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EXHIBIT 10.27
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of January, 2000, by and between XXXX X.
XXXXX, residing at 000 Xxxxxx Xxxx, Xxxxxxxxxxx, Xxx Xxxx 00000 (hereinafter
referred to as the "Employee") and BITWISE DESIGNS, INC., a Delaware corporation
with principal offices located at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxxx X.X. 00000
(hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the manufacture and distribution of
computers and document imaging systems, providing Internet-based document
authentication services and related business enterprises; and
WHEREAS, the Company employs and desires to continue the employment of the
Employee for the purpose of securing to the Company the experience, ability and
services of the Employee; and
WHEREAS, the Employee desires to continue his present employment with the
Company, pursuant to the terms and conditions herein set forth, superseding all
prior agreements between the Company, its subsidiaries and/or predecessors and
Employee;
NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the Company
hereby employs and agrees to continue the employment of the Employee, and the
Employee hereby accepts such continued employment in his capacity as President
and Chief Executive Officer. In this capacity, Employee will report to the Board
of Directors.
ARTICLE II
DUTIES
(A) The Employee shall, during the term of his employment with the
Company, perform such services and duties of an executive nature in connection
with the business, affairs and operations of the Company, and its subsidiaries,
as may be reasonably and in good faith assigned or delegated to him from time to
time by or under the authority of the Board of Directors of the Company and
consistent with the position of President and Chief Executive Officer.
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(B) The Employee agrees to use his best efforts in the promotion and
advancement of the Company and its welfare and business. Employee agrees to
devote his primary professional time to the business of the Company as Employee
deems reasonably necessary; provided, however, that the Company acknowledges
that Employee shall be entitled to pursue unrelated personal business ventures
that do not materially conflict with the performance of Employee's duties to the
Company.
(C) Employee shall be based in the Schenectady, New York area, and
shall undertake such occasional travel, within or without the United States as
is or may be reasonably necessary in the interests of the Company.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company shall pay
to Employee a salary at the rate of $250,000 per annum for the first l2 months
that this Agreement shall be in effect (payable in equal weekly installments or
pursuant to such regular pay periods adopted by the Company) (the "Base
Salary"). On each anniversary date of this Agreement the Base Salary shall be
increased l0% of the Base Salary for the previous l2 month period.
(B) Employee shall be entitled to receive a bonus (the "Bonus") during
each year of this Agreement, determined as follows:
The amount to be paid as a Bonus shall be determined as of each
June 30 based upon the fiscal year end and shall be equal to three (3%) percent
of the net pre-tax profit of the Company as determined by the Company's
independent auditors no later than 90 days following the end of the Company's
fiscal year without giving effect to loss carryforwards or non-cash items and
giving effect to and including revenues received by the Company during the
fiscal year and which revenues may have otherwise been excluded in computing net
pre-tax profit by reason of any revenue recognition rules otherwise utilized in
the application of generally accepted accounting principles, and excluding any
expense deduction attributed to such Bonus paid to any other executive officer
of the Company (the "Net Pre-Tax Profit"); provided that, in the event the Net
Pre-Tax Profit of the Company, as determined for any fiscal year is less than
$600,000 during the term of this Agreement, no bonus shall be paid by the
Company to the Employee pursuant to this subparagraph (B). Such determination,
for Bonus purposes only, shall be made in accordance with generally accepted
accounting principles, as modified by these resolutions.
(C) Employee may receive such other additional compensation as may be
determined from time to time by the Board of Directors. Nothing herein shall be
deemed or construed to require the Board to award any bonus or additional
compensation.
(D) The Company shall deduct from Employee's compensation all federal,
state and local taxes which it may now or may hereafter be required to deduct.
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ARTICLE IV
BENEFITS
(A) During the term hereof, (i) the Company shall provide Employee with
Blue Cross/Blue Shield or equivalent health insurance benefits and major medical
insurance; (ii) Employee shall be reimbursed by the Company upon presentation of
appropriate vouchers for all business expenses incurred by the Employee on
behalf of the Company; (iii) the Company shall provide the Employee with an
automobile suitable for his position and reimburse reasonable automobile
expenses including repairs, maintenance, gasoline charges, mobile phone etc.
(B) In the event the Company wishes to obtain Key Man life insurance on
the life of Employee, Employee agrees to cooperate with the Company in
completing any applications necessary to obtain such insurance and promptly
submit to such physical examinations and furnish such information as any
proposed insurance carrier may request.
