EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made on June 11th, 1999, by and between
Base Ten System, Inc. ("Employer"), a New Jersey corporation ("Employer"), and
Xxxxxx X. Xxxxxxxxx ("Employee") (Employer and Employee collectively referred to
as the "Parties" and individually as a "Party").
BACKGROUND
Whereas, Employer desires to employ Employee as "President,
Applications Software Division" and Employee desires to be so employed. The
Parties are entering into this Agreement to set forth the terms and conditions
of Employee's employment by Employer.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings hereinafter set forth, intending to be legally bound hereby, the
Parties hereto agree as follows:
SECTION 1. EMPLOYMENT
a. Position and Duties. Employer employs Employee and Employee
hereby accepts such employment as Employer's "President,
Applications Software Division" with responsibility for
Employer's Applications Software Division as conducted through
BTS Clinical Inc., a New Jersey corporation wholly-owned by
Employer, and reporting to the Chairman of the Board or the
Chief Executive Officer of Employer for the Employment Term
(as defined below). During his employment hereunder, Employee
shall have such authority and responsibilities as are
consistent with his prior service as President of Almedica
Technology Group Inc. ("ATG"). Employee shall perform any
other duties in addition thereto as may be reasonably required
by the Employer and its Board of Directors (the "Board"),
including services for Employer's subsidiaries and affiliated
companies. Employee's entire working time, energy, and skill
shall be devoted to the performance of Employee's duties
hereunder in a manner which will faithfully and diligently
further the business and interest of Employer. During the
Employment Term, Employee may engage in charitable, civic,
fraternal and trade association activities that do not
interfere with Employee's obligations to Employer. Employee
shall not work for any other for-profit business, except that
Employee may serve on boards of directors of other for-profit
businesses as are approved, in advance, in writing, by
Employer.
b. Location of Employment. Employee's services shall be rendered
principally at Employer's office in Parsippany, New Jersey, or
at a location or office within a 25 mile (map, not travel)
radius of the current office of BTS Clinical Inc. in
Parsippany, New Jersey, unless mutually agreed to otherwise by
Employer and Employee.
SECTION 2. TERMINATION OF EMPLOYMENT
a. Term. Unless terminated sooner in accordance with the
provisions of this Agreement, the term of Employee's full-time
employment hereunder shall continue from the date hereof
through June 30, 2001 ("Initial Employment Term"). Thereafter,
the term shall continue from year to year for additional one
year terms (the "Additional Term(s)"; the Initial Employment
Term together with any Additional Terms are hereinafter
referred to in the aggregate as the "Employment Term") unless
sooner terminated as provided herein.
b. Termination for Cause. Notwithstanding any other provision of
this Agreement, Employee's employment may be terminated by
Employer at any time without prior notice upon a determination
of Cause. As used herein, "Cause" shall mean (i) the
continuing willful failure by Employee to devote substantially
all his working time, energy and skill to performing his
duties hereunder as provided in Section 1 (a) (other than any
such failure resulting from Employee's death or incapacity due
to physical or mental illness) and the continuance of such
failure for a period of 30 days after a written demand for
substantial performance is delivered to Employee by the Board
which specifically identifies the manner in which the Board
believes that Employee has not substantially performed such
duties; (ii) the engaging by Employee in willful gross
misconduct or willful gross neglect in carrying out his duties
under this Agreement, resulting, in either case, in material
economic harm to the Company; (iii) the Employee engaging in
any activity that constitutes a crime or offence involving
moral turpitude; or (iv) the Employee engaging in any activity
that constitutes embezzlement, theft, fraud or similar
criminal conduct. No termination of Employee's employment for
Cause shall be effective unless the provisions set forth in
the following three sentences shall have been complied with.
The Board shall give Employee written notice of its intention
to terminate him for Cause, such notice (x) to state in detail
the particular circumstances that constitute the grounds on
which the proposed termination for Cause is based and (y) to
be given no later than 90 days after the Board is first
advised of such circumstances. Employee shall then be entitled
to a hearing before the Board to be held within 20 days of his
receiving such notice. If, within, seven days following such
hearing, the Board gives written notice to Employee confirming
that, in the reasonable, good faith judgment of at least a
majority of the members of the Board, Cause for terminating
him on the basis set forth in the original notice exists, his
employment with the Company shall thereupon be terminated for
Cause, subject to de novo review in accordance with
Section 7.
c. Termination Without Cause. Employer may terminate employment
of Employee without cause by giving Employee notice of such
termination 90 days prior to the end of the Initial Employment
Term, or 90 days prior to the end of any Additional Term, such
notice of termination to be effective at the end of such term.
