Document:

Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

This employment agreement (the “Agreement”)
is made as of the 15th day of February, 2006 by and between William
A. Marshall (hereinafter referred to as the “Employee”) and Authentidate
Holding Corp., a Delaware corporation.

 

WITNESSETH:

 

WHEREAS, Authentidate Holding Corp.  and its subsidiaries (the “Company”) are
engaged in the business of the manufacture and distribution of computers and document
imaging systems, providing Internet and software-based document authentication
services and related business enterprises; and

 

WHEREAS, the Company desires to employ the
Employee for the purpose of securing for the Company the experience, ability
and services of the Employee; and

 

WHEREAS, the Employee desires to accept
employment with the Company effective February 15, 2006 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 (i) Base Salary, (ii) reimbursement
for business expenses incurred by the Employee on behalf of the Company,
pursuant to the Company’s

 

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expense reimbursement policy in effect at such time, (iii) vacation
pay and discretionary time per Company Policy, and (iv) bonuses and
incentive compensation earned and accrued prior to the Termination Date (as
determined in good faith by the Board of Directors).

 

1.2           Cause. “Cause” shall mean: (i) willful disobedience by
the Employee of a reasonable, material and lawful instruction of the Chief
Executive Officer or Board of Directors of the Company consistent with the
duties and functions of Employee’s position; (ii) conviction of the
Employee of any misdemeanor involving fraud or embezzlement or similar crime,
or any felony; (iii) fraud, gross negligence or willful misconduct in the
performance of any material duties to the Company; or (iv) 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 (i), (iii) or (iv) 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.

 

1.3           Change
in Control.  “Change in
Control” shall mean any of the following events:

 

a.             (i) 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

 

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acquired
in a “Non-Control Acquisition” (as defined below) shall not constitute an
acquisition which would cause a Change in Control. 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.

 

(ii) 
Notwithstanding the foregoing, 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 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.

 

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

 

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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:

 

(i)            A merger,
consolidation or reorganization involving the Company, unless: (1) the
stockholders of the Company, immediately before 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)           An agreement for
the sale or other disposition of all or substantially all of the assets of the
Company, to any Person, other than a transfer to a Subsidiary, in one
transaction or a series of related transactions; or

 

(iii)          The
stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.

 

1.4           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 end of the month in which the final Severance
Payment (as defined below) installment is payable (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

 

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the Employee’s termination of employment, including, without limitation,
retiree medical and life insurance benefits.

 

1.5           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 ninety
consecutive days, 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).

 

1.6           Good Reason. “Good Reason” shall mean without the written
consent of the Employee: (A) a material adverse breach of any provision of
this Agreement by the Company; (B) failure by the Company to pay when due
any compensation or material benefit to the Employee; (C) failure by the
Company to maintain the Employee in the positions referred to in Section 2.1
of this Agreement; (D) the relocation of the principal office of the
Company or the Employee’s principal place of employment without the Employee’s
consent, to a location other than within a 30 mile radius from its current
location;  (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; or (F) a reduction in the Employee’s Base Salary or
target bonus percentage, or any material reduction in benefits below that which
is required by this Agreement; 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

 

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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.

 

1.7           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.

 

1.8           Severance
Payment.  “Severance Payment” shall
mean an amount equal to the sum of 12 months of the Employee’s Base Salary in
effect on the Termination Date (if Base Salary has been reduced then the
Severance Payment shall be based on the highest Base Salary paid to the
Employee). The Severance Payment shall be payable as provided in Section 9.  For purposes of computing the Severance
Payment, Base Salary shall include any automatic increases to Base Salary to
which the Employee would have been entitled had this Agreement not been
terminated.

 

1.9           Termination Date. Termination Date shall mean (i) in
the case of the Employee’s death, his date of death; (ii) 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; and (iii) in all other cases, the date specified in the Notice
of Termination; provided, however, (A) if the Employee’s employment is
terminated by the Company pursuant to Section 9.1(c), the date specified
in the Notice of Termination shall be at least 60 days from the date the Notice
of Termination is given to the Employee and (ii) that in the case of
Disability, the

 

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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 employs the Employee, and the Employee hereby accepts such
employment, in the capacity of Chief Financial Officer and Treasurer.

