Employment Agreement - Bitwise Designs Inc. and Nicholas Themelis
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 28th day of February, 2000, by and
between NICHOLAS THEMELIS, residing at 14 Serenite Lane, Muttontown, New York
11791 (hereinafter referred to as the "Employee") and BITWISE DESIGNS, INC., a
Delaware corporation with principal offices located at 2165 Technology Drive,
Schenectady N.Y. 12308 (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, document imaging systems and related business
enterprises and various Internet products and services; and
WHEREAS, the Company desires to employ the Employee for the
purpose of securing to the Company the experience, ability and services of the
Employee; and
WHEREAS, the Employee desires to be employed by 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 Employee, and the Employee hereby accepts
such employment in his capacity as Vice President and Chief Technology Officer.
In this capacity, Employee will report to the Chairman of the Board and the
Chief Executive Officer of the Company.
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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 Chief Executive Officer
and/or the Board of Directors of the Company and consistent with the position of
Vice President and Chief Technology Officer.
(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
is reasonably necessary.
(C) Employee shall be based in the New York City, New York
area but will be required to spend a reasonable amount of business time in
Schenectady, New York, 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.
(D) Employee shall also serve as the Chief Executive Officer
of a joint venture between the Company and a nonaffiliated party tentatively
named "AuthentiGraph.com."
(E) Employee shall also be appointed to the advisory board to
be formed by Bitwise which will advise the Company on Internet acquisitions.
Employee shall be entitled to receive the same compensation as other members of
the advisory board, as set by the Compensation Committee of the Board of
Directors of the Company.
ARTICLE III
COMPENSATION
(A) Commencing on the 1st day of April, 2000, the Company
shall pay to Employee a salary at the rate of $240,000 per annum for the
following 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"),increasing to $260,000 one month after the first
anniversary date of this Agreement. The Company guarantees payment of the Base
Salary through the 31st day of March,2001. Thereafter, the Company may
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terminate the Employee's employment under this Agreement according to the terms
of Article IX of this Agreement.
(B) Employee shall be entitled to receive a bonus (the
"Bonus") 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.
(C) Employee shall also be entitled to receive a base salary
of $50,000 to serve as Chief Executive Officer of AuthentiGraph.com.
(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.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) the Company shall make
a good faith effort to provide Employee with Aetna Point of Service
or equivalent health insurance benefits, and major medical
insurance; and (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. If the Company
is unable to furnish the Employee with Aetna Point of Service or
equivalent health insurance benefits, the Company shall provide
Employee with Blue Cross/Blue Shield or equivalent health insurance
benefits.
(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) In the event Employee wishes to obtain life insurance
coverage, the Company agrees to provide Employee with up to $5,000 to be applied
towards annual premium payments on such policy as Employee desires to procure.
(D) For each year of the term hereof, Employee shall be
entitled to four weeks paid vacation.
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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, technology,
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, technology, 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 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 document imaging
systems in the same geographical areas of operation of the Company on the offer
or development of an Internet service concerning the verification of images,
documents and facsimiles, or any other product or service or under development
by the Company during the term of this Agreement.
(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
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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 March 31, 2001, unless sooner terminated
pursuant to the terms hereof.
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 two (2) 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 six
(6) 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,
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has been prevented from and unable to perform all of his duties hereunder for a
consecutive period of two (2) months.
(C) Upon written notice from the Company to the Employee, at
any time for "Cause." For purposes of this Agreement, "Cause" shall be defined
as: (i) willful disobedience by the Employee of a material and lawful
instruction of the Board of Directors or Chief Executive Officer of the Company;
(ii) conviction of the Employee of any misdemeanor or crime; (iii) breach by the
Employee of any material provision of this Agreement; (iv) conduct amounting to
fraud, dishonesty, negligence, willful misconduct, insubordination; or (v)
inattention to or unsatisfactory performance of duties.
(D) Upon termination of this Agreement pursuant to Article
IX(C)(v), Employee shall be entitled to severance payment equal to six months of
Employee's Base Salary, payable in six monthly payments.
