Exhibit 10.1
EMPLOYMENT
AGREEMENT
AGREEMENT made as of
the 1 st day of January, 2009 by and
between O’Connell Benjamin, residing at
(hereinafter referred to as the “Employee”) and
Authentidate Holding Corp., a Delaware corporation with principal
offices located at 300 Connell Drive, Berkeley Heights, NJ
07922.
W I T N E S S E T
H:
WHEREAS, Authentidate Holding Corp.
and its subsidiaries (the “Company”) are engaged in the
business of providing Internet and software-based document
authentication services and related business enterprises;
and
WHEREAS, the Company desires to
continue the employment of the Employee for the purpose of securing
for the Company the experience, ability and services of the
Employee; and
WHEREAS, the Employee desires to
continue employment with the Company pursuant to the terms and
conditions herein set forth, superseding all prior oral and written
employment agreements and term sheets and letters 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.
Definitions
1.1 Accrued Compensation.
“Accrued Compensation” shall mean an amount which shall
include all amounts earned or accrued through the
“Termination Date” (as defined below) but not paid as
of the Termination Date, including
(a) Base Salary,
(b) reimbursement for business
expenses incurred by the Employee on behalf of the Company,
pursuant to the Company’s expense reimbursement policy in
effect at such time,
(c) expense allowance,
(d) vacation pay per Company Policy,
and
(e) bonuses and incentive
compensation earned and awarded prior to the Termination
Date.
1.2 “Breakeven
Operations” operations shall mean, a calendar month of
operations prior to December 31, 2009, for which the
Company’s shall not have suffered a loss from consolidated
operations excluding
(a) “extraordinary
items” of gain or loss as that term shall be defined in
generally accepted accounting principles;
(b) any gains or profits realized
from the sale of any assets in the outside the ordinary course of
business;
(c) executive bonuses, but including
base salary of executives based on the rate of base compensation at
the commencement of the calendar year 2009.
1.3 Cause .
“Cause” shall mean:
(a) willful disobedience by the
Employee of a reasonable, material and lawful instruction of the
Board of Directors of the Company consistent with the duties and
functions of Employee’s position;
(b) conviction of the Employee of
any misdemeanor involving fraud or embezzlement or similar crime,
or any felony;
(c) fraud, gross negligence or
willful misconduct in the performance of any material duties to the
Company; or
(d) excessive absences from work,
other than for illness or Disability; provided that the Company
shall not have the right to terminate the employment of Employee
pursuant to the foregoing clauses (a), (c) or (d) above
unless written notice specifying such breach shall have
been given to the Employee and, in the case of
breach which is capable of being cured, the Employee shall have
failed to cure such breach within thirty (30) days after his
receipt of such notice.
1.4 Change in Control.
“Change in Control” shall mean any of the following
events:
(a) An acquisition (other than
directly from the Company) of any voting securities of the Company
(the “Voting Securities”) by any “Person”
(as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)) immediately after which such Person has
“Beneficial Ownership” (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of twenty percent
(20%) or more of the combined voting power of the
Company’s then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a
“Non-Control Acquisition” (as defined below) shall not
constitute an acquisition which would cause a Change in
Control.
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(i)
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A
“Non-Control Acquisition” shall mean an acquisition by
(1) an employee benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y) any
corporation or other Person of which a majority of its voting power
or its equity securities or equity interest is owned directly or
indirectly by the Company (a “Subsidiary”), or
(2) the Company or any Subsidiary.