Such termination notice may be given if Employee is not
performing as a result of a physical or mental incapacity even
if the entire time period under 2(d)(2) has not accrued, if
such termination is not in violation of law. A material breach
of this Agreement by Employer not cured after written notice
thereof specifying the particulars thereof and a reasonable
opportunity to cure such breach, or the constructive discharge
of Employee, shall be deemed a termination without cause.
d. Termination Upon Death or Disability.
Notwithstanding any other provision of this Agreement:
(1) The Employment Term shall expire immediately upon the
death or disability of the Employee.
(2) Employee shall be deemed to be disabled if by reason of
physical or mental illness or incapacity he is unable to
perform, on a full-time basis, the regular duties and
activities of his employment for a period of:
(a) Six (6) consecutive months, or
(b) A total of thirty-nine (39) weeks during any
twenty-four (24) month period.
(3) The date of disability shall be the date on which the
earlier of the requirements stated in (2)(a) or (2)(b) of
this Section 2(d) are satisfied. In the event that a
dispute arises as to the existence of disability, a
determination shall be made by two medical doctors
licensed in New Jersey or, in the event Employee is
hospitalized or otherwise confined, licensed in the State
of such hospitalization or confinement. One doctor shall
be appointed by the Employer and one doctor shall be
appointed by the Employee. If the two doctors cannot
agree on a determination regarding disability, the two
doctors shall appoint a third doctor, who shall be
responsible for making such a determination. Any such
determination in accordance with the foregoing provisions
shall be final and binding and conclusive on the parties.
SECTION 3. COMPENSATION, BENEFITS AND EXPENSES
a. Salary. During the Employment Term, Employer shall pay
Employee an annual salary of Two Hundred Thousand Dollars
($200,000), less withholding and deductions required by law or
agreed to by Employee, payable in accordance with Employer's
regular payroll practice. Employee's annual salary may be
increased by Employer's Board of Director's at Employee's
annual review, at its sole discretion.
b. Bonus. During the portion of Employment Term occurring after
December 31, 1999, the Employer, shall pay to Employee an
annual bonus targeted to equal forty percent (40%) of
Employee's then annual salary with respect to each calendar
year (or pro-rata for the portion thereof occurring prior to
December 31 of any year in which this Agreement is terminated
and, by the terms hereof, such bonus is to be paid), based on
the achievement of such goals and objectives as agreed upon,
in writing, by Employer and Employee. During the portion of
Employment Term occurring prior to January 1, 2000 Employer
shall pay to Employee an bonus equal to $40,000 in two
installments of $20,000 each, payable September 30, 1999 and
December 31, 1999.
c. Benefits.
(1) Paid Time-Off. During the Employment Term, Employee shall
be entitled to paid time-off in accordance with the
Employer's standard policies applicable to senior
executives of Employer. Effective on the date hereof,
Employee is credited with 475.15 hours of accrued paid
time-off, which, to the extent not utilized by Employee,
shall be paid to Employee in cash, in two installments of
not more than 237.875 hours on July 1 of 2000 and July 1,
2001.
(2) Other Benefits. In addition to the paid time-off set
forth in Section 3(c)(1) hereof, during the Employment
Term, Employee will receive the fringe benefits which are
generally applicable to senior executives of Employer.
d. Withholdings. Employer shall withhold from any amounts payable
as compensation all federal, state, municipal, or other
deductions as are required by any law, regulation, or ruling.
Notwithstanding the foregoing provisions of this Section 3(d),
Employee shall be liable for the payment, if any, of any
federal, state, or local taxes incurred by him as a result of
Employer's provision of benefits hereunder.
e. Effect of Termination on Salary and Benefits.
(1) Upon termination of the Employment Term pursuant to
Section 2(c) or Section 2(d), Employee shall be entitled
to (i) severance pay equal to 24 times the amount which
is the average of his salary per month for the twelve
months prior to such termination to be paid, subject to
withholdings and deductions required by law, in 24 equal
monthly installments commencing on the last day of the
first calendar month beginning after such termination;
(ii) any annual bonus or other incentive compensation
awarded but not yet paid; (iii) any amounts earned or
accrued, but not yet paid, under this Section 3; and (iv)
a lump sum payment in respect of accrued but unused
vacation days at his salary rate on the date of
termination; Employee's salary and benefits under this
Section 3 shall terminate effective on the date of any
termination of Employee's employment or this Agreement;
Employee shall be entitled to any rights with respect to
the stock option referred to in Section 3(g) as set forth
in the separate agreement and plan with regard thereto.
