Company or a
Subsidiary shall continue to pay the Executive the same Salary and to provide
the Executive with the same or substantially comparable welfare benefits and
perquisites that the Executive was paid and provided as of a date one (1) year
prior to the Change in Control of the Company. Should a Dispute ultimately be
determined in favor of the Company or a Subsidiary, then all sums paid by the
Company or a Subsidiary to the Executive from the date of termination specified
in the Notice of Termination until final resolution of the Dispute pursuant to
this paragraph shall be repaid promptly by the Executive to the Company or a
Subsidiary, with interest at the prime rate generally prevailing from time to
time among major New York City banks and all options, rights and stock awards
granted to the Executive during such period shall be cancelled or returned to
the Company or Subsidiary. The Executive shall not be obligated to pay to the
Company or a Subsidiary the cost of providing the Executive with welfare
benefits and perquisites for such period unless the final judgment, order or
decree of a court or other body resolving the Dispute determines that the
Executive acted in bad faith in giving a notice of Dispute. Should a Dispute
ultimately be determined in favor of the Executive or be settled by mutual
agreement between the Executive and the Company, then the Executive shall be
entitled to retain all sums paid to the Executive under this subparagraph (f)
for the period pending resolution of the Dispute and shall be entitled to
receive, in addition, the payments and other benefits to the extent provided for
in paragraph 4 hereof to the extent not previously paid hereunder.
4. PAYMENTS UPON TERMINATION.
If within three years after a Change in Control of the Company (or if
within nine (9) months prior to a Change in Control if effected in connection
with such Change in Control),
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the Company or a Subsidiary shall terminate the Executive's employment other
than by reason of the Executive's death, Disability or for Cause or the
Executive shall terminate his employment for Good Reason then,
(a) The Company or a Subsidiary will pay on the Date of Termination
to the Executive as compensation for services rendered on or before
the Executive's Date of Termination, a lump sum cash amount (subject
to any applicable payroll or taxes required to be withheld computed at
the rate for supplemental payments) equal to (i) 2.99 times the sum of
the average for each of the five fiscal years of the Company ending
before the day on which the Change in Control of the Company occurs of
the Executive's Salary, his Incentive Compensation and the annual cost
to the Company of all hospital, medical and dental insurance, life
insurance, disability insurance and other welfare or benefit plan
provided to the Executive (the sum of such Incentive Compensation and
annual loss of welfare benefits to be deemed to be $50,000 for each
fiscal year of the Company ending on or before November 1, 1997) minus
(ii) the cost to the Company of the insurance required under
subparagraph 4(b) hereof;
(b) For a period of three years following the Date of Termination,
the Company shall provide, at Company expense, the Executive and the
Executive's spouse with full hospital, medical and dental insurance
with substantially the same coverage and benefits as were provided to
the Executive immediately prior to the Change in Control of the
Company; and
(c) In event that any payment or benefit received or to be received
by the Executive pursuant to this Agreement in connection with a
Change in Control of the Company or the termination of the Executive's
employment (collectively with all payments and benefits hereunder,
"Total Payments") would not be deductible in whole or in part by the
Company as the result of Section 280G of the Internal Revenue Code of
1986, as amended and the regulations thereunder (the "Code"), the
payments and benefits hereunder shall be reduced until no portion of
the Total Payments is not deductible by reducing to the extent
necessary the payment under subparagraph (a) hereof. For purposes of
this limitation (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in
writing prior to the date of payment shall be taken into account, (ii)
no portion of the Total Payments shall be taken into account which in
the opinion of tax counsel selected by the Executive and acceptable to
the Company's independent auditors the Executive is not likely to
constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, and (iii) the value of any non-cash benefit or
any deferred payment or benefit included in the Total Payments shall
be determined by the Company's independent auditors in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.
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5. GENERAL.
(a) The Executive shall retain in confidence any proprietary or other
confidential information known to him concerning the Company and its business
(including the Company's Subsidiaries and their businesses) so long as such
information is not publicly disclosed and disclosure is not required by an order
of any governmental body or court.
(b) If litigation or other proceedings shall be brought to enforce or
interpret any provision contained herein, or in connection with any tax audit to
the extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder, the Company shall indemnify the Executive
for his reasonable attorney's fees and disbursements incurred in connection
therewith (which indemnification shall be made at regular intervals during the
course of such litigation, not less frequently than every three (3) months) and
pay prejudgment interest on any money judgment obtained by the Executive
calculated at the prime rate of interest generally prevailing from time to time
among major New York City banks from the date that payment should have been made
under the Agreement; provided that if the Executive initiated the proceedings,
the Executive shall not have been found by the court or other fact finder to
have acted in bad faith in initiating such litigation or other proceeding, which
finding must be final without further rights of appeal.
(c) The Company's obligation to pay the Executive the compensation
and to make the arrangements provided herein shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
any setoff, counterclaim, recoupment, defense or other right which the Company
may have against the Executive or anyone else. All amounts payable by the
Company hereunder shall be paid without notice or demand. Except as expressly
provided herein, the Company waives all rights which it may now have or may
hereafter have conferred upon it, by statute or otherwise, to terminate, cancel
or rescind this Agreement in whole or in part. Except as provided in paragraph
3(f) herein, each and every payment made hereunder by the Company shall be final
and the Company will not seek to recover for any reason all or any part of such
payment from the Executive or any person entitled thereto. The Executive shall
not be required to mitigate the amount of any payment or other benefit provided
for in this Agreement by seeking other employment or otherwise.
(d) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company (excluding, for
this purpose, the sale of the Company's Government Technology division), by
written agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
paragraph 5 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
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(e) This Agreement shall inure to the benefit of, and be enforceable
by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees. If the
Executive should die while any amounts would still be payable to the Executive
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive's devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate. The obligations of the Executive hereunder
shall not be assignable by the Executive.
(f) Nothing in this Agreement shall be deemed to entitle the
Executive to continued employment with the Company or a Subsidiary, and the
rights of the Company or a Subsidiary to terminate the employment of the
Executive shall continue as fully as though this Agreement were not in effect.
6. NOTICE.
Notices and all other communications provided for in the Agreement shall be in
writing and shall be given as provided in Section 12 of the Employment
Agreement.
7. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No assurances or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement or the Employment Agreement.
However, this Agreement is in addition to, and not in lieu of, any other plan
providing for payments to or benefits for the Executive or any agreement now
existing, or which hereafter may be entered into, between the Company and the
Executive. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New Jersey.
8. FINANCING.
All amounts due and benefits provided under this Agreement shall
constitute general obligations of the Company in accordance with the terms of
this Agreement. The Executive shall have only an unsecured right to payment
thereof out of the general assets of the Company. Notwithstanding the
foregoing, the Company may, by agreement with one or more trustees to be
selected by the Company, create a trust on such terms as the Company shall
determine to make payments to the Executive in accordance with the terms of this
Agreement.
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9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect. Any provision in this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BASE TEN SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXX
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Chairman of the Board and
Chief Executive Officer
/s/ XXXXXX X. XXXXXXX
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(EXECUTIVE)
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