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(ii)
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Notwithstanding an acquisition as
described in this subparagraph (a), a Change in Control shall not
be deemed to occur solely because a Person (the “Subject
Person”) gained Beneficial Ownership of more than the
permitted amount of the outstanding
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Voting Securities as a result of
the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject
Person, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of
Voting Securities by the Company, and after such share acquisition
by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of
the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
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(b) The individuals who, as of the
date this Agreement is approved by the Board, are members of the
Board (the “Incumbent Board”), cease for any reason to
constitute at least two-thirds of the Board; provided, however,
that if the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered and
defined as a member of the Incumbent Board; and provided, further,
that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of
either an actual “Election Contest” (as described in
Rule 14a-11 promulgated under the 1934 Act) or other solicitation
of proxies or consents by or on behalf of a Person other than the
Board (a “Proxy Contest”); or
(c) Approval by stockholders of the
Company of:
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(i)
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A merger, consolidation or
reorganization involving the Company, unless: (1) the
stockholders of the Company, immediately before
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such merger, consolidation or
reorganization, own, directly or indirectly immediately following
such merger, consolidation or reorganization, at least sixty
percent (60%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger or
consolidation or reorganization (the “Surviving
Corporation”) in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
consolidation or reorganization, (2) the individuals who were
members of the Incumbent Board immediately prior to the execution
of the agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of the
board of directors of the Surviving Corporation, and (3) no
Person (other than the Company, any Subsidiary, any employee
benefit plan (or any trust forming a part thereof) maintained by
the Company, the Surviving Corporation or any Subsidiary) becomes
Beneficial Owner of twenty percent (20%) or more of the
combined voting power of the Surviving Corporation’s then
outstanding voting securities as a result of such merger,
consolidation or reorganization, a transaction described in clauses
(1) through (3) shall herein be referred to as a
“Non-Control Transaction”; or
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(ii)
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An agreement for the sale or
other disposition of all or substantially all of the assets of the
Company, to any Person, other than 1) a transfer to a Subsidiary,
in one transaction or a series of
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related transactions; or 2) the
sale, spin-off or divestiture of a subsidiary or business unit
other than the US security software business unit.
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(iii)
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The
stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company.
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(d) Notwithstanding anything
contained in this Agreement to the contrary, if the
Employee’s employment is terminated prior to a Change in
Control and the Employee reasonably demonstrates that such
termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a “Third Party”) or
(ii) otherwise occurred in connection with, or in anticipation
of, a Change in Control, then for all purposes of this Agreement,
the date of a Change in Control with respect to the Employee shall
mean the date immediately prior to the date of such termination of
the Employee’s employment.
1.5 Continuation Benefits.
“Continuation Benefits” shall be the continuation of
the Benefits, as defined in Section 5.1, for the period from
the Termination Date to either (i) the later of the Expiration
Date, or the end of the month in which the one-year anniversary of
the Termination Date occurs, or (ii) such other period as
specifically stated by this Agreement (the “Continuation
Period”), at the Company’s expense, less any normal
payroll deductions, on behalf of the Employee and his dependents;
provided, however, if any of the Benefits required to be provided
by the Company during the Continuation Period under the
Company’s benefit plans are, pursuant to the terms of such
plans, not available to non-employees of the Company, the Company,
at its sole cost and expense, less any normal payroll deductions,
shall be required to provide such benefits as shall be reasonably
available and substantially similar to the benefits provided to
employees of the Company. The Company’s obligation hereunder
with respect to the
foregoing benefits shall also be limited to the
extent that if the Employee obtains such benefits pursuant to a
subsequent employer’s benefit plan, the Company may reduce
the coverage of any benefits it is required to provide the Employee
hereunder as long as the aggregate coverage and benefits of the
combined benefit plans is no less favorable to the Employee than
the coverage and benefits required to be provided hereunder. This
definition of Continuation Benefits shall not be interpreted so as
to limit any benefits to which the Employee, his dependents or
beneficiaries may be entitled under any of the Company’s
employee benefit plans, programs or practices following the
Employee’s termination of employment, including, without
limitation, retiree medical and life insurance benefits.
1.6 Disability .
“Disability” shall mean a physical or mental infirmity
which impairs the Employee’s ability to substantially perform
his duties with the Company for a period of three consecutive
months, and the Employee has not returned to his full time
employment prior to the Termination Date as stated in the
“Notice of Termination” (as defined below).