ARTICLE X
STOCK OPTIONS
As an inducement to Employee to enter into this Agreement the
Company hereby grants to Employee options to purchase shares of the Company's
Common Stock, $.00l par value, upon and subject to the following conditions:
(A) Subject to the terms and conditions of the Company's l992
Employee Stock Option Plan (the "Plan"), a copy of which Employee acknowledges
having been received, and the terms and conditions set forth in the Stock Option
Certificate which are incorporated herein by reference, the Employee is hereby
granted options to purchase 200,000 shares of the Company's Common Stock of
which options to purchase 50,000 shares shall be vested as of the date hereof,
and the remaining options to purchase 150,000 shares shall be vested on the six
month, one year and 18 month anniversaries hereof in equal increments of 50,000
options. The option shall contain such other terms and conditions as set forth
in the stock option agreement. The exercise price of the options shall be $11.25
per share. The foregoing options shall be qualified as incentive stock options
to the extent legally permissible. If Employee is terminated without cause, all
of the Bitwise options shall vest immediately.
(B) The Options provided for herein are not transferable by
Employee, except to members of Employee's immediate family or a
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trust for the benefit of Employee's estate or beneficiaries thereof, and shall
be exercised only by Employee, or by his legal representative or executor, as
provided in the Plan.
(C) Employee shall be granted an option to purchase such
number of shares of AuthentiGraph, at an aggregate exercise price of $50,000, as
shall equal 10% of the total issued and outstanding shares of AuthentiGraph. The
AuthentiGraph options shall expire at the end of five years from the date of
issuance. All options to purchase common stock of AuthentiGraph shall be vested
as of the date hereof. The options shall provide that in the event AuthentiGraph
shall at any time after the date hereof and prior to the earlier of (i)the
effective date of AuthentiGraph's initial public offering or (ii) the
consummation of, in the aggregate, private equity financing in the amount of
$10,000,000, sell Common Stock, or options, rights or warrants to subscribe for
shares of Common Stock, or any securities convertible into or exchangeable for
shares of Common Stock (except options granted under AuthentiGraph's Employee
Stock Option Plan and warrants granted as compensation for services)("Additional
Securities"), Employee shall be granted 10% of such Additional Securities.
(D) Employee shall be granted an option to purchase 2% of the
issued and outstanding shares of Authentidate.com as of the date hereof at an
aggregate exercise price of $400,000. The Authentidate.com options shall vest
pursuant to the following schedule: (i) 25% of the options granted to Employee
shall be vested as of the date hereof; and (ii) the remaining options granted to
Employee shall be vested on the six month, one year and 18 month anniversaries
hereof in equal increments of 25% of the aggregate grant. The Authentidate.com
options shall expire at the end of five years from the date of issuance. If
Employee is terminated without cause, all of the Authentidate.com options shall
vest on the date of such termination. The option shall provide that in the event
Authentidate.com shall at any time after the date hereof and prior to the
earlier of (i)the effective date of Authentidate.com's initial public offering
or (ii) the consummation of, in the aggregate, private equity financing in the
amount of $10,000,000, sell Common Stock or options, rights or warrants to
subscribe for shares of Common Stock, or any securities convertible into or
exchangeable for shares of Common Stock (except options granted under
Authentidate.com's Employee Stock Option Plan or warrants granted as
compensation for services)("Additional Securities"), Employee shall be granted
2% of such Additional Securities.
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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.
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 mutual consent
of the parties, but if the parties cannot reach an agreement, 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:
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IF TO THE COMPANY: BITWISE DESIGNS, INC.
2165 Technology Drive
Schenectady, NY 12308
IF TO THE EMPLOYEE: Nicholas Themelis
14 Serenite Lane
Muttontown, New York 11791
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.
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
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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.
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. Edward Sheridan, Chairman
Compensation Committee
_________________________________
NICHOLAS THEMELIS (Employee)
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