 

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 Chief
Executive Officer of the Company and shall exercise such authority, perform such
executive duties and functions and discharge such responsibilities as are
reasonably associated with his position or as may be reasonably assigned or
delegated to him from time to time by the Chief Executive Officer or the Board,
consistent with his position as Chief Financial Officer and Treasurer.  Employee shall perform, in conjunction with
the Company’s executive management, to the best of his ability the following
services and duties for the Company and its subsidiary corporations (by way of
example, and not by way of limitation):

 

(i)            Those
duties attendant to the executive position with the Company for which he was
hired or appointed;

 

(ii)           Oversee
the management of the Company’s cash and investments in accordance with Board
of Director guidelines;

 

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(iii)          Oversee
the establishment and implementation of current and long range financial plans,
objectives and policies, subject to the approval of the CEO and Board of
Directors;

 

(iv)          Oversee
the management of the Company’s accounting staff;

 

(v)           Oversee
the preparation and filing of all SEC related reports and registration
statements as well as all federal and state tax returns;

 

(vi)          Participate
in the raising of capital either through public or private equity transactions
or through debt;

 

(vii)         Participate
with executive management and the Board in the planning and execution of the
Company’s business plan;

 

(viii)        Assist
in the planning and negotiations of all acquisitions and dispositions of
business units;

 

(ix)           Promote
the relationships of the Company and its subsidiaries with their respective
employees, customers, suppliers, shareholders, analysts, market makers, fund
managers and others in the business community; and

 

(x)            Oversee
the preparation of the consolidated financial statements of the Company and its
subsidiaries and divisions.

 

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 necessary to discharge the responsibilities assigned hereunder, use his
best efforts in the performance of his duties for the Company and any
subsidiary corporation of the Company. 
During the term of this Agreement the Employee may, so long as it does
not materially interfere with his duties hereunder: (i) subject to

 

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Article VII hereof, serve on the board of directors (or equivalent
bodies) of civic, non-profit, or charitable organizations or entities
unaffiliated with the Company, (ii) deliver lectures or otherwise
participate in speaking engagements, and (iii) manage his personal
investments and affairs.

 

3.3           Employee
shall be based out of the Company’s principal office, currently located in
Berkeley Heights, New Jersey, and undertake travel to the Company’s operational
offices, and such other occasional travel within or outside the United States
as is or may be reasonably necessary in the interests of the Company.  All such travel shall be at the sole cost and
expense of the Company and all airplane travel shall be in accordance with the
Company’s policy for executive officers.

 

ARTICLE IV

 

COMPENSATION

 

4.1           During
the term of this Agreement, Employee shall be compensated at the rate of
$260,000 per annum, subject to such increases to be determined by the Board, or
if the Board so designates, the Compensation Committee, in its discretion, at
the commencement of each of the Company’s fiscal years, commencing with the
fiscal year beginning July 1, 2007, during the term of this Agreement (the
“Base Salary”).  Base Salary shall be
paid to the Employee in regular installments on each of the Company’s regular
pay dates for executives, but no less frequently than monthly.

 

4.2           Employee
shall be eligible to receive a bonus (the “Bonus”) in the discretion of the
Board, or if the Board so designates, the Compensation Committee of the Board,
targeted at 50% of Employee’s Base Salary, based on the annual performance of
the Company, except that the

 

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Bonus for the fiscal year ending June 30, 2006 shall be guaranteed
on a pro rata basis, based on the
Commencement Date (defined below). 
Thereafter, Employee will have an opportunity to earn a target Bonus of
50% of Employee’s Base Salary for each fiscal year of employment based on
Employee’s achievement of revenue and income targets and other key objectives
established at the commencement of each fiscal year by the Chief Executive
Officer and the Board, or if the Board so designates, the Compensation
Committee of the Board, and reasonably acceptable to the Employee.  The Board shall exercise good faith efforts
to determine the annual targets and objectives within ninety (90) days after
the beginning of the applicable fiscal year.