(2) Upon termination of the Employment Term pursuant to
Section 2(b), or upon voluntary termination by Employee,
Employee shall be entitled to (i) any annual bonus or
other incentive compensation awarded but not yet paid;
(ii) any amounts earned or accrued, but not yet paid,
under this Section 3; and (iii) a lump sum payment in
respect of accrued but unused vacation days at his salary
rate on the date of termination; Employee's salary and
benefits under this Section 3 shall terminate effective
on the date of any termination of Employee's employment
or this Agreement; Employee shall be entitled to any
rights with respect to the stock option referred to in
Section 3(g) as set forth in the separate agreement and
plan with regard thereto.
f. Business Expenses. Employer shall reimburse Employee for
ordinary and necessary expenses reasonably incurred for
business purposes of Employer in the course of his employment,
in accordance with Employer's policies in effect from
time-to-time.
g. Stock Option. On the date hereof, Employer shall award to
Employee a ten-year incentive stock option (the "Stock
Option") pursuant to Employer's 1998 Stock Option and Stock
Award Plan (the "1998 Stock Plan"), to purchase 300,000 shares
of Employer's Class A Common Stock at a price per share equal
to the closing price of Employer's Class A Common Stock as
reported by the NASDAQ National Market System on the date of
this Agreement, subject to and in accordance with the 1998
Stock Plan. The Stock Option shall be substantially in the
form attached hereto as Exhibit A.
h. Change in Control. On the date hereof, Employer shall enter
into a change in control agreement with Employee,
substantially in the form attached hereto as Exhibit B.
Employer's obligation to provide benefits and compensation
under Section 3(e)(1)(i), (ii), (iii), and (iv) of this
Agreement shall not be paid if duplicative of amounts paid for
similar benefits under such change in control agreement.
SECTION 4. CONFIDENTIALITY
a. Confidential Information. The Employee shall not, either
directly or indirectly, except as required in the course of
his employment by the Employer, disclose or use at any time,
whether during or subsequent to the Employment Term, any
information owned by the Employer or any of its subsidiaries
including, but not limited to, customer lists, records, data,
formulae, documents, specifications, inventions, processes,
methods, systems, technical information and intangible rights,
which are acquired by him in the performance of his duties for
the Employer or any subsidiary or affiliate thereof and which
are proprietary to, confidential information of or trade
secrets of Employer. All inventions, computer software
programs and developments, processes, methods and intangible
rights, records, files, drawings, documents, equipment, and
the like, relating to the business of the Employer or a
subsidiary or affiliate, which the Employee shall invent,
develop, conceive, produce, prepare, use, construct or
observe, during the course of his employment by the Employer
or ATG (including during employment by ATG prior to the date
hereof), shall be disclosed promptly in writing to the
Employer and shall be and remain sole property of the Employer
or the relevant subsidiary or affiliate of Employer and, at
the Employer's request and expense, the Employee shall apply
to the proper issuing authorities for such patent(s) or
copyright(s) thereon as the Employer may designate and, upon
issuance of any such patent(s) or copyright(s), the Employee
shall assign them to the Employer without further
consideration. Upon the termination of his employment, the
Employee shall return to the possession of the Employer any
materials or copies thereof involving any confidential
information or trade secrets and shall not take any material
or copies thereof from possession of the Employer or any
subsidiary or affiliate.
SECTION 5. COVENANT NOT TO ENGAGE IN CERTAIN ACTIVITIES
a. Definitions. For purposes of this Section 5, "Restricted Area"
shall be defined as the State of New Jersey, the remainder of
the United States, and the remainder of the world. The phrase
"Products and Services" shall be defined as all services,
including customization and design, with respect to products
sold or offered for sale by Employer, or any of its
subsidiaries or affiliates, used or developed for Employer, or
any of its subsidiaries or affiliates, by Employee or under
the direction of Employee, at any time, and from time to time,
during the Employment Term.
b. Covenant. During the Employment Term and for one year
thereafter Employee shall not, directly or indirectly, acting
as employee, investor, officer, partner, principal or
otherwise, of any corporation or other entity, within the
Restricted Area, on behalf of or for POMS Corporation, Pro
Pack Data GmbH, or any entity which on the date hereof is not
in the business of providing products and services which
compete materially with the Products and Services, engage in
any activity involving products or services which compete
materially with the Products and Services, as such Products
and Services exist as of the date hereof and during the
Employment Term.