(C) The Company will obtain and maintain during the full term hereof
and at its sole cost and expense a policy of life insurance on the life of
Employee in the face amount of $500,000 payable to a beneficiary named and
designated by Employee. Upon the conclusion of this Agreement, all right, title
and interest in the policy shall be transferred to the Employee, and the
Employee shall be responsible for any premiums due after such transfer.
(D) For each year of the term hereof, Employee shall be entitled to
four weeks paid vacation.
ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the termination of his
employment hereunder except when acting on behalf of and with the authorization
of the Company, make use of or disclose to any person, corporation, or other
entity, for any purpose whatsoever, any trade secret or other confidential
information concerning the Company's business, finances, methods, operations,
marketing information, research and development, customers, pricing and
information relating to proposed expansion of the Company or the Company's
business plans (collectively referred to as the "Proprietary Information"). For
the purposes of this Agreement, trade secrets and confidential information shall
mean information disclosed to the Employee or known by him as a consequence of
his employment by the Company, whether or not pursuant to this Agreement, and
not generally known in the industry, concerning the business, finances, methods,
operations, marketing information, research and development, customers, pricing
and information relating to proposed expansion of the Company or the Company's
business plans. The Employee acknowledges that trade secrets and other items of
confidential information, as they may exist from time to time, are valuable and
unique assets of the Company, and that disclosure of any such information would
cause
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substantial injury to the Company.
ARTICLE VI
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment with the
Company or Employee's discharge in accordance with Article IX paragraph (C),
Employee agrees that he will not, for a period of one year following such
termination, directly or indirectly enter into or become associated with or
engage in any other business (whether as a partner, officer, director,
shareholder, employee, consultant, or otherwise), which business is primarily
involved in the manufacture, development and/or distribution of computers and/or
document imaging systems in the same geographical areas of operation of the
Company.
(B) If any court shall hold that the duration of non-competition or any
other restriction contained in this paragraph is unenforceable, it is our
intention that same shall not thereby be terminated but shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or
unenforceable or in the alternative such judicially substituted term may be
substituted therefor.
ARTICLE VII
TERM
This Agreement shall be for a term commencing on the date first set forth
above and terminating January 1, 2003, unless sooner terminated pursuant to the
terms hereof, and renewable as provided for herein, for one additional period of
one year. The Company agrees to notify Employee in writing of its intent to
negotiate an extension of this Agreement six months prior to the expiration of
the original term hereof. If the Company fails to so notify Employee, or after
having timely notified Employee of its intention to extend, fails to reach
agreement with Employee on the terms of such extension, this Agreement shall be
renewable, at the option of the Employee, for an additional period of one year
from the date on which this Agreement would have expired without such renewal
(the "Renewal Term"), except that Employee's base salary shall be increased l0%
above the prior year. If the Company elects not to seek to negotiate an
extension and has so timely notified Employee, then the Company shall pay
Employee, upon the expiration of the original term of this Agreement, or the
Renewal Term, whichever is applicable, a severance benefit equal to Employee's
annual Base Salary and Bonus for the year immediately preceding the termination
of this Agreement, payable in twelve equal monthly installments commencing on
the termination date of this Agreement.
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ARTICLE VIII
DISABILITY DURING TERM
In the event that the Employee becomes totally disabled so that he is
unable or prevented from performing substantially all of his usual duties
hereunder for a period of four (4) consecutive months, and the Company elects to
terminate Employee under Article IX(B) then, and in that event, the Company
shall continue to compensate Employee and Employee shall receive his Base Salary
as provided under Article III of this Agreement for a period of twelve (l2)
months commencing from the date of such termination. The aforesaid obligations
of the Company shall not extend beyond the term of this Agreement. The
obligation of the Company to make the aforesaid payments shall be modified and
reduced and the Company shall receive a credit for all disability insurance
payments which Employee may receive or to which he may become entitled.
ARTICLE IX
TERMINATION
The Company may terminate this Agreement:
(A) Upon the death of Employee during the term hereof, except that the
Employee's legal representatives, successors, assigns and heirs shall have those
rights and interests as otherwise provided in this Agreement, including the
right to receive accrued but unpaid Bonus compensation, if any.
(B) Subject to the terms of Article VIII herein, upon written notice
from the Company to the Employee, if Employee becomes totally disabled and as a
result of such total disability, has been prevented from and unable to perform
all of his duties hereunder for a consecutive period of four (4) months.