 

4.3           Unless
this Agreement is sooner terminated, all Bonuses shall be paid to the Employee
on the earlier to occur of (x) the first pay period after the filing of the
Company’s report on Form 10-K with the Securities and Exchange Commission
or (y) at such time as the amount of the Bonus for such period can reasonably
be audited by the Company’s independent accountants.  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 under applicable law.

 

4.4           Employee
may receive such other additional compensation as may be determined from time
to time by the Board including bonuses and other long term compensation
plans.  Except to the extent any
established performance targets are satisfied, nothing in this subparagraph 4.4
shall be deemed or construed to require the Board to award any bonus or
additional compensation.

 

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ARTICLE V

 

BENEFITS

 

5.1           During
the term hereof, the Company shall provide Employee with the following
benefits, as such benefits may change from time to time (the “Benefits”): (i) group
health care and insurance benefits as generally made available to the Company’s
senior management; and (ii) such other benefits (including insurance
related benefits, holiday, sick leave, personal days, etc.) obtained by the
Company or made generally available to the Company’s senior management;

 

5.2           The
Employee shall receive an allowance of $75,000 for reimbursement of temporary
living and relocation expenses. Any unused balance of this allowance as of December 31,
2006 will be paid as a cash award to Employee no later than January 31,
2007 provided that Employee continues to be employed with the Company as of
that date.

 

5.3           In
addition, the Company shall reimburse Employee, upon presentation of the
Company’s standard expense report accompanied by appropriate vouchers and other
suitable documentation, incurred by Employee on behalf of the Company, provided
such expenditure is consistent with Company policy.

 

5.4           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.

 

5.5           For
the term of this Agreement, Employee shall be entitled to paid vacation at the
rate of (4) weeks per annum.

 

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ARTICLE VI

 

NON-DISCLOSURE

 

6.1           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, or when required by law or legal process, or
where appropriate in response to regulatory authorities, 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, marketing, computerized payroll, accounting and information
business, personnel and/or employee leasing business of the Company and its
subsidiaries, including information relating to any customer of the Company, or
any other nonpublic business information of the Company and/or its subsidiaries
learned as a consequence of Employee’s employment with the Company, except for
information available publicly or from other non-confidential sources
(collectively referred to as the “Proprietary Information”).  The Employee acknowledges that Proprietary
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. 
Proprietary Information shall cease to be Proprietary Information, as
applicable, at such time as such information becomes public other than through
disclosure, directly or indirectly, by Employee in violation of this Agreement.

 

6.2           If
Employee is requested or required (by oral questions, interrogatories, requests
for information or document subpoenas, civil investigative demands, or similar
process) to disclose any Proprietary Information, Employee shall, unless
prohibited by law, promptly notify the Company of such request(s) so that the
Company may seek an appropriate protective order.

 

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ARTICLE VII

 

RESTRICTIVE
COVENANT

 

7.1           In
the event of the termination of Employee’s employment with the Company at any
time, Employee agrees that he will not, for a period of one (1) 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, or digital image authentication or
is otherwise engaged in the same or similar business as the Company in direct
competition with the Company, or which the Company was in the process of
developing during the term of Employee’s employment with the Company and such
development is based on actual or demonstrative anticipated research.  Notwithstanding the foregoing, (x) the
ownership by Employee of less than five percent of the shares of any publicly
held corporation shall not violate the provisions of this Article VII, and
(y) the Employee shall not be required to comply with any provision of this Article VII
following termination of this Agreement if the amounts required to be paid
under Article IX are not timely paid.