c. Construction. The parties hereto agree that in the event that
either the length of time or the geographical areas set forth
in Section 5(a) hereof is deemed too restrictive in any court
proceeding, the court may reduce such restrictions to those
which it deems reasonable under the circumstances.
d. Remedies. Employee agrees and acknowledges that Employer and
any of its subsidiaries or affiliates do not have adequate
remedy at law for the breach or threatened breach by Employee
of the covenants under this Section 5 and agrees that Employer
or any subsidiary or affiliate of Employer shall be entitled
to apply for injunctive relief to restrain Employer from such
breach or threatened breach in addition to any other remedies
which might be available to Employer any subsidiary or
affiliate of Employer at law or equity.
SECTION 6. LEGAL COUNSEL
Employee represents and warrants that he has been afforded a
reasonable opportunity to review this Agreement, to understand its terms, and
has had an opportunity to have an attorney of his choice review it prior to its
execution, and that he knowingly and voluntarily enters this Agreement. Employer
represents and warrants that it has had an opportunity to have its attorney
review this Agreement prior to its execution.
SECTION 7. DISPUTE RESOLUTION
Except as otherwise provided in Section 5, any dispute or
controversy between Employee and the Employer that arises out of or relates to
this Agreement (or any amendment thereof) shall, at the election of either
party, be resolved by confidential arbitration, to be held in New Jersey, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction thereof.
SECTION 8. MISCELLANEOUS PROVISIONS
a. Notices. Unless otherwise agreed in writing by a Party
entitled to notice, all notices required by this Agreement
shall be in writing and shall be deemed given when physically
delivered to and acknowledged by receipt by a Party or its
duly authorized attorney or legal representative, or when
deposited postage paid, registered or certified mail,
addressed to the Party at its principal business or residence
as set forth in Employer's records or as known to or
reasonably ascertainable by the Party required to give notice.
b. Meaning of Certain Words. The word "including" shall mean
"including without limitation."
c. Waivers. No assent, express or implied, by any Party to any
breach or default under this Agreement shall constitute a
waiver of or assent to any breach or default of any other
provision of this Agreement or any breach or default of the
same provision on any other occasion.
d. Entire Agreement, Modification. This Agreement (including
Exhibit A and Exhibit B of this Agreement) constitutes the
entire agreement of the Parties concerning its subject matter
and supersedes all other oral or written understandings,
discussions, and agreements, and may be modified only in a
writing signed by both Parties.
e. Binding Effect; No Third Party Beneficiaries. This Agreement
shall bind and benefit the Parties and their respective heirs,
devisees, beneficiaries, grantees, donees, legal
representatives, successors, and assigns. Employee
specifically acknowledges that all his covenants given in
Sections 4 and 5 are transferable and assignable by Employer
in connection with any assignment subject to Section 8(f)
hereof (subject to the obligations of Employer under this
Agreement). Nothing in this Agreement shall be construed to
confer any rights or benefits on third-party beneficiaries,
except Employer's subsidiaries and affiliates.
f. Assignment. Neither Party may assign its interest in this
Agreement without the other's prior written consent; provided
that Employer may assign this Agreement and its rights and
obligations hereunder without Employee's consent to another
entity which Employer controls, or is controlled by it, or is
under common control with it, or in connection with the sale
of all or substantially all of Employer's business or assets.
g. Captions. Titles or captions contained in this Agreement are
for convenience and are not intended to affect the substantive
meaning of any provision.
h. Governing Law. This Agreement shall be governed by and
construed under the substantive laws of New Jersey without
reference to choice of laws rules.
IN WITNESS WHEREOF, the Parties have executed this Agreement,
intending to be legally bound hereby, on the date first written above.
BASE TEN SYSTEMS, INC.
XXXXXXX X. XXXXXXX
By:_______________________________
XXXXXXX X. XXXXXXX,
Executive Vice President
XXXXXX X. XXXXXXXXX
__________________________________
XXXXXX X. XXXXXXXXX
Attachments:
Exhibit A - Stock Option
Exhibit B - Change in Control Agreement
EXHIBIT A
BASE TEN SYSTEMS, INC.
1998 STOCK OPTION AND STOCK AWARD PLAN
INCENTIVE STOCK OPTION AGREEMENT
To:
We are pleased to notify you that by the determination of the
Board of Directors of Base Ten Systems, Inc. (the "Company") or an appropriately
designated Committee (the "Committee"), an incentive stock option to purchase
_______ shares of Class A Common Stock of the Company at a price of _______
($___) per share effective this __ day of _______ 1999 has been granted to you
under the Company's 1998 Stock Option and Stock Award Plan (the "Plan"). This
incentive stock option (the "Option") may be exercised only upon the terms and
conditions set forth below.
Purpose of the Plan.
The purpose of the Plan under which this Option has been
granted is to advance the interests of the Company and its shareholders by
providing incentives to selected officers and other key employees of the Company
and its subsidiaries.
Acceptance of Option Agreement.
Your execution of this incentive stock option agreement
(herein called the "Agreement") will indicate your acceptance of and your
willingness to be bound by its terms; it imposes no obligation upon you to
purchase any of the shares subject to the Option. Your obligation to purchase
shares can arise only upon your exercise of the Option in the manner set forth
in paragraph 3 hereof.
When Option May Be Exercised.
The Option granted you hereunder shall be first exercisable
from the effective date of the Committee's grant as set forth above. Your
entitlement to exercise this Option shall vest as follows:
25% at grant date and an additional 25% on each of the next
three anniversaries of the grant date.
This Option may not be exercised for less than fifty (50) shares at any one time
(or the remaining shares then purchasable if less than fifty (50)) and expires
at the end of ten (10) years from the date it is granted whether or not it has
been duly exercised, unless sooner terminated as provided in paragraphs 5, 6,
and 7 hereof.
How Option May Be Exercised.
This Option is exercisable by a written notice signed by you
and delivered to the Company at its executive offices, signifying your election
to exercise the Option. The notice must state the number of shares of Class A
Common Stock as to which your Option is being exercised and must be accompanied
by cash, shares of Class A Common Stock already owned by you (the value of such
stock shall be its fair market value on the date of exercise as determined under
Paragraph 6(a) of the Plan), or any combination thereof. Any shares of Class A
Common Stock delivered in satisfaction of all or any portion of the purchase
price shall be appropriately endorsed for transfer and assignment to the
Company. No shares of Class A Common Stock shall be issued until full payment
therefor has been made.
The Company shall prepare and file with the Securities and
Exchange Commission a Registration Statement on Form S-8 under the Securities
Act of 1933 covering shares issuable pursuant to the terms of the Plan. The
Company will endeavor to keep such registration statement effective at all times
that this Agreement is outstanding, but in the event that such registration
statement is not effective at the time of exercise, your written notice of
exercise to the Company must contain a statement by you (in form acceptable to
the Company) that such shares are being acquired by you for investment and not
with a view to their distribution or resale.
If notice of the exercise of this Option is given by a person
or persons other than you, the Company may require, as a condition to the
exercise of this Option, the submission to the Company of appropriate proof of
the right of such person or persons to exercise this Option.
Certificates for the shares of Class A Common Stock purchased
hereunder will be issued as soon as practicable. The Company, however, shall not
be required to issue or deliver a certificate for any shares until it has
complied with all requirements of the Securities Act of 1933, the Securities
Exchange Act of 1934, any national securities exchange or automated quotation
system upon which shares of Class A Common Stock may then be listed and all
applicable state laws in connection with the issuance or sale of such shares or
the listing of such shares on said exchange. Until the date of issuance of the
certificate for such shares to you (or any person succeeding to your rights
pursuant to the Plan), you (or such other person, as the case may be) shall have
no rights as a stockholder with respect to any shares of Class A Common Stock
subject to this Option.
Termination of Employment.
If your employment with or your performance of services for
the Company is terminated or shall cease for any reason other than by death or
permanent disability (as determined by the Board of Directors or the Committee),
the Option shall simultaneously terminate, unless otherwise determined by the
Board of Directors or the Committee.
Disability.
If your employment with or your performance of services for
the Company or a subsidiary is terminated by reason of your permanent disability
(as determined by the Board of Directors or the Committee) and this Option has
not expired and has not been fully exercised, you may exercise the vested
portion of this Option for a period of one (1) year following such termination,
but not beyond the expiration date of the option.
Death.
If you die while employed by or performing services for the
Company or a subsidiary and this Option has not expired and has not been fully
exercised, the unvested portion of this Option shall immediately vest and the
Option may thereafter by immediately exercised in full by the legal
representative of your estate of by the legatee under your last will for a
period of three (3) months following the date of such death, but not beyond the
expiration date of the option.
Non-Transferability of Option.
This Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution, and shall be exercisable during your lifetime only by you, except
as otherwise set forth herein or in the Plan.
Dilution and Other Adjustments.
If at any time after the date of the grant of this Option,
there is any change in the outstanding Class A Common Stock of the Company by
reason of any stock dividend, stock split, reverse split, subdivision,
recapitalization, merger, consolidation (whether or not the Company is the
surviving corporation), combination or exchange of shares, reorganization or
liquidation, then the number of shares of Class A Common Stock covered by this
Option and the terms of this Option shall be equitably adjusted by the Board of
Directors or the Committee, whose determination shall be conclusive and binding.
Trading Black Out Periods.
By entering into this Agreement the undersigned expressly
agrees that: (i) during all periods of employment of the undersigned with the
Company and its subsidiaries, or otherwise while the undersigned is otherwise
maintained on the payroll of the Company or its subsidiaries, the undersigned
shall abide by all trading "black out" periods with respect to purchases or
sales of common stock or exercises of stock options for common stock established
from time to time by the Company ("Trading Black Out Periods") and (ii) upon any
cessation or termination of employment with the Company for any reason, the
undersigned agrees that for a period of six (6) months following the effective
date of any termination of employment or, if later, for a period of six (6)
months following the date as of which the undersigned is no longer on the
payroll of the Company or its subsidiaries, the undersigned shall continue to
abide by all such Trading Black Out Periods established from time to time by the
Company.
Change in Control.
This Option shall become immediately exercisable and fully
vested upon a Change in Control of the Company (as such term is defined in the
Plan).
Subject to Terms of the Plan.
This Agreement shall be subject in all respects to the terms
and conditions of the Plan and in the event of any question or controversy
relating to the terms of the Plan, the decision of the Board of Directors or the
Committee shall be conclusive.
Tax Status.
It is the intent of the Company that this Option be classified
as an "incentive stock option" under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended. The income tax implications of your
receipt of an incentive stock option and your exercise of such an option should
be discussed with your tax counsel.
You will recognize no income upon the grant of an incentive
stock option and incur no tax on its exercise unless you are subject to the
alternative minimum tax. If you hold the stock acquired upon exercise of this
incentive stock option for more than one year after the date the option was
exercised and for more than two years after the date the option was granted, you
generally will realize long-term capital gain or loss (rather than ordinary
income or loss) upon disposition of the stock. This gain or loss will be equal
to the difference between the amount realized upon such disposition and the
amount paid for the stock.
If you dispose of the stock prior to the expiration of either
of the above required holding periods, the gain realized upon such disposition,
up to the difference between fair market value of the stock on the date of
exercise and the option exercise price, will be treated as ordinary income. Any
additional gain will be long-term or short-term capital gain, depending upon
whether or not the stock was held for more than one year following the date of
exercise.
Sincerely yours,
BASE TEN SYSTEMS, INC.
By:______________________________________
Name:
Title:
Agreed to and accepted this ______ day of ___________, 1999.
_______________________________
EXHIBIT B
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT dated June ___, 1999, by and
between Base Ten Systems, Inc., a New Jersey corporation (together with any
successor, the "Company"), and Xxxxxx X. Xxxxxxxxx, residing at
___________________, (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 or should there be a significant change in the composition of the Board
of Directors of the Company (the "Board"), 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 desires to enhance executive morale and
its ability to retain existing management; and
WHEREAS, the Company desires to compensate 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 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 enter into 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 or change in the composition of the Board, 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 June 10, 2002; provided, however, that commencing on
June 11, 2000 and each succeeding June 11, 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 March 10 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, after the date of this Agreement:
(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
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 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 herein
below 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 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.
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
(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 in Parsippany, New Jersey, or at a
location or office within a 25 mile (map, not
travel,) radius of the Company's current principal
office in Parsippany, new Jersey (unless mutually
agreed to otherwise by the Executive and the
Company), except for required travel on the Company's
or a Subsidiary's business to an extent 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 the Executive's average annual
compensation 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 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), 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
deduction 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 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 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.
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(e) 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.
(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.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxxxx X. Xxxxxxxxx
--------------------
--------------------
If to the Company:
Base Ten Systems, Inc.
Xxx Xxxxxxxxxxx Xxxxx
X. X. Xxx 0000
Xxxxxxx, Xxx Xxxxxx 00000
Attention: President
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.
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:___________________________________________
Name:
Title:
______________________________________________
XXXXXX X. XXXXXXXXX