(C) Upon written notice from the Company to Employee, if Employee is
convicted of a felony, or has directly derived personal monetary gain from
actual fraud committed by Employee against the Company.
ARTICLE X
EXTRAORDINARY TRANSACTIONS
The Company's Board of Directors has determined that it is appropriate
to reinforce and encourage the continued attention and dedication of members of
the Company's management, including the Employee, to their assigned duties
without distraction in potentially disturbing circumstances arising from the
possibility of a change in control of the Company. A "Change in Control" of the
Company shall be deemed to have occurred if there shall be consummated (i)(x)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into
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cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (ii) the stockholders of the
Company approved any plan or proposal for the liquidation or dissolution of the
Company, or (iii) any person (as such term is used in Sections 13(d) and
l3(d)(2) of the Securities Exchange Act of l934, as amended (the "Exchange
Act"), who is not a beneficial owner (within the meaning of Rule l3d-3 under the
Exchange Act) of 20% or more of the Company's outstanding Common Stock on the
date hereof, shall become the beneficial owner (within the meaning of Rule l3d-3
under the Exchange Act) of 20% or more of the Company's outstanding Common
Stock, or (iv) during any period of two consecutive years, individuals who at
the beginning of such period constituted the entire Board of Directors shall
cease for any reason to constitute a majority thereof unless the election, or
the nomination for election by the Company's stockholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
The Company agrees that, if during the term hereof, or during such time as
the Employee is otherwise employed by the Company, a Change in Control shall
occur, all options to purchase Common Stock of the Company held by Employee,
either pursuant to this Agreement or otherwise, shall immediately vest and
become exercisable on the first day following a Change in Control. Further, the
options shall be deemed amended to provide that in the event of termination of
Employee after an event enumerated in this Article X, the options shall remain
exercisable for the duration of their term; and further, at the Employee's
option, an amount equal to three times the aggregate annual compensation paid to
the Employee during the calendar year preceding the Change in Control shall be
credited against the exercise price of any options held by Employee at the time
Employee elects to exercise such options; provided, however, that if the lump
sum severance payment under this Article X, either alone or together with other
payments which the Employee has the right to receive from the Company, would
constitute a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code of l954, as amended (the "Code")), such credit shall be reduced to
the largest amount as will result in no portion of the credit under this Article
X being subject to the excise tax imposed by Section 4999 of the Code.
ARTICLE XI
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written,
without prejudice to Employee's right to all accrued compensation prior to the
effective date of this Agreement.
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ARTICLE XII
ARBITRATION
Any dispute arising out of the interpretation, application and/or
performance of this Agreement with the sole exception of any claim, breach or
violation arising under Articles V or VI hereof shall be settled through final
and binding arbitration before a single arbitrator in the City of New York, the
State of New York in accordance with the rules of the American Arbitration
Association. The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of corporate law. Any judgment upon any
arbitration award may be entered in any court, federal or state, having
competent jurisdiction of the parties.
ARTICLE XIII
SEVERABILITY
If any provision of this Agreement shall be held invalid and unenforceable,
the remainder of this Agreement shall remain in full force and effect. If any
provision is held invalid or unenforceable with respect to particular
circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE XIV
NOTICE
All notices required to be given under the terms of this Agreement shall be
in writing and shall be deemed to have been duly given only if delivered to the
addressee in person or mailed by certified mail, return receipt requested, as
follows:
IF TO THE COMPANY: BITWISE DESIGNS, INC.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
IF TO THE EMPLOYEE: XXXX X. XXXXX
000 Xxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
or to any such other address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph. Any such written notice
shall be effective upon receipt, but not later than four (4) days after the
deposit with the U.S. Postal Service.
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ARTICLE XV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE XVI
WAIVER
The waiver by either party of any breach or violation of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of construction and validity.
ARTICLE XVII
GOVERNING LAW
This Agreement has been negotiated and executed in the State of New York,
and New York law shall govern its construction and validity.
ARTICLE XVIII
JURISDICTION
Any or all actions or proceedings which may be brought by the Company or
Employee under this Agreement shall be brought in courts having a situs within
the State of New York and Employee hereby consents to the jurisdiction of any
local, state or federal court located within the State of New York.
ARTICLE XIX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties hereto. No
change, addition or amendment shall be made hereto, except by written agreement
signed by the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written.
(Corporate Seal) BITWISE DESIGNS, INC.
By__________________________
J. Xxxxxx Xxxxxxxx
Chairman - Compensation
Committee
__________________________
XXXX X. XXXXX (Employee)
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