 

7.2           In
furtherance of the foregoing, Employee shall not during the aforesaid period of
non-competition, directly or indirectly, in connection with any business primarily involved
in the manufacture, development and/or distribution of computers and/or
document imaging systems, or digital image authentication services, or any
business similar to the business in which the Company was engaged, or in the
process of developing during Employee’s tenure with the Company and such
development is based on actual or demonstrative anticipated research, solicit
any customer or employee of the Company who was a customer or employee of the
Company within one year of the Termination Date.

 

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7.3           Except as otherwise may
be agreed by the Company in writing, in consideration of the employment of
Employee by the Company, and free of any additional obligations of the Company
to make additional payment to Employee, Employee agrees to irrevocably assign
to the Company any and all inventions, software, manuscripts, documentation,
improvements or other intellectual property whether or not protectable by any
state or federal laws relating to the protection of intellectual property,
relating to the present or future business of the Company that are developed by
Employee during the term of his/her employment with the Company, either alone
or jointly with others, and whether or not developed during normal business
hours or arising within the scope of his/her duties of employment.  Employee agrees that all such inventions,
software, manuscripts, documentation, improvement or other intellectual
property shall be and remain the sole and exclusive property of the Company and
shall be deemed the product of work for hire. 
Employee hereby agrees to execute such assignments and other documents
as the Company may consider appropriate to vest all right, title and interest
therein to the Company and hereby appoints the Company Employee’s
attorney-in-fact with full powers to execute such document itself in the event
employee fails or is unable to provide the Company with such signed
documents.  Notwithstanding the
foregoing, this provision does not apply to an invention for which no
equipment, supplies, facility, or trade secret information of the Company was
used and which was developed entirely on Employee’s own time, unless (a) the
invention relates (i) to the business of the Company, or (ii) to the
Company’s actual or demonstrably anticipated research or development, or (b) the
invention results from any work performed by Employee for the Company.

 

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7.4           If
any court shall hold that the duration of non-competition or any other
restriction contained in this Article VII 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 VIII

 

TERM

 

8.1           This
Agreement shall be effective upon execution by both parties hereto and the
employment term (the “Term”) shall commence on February 15, 2006 (the “Commencement
Date”).  The Term shall continue until
this Agreement is terminated by either the Company or Employee in accordance
with the terms and conditions set forth in Article IX.

 

8.2           Upon
termination the Employee’s employment with the Company, the Company shall pay
Employee, in addition to any other payments due hereunder, the amounts due
under Article IX.  The termination
of this Agreement shall not relieve the Company of its post- employment
obligations to the Employee as expressly set forth herein and the covenants set
forth in Articles VI and VII and in Section 9.6 shall survive any
termination or expiration of this Agreement.

 

ARTICLE IX

 

TERMINATION

 

9.1           The
Company may terminate this Agreement by giving a Notice of Termination to the
Employee in accordance with this Agreement:

 

a.             for
Disability;

 

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b.             for
Cause

 

c.             without
Cause.

 

9.2           Employee
may terminate this Agreement at any time by giving a Notice of Termination to
the Company at least sixty (60) days prior to the date on which such
termination is to be effective, in accordance with this Agreement, or for Good
Reason in accordance with Sections 1.6 and 1.9.

 

9.3           If
the Employee’s employment with the Company shall be terminated, the Company
shall pay and/or provide to the Employee the following compensation and
benefits:

 

a.             if the Employee
was terminated by the Company for Cause, or the Employee terminates without
Good Reason, the Accrued Compensation; or

 

b.             if the Employee
was terminated by the Company for Disability, the Accrued Compensation, the
Severance Payment and the Continuation Benefits; or

 

c.             if termination
was due to the Employee’s death, the Accrued Compensation; or

 

d.             if the Employee
was terminated by the Company without Cause or the Employee terminates this
Agreement for Good Reason, (i) the Accrued Compensation; (ii) the
Severance Payment; and (iii) the Continuation Benefits.  For purposes of clarity, Employee and Company
agree that the occurrence of a Change in Control shall not affect the amounts
and benefits payable to Employee pursuant to this Section 9