1.7 Good Reason . “Good
Reason” shall mean without the written consent of the
Employee:
(a) a material breach of any
provision of this Agreement by the Company;
(b) failure by the Company to pay
when due any compensation to the Employee;
(c) a reduction in the
Employee’s Base Salary;
(d) failure by the Company to
maintain the Employee in the positions referred to in
Section 2.1 of this Agreement, unless such change was due to a
Change of Control;
(e) assignment to the Employee of
any duties materially and adversely inconsistent with the
Employee’s positions, authority, duties, responsibilities,
powers, functions, reporting relationship or title as contemplated
by Section 2.1 of this Agreement or any other
action by the Company that results in a material
diminution of such positions, authority, duties, responsibilities,
powers, functions, reporting relationship or title, unless such
change was due to a Change of Control;
(f) relocation of the principal
office of the Company or the Employee’s principal place of
employment to a location outside a 15 (fifteen) mile radius of the
present location in Berkeley Heights, New Jersey, without the
Employee’s written consent; or
(g) a Change in Control, provided
the event on which the Change of Control is predicated occurs not
less than 90 nor more than 150 days of the service of the Notice of
Termination by the Employee, it being understood that Employee
shall have the right to terminate his employment under this
Section 1.6 (g) for any reason or no reason within such
60 day period; and provided further, however, that the Employee
agrees not to terminate his employment for Good Reason pursuant to
clauses (a) through (f) unless (i) the Employee has
given the Company at least 30 days’ prior written notice of
his intent to terminate his employment for Good Reason, which
notice shall specify the facts and circumstances constituting Good
Reason; and (ii) the Company has not remedied such facts and
circumstances constituting Good Reason to the reasonable and good
faith satisfaction of the Employee within a 30-day period after
receipt of such notice.
1.8 Notice of Termination .
“Notice of Termination” shall mean a written notice
from the Company, or the Employee, of termination of the
Employee’s employment which indicates the specific
termination provision in this Agreement relied upon, if any, and
which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated.
1.9 Severance Payment .
“Severance Payment” shall mean an amount equal to 12
months of Employee’s Base Salary in effect on the Termination
Date, but no less than $290,000.
1.10 Termination Date .
Termination Date shall mean
(a) in the case of the
Employee’s death, his date of death;
(b) in the case of Good Reason, 30
days from the date the Notice of Termination is given to the
Company, provided the Company has not remedied such facts and
circumstances constituting Good Reason to the reasonable and good
faith satisfaction of the Employee;
(c) in the case of termination of
employment on or after the Expiration Date, the last day of
employment; and
(d) in all other cases, the date
specified in the Notice of Termination; provided, however, if the
Employee’s employment is terminated by the Company for any
reason except Cause, the date specified in the Notice of
Termination shall be at least 30 days from the date the Notice of
Termination is given to the Employee, and provided further that in
the case of Disability, the Employee shall not have returned to the
full-time performance of his duties during such period of at least
30 days.
Article II.
Employment
2.1 Subject to and upon the terms
and conditions of this Agreement, the Company hereby agrees to
continue the employment of the Employee, and the Employee hereby
accepts such continued employment in his capacity as
President.
Article III.
Duties
3.1 The Employee shall, during the
term of his employment with the Company, and subject to the
direction and control of the Board, report directly to the Board,
or the Chief Executive Officer, if any, and shall exercise such
authority, perform such executive duties and functions and
discharge such responsibilities as are reasonably associated with
his executive position or as may be reasonably assigned or
delegated to him from time to time by the Board, consistent with
his position as President. In general, Employee shall have
management authority with respect to, and responsibility for, the
overall operations and day-to-day business and affairs of the
Company and all major operating units.
3.2 During the term of this
Agreement and excluding periods of vacation and sick leave to which
the Employee is entitled, the Employee agrees to devote
substantially all of his business time and attention to the affairs
of the Company and, to the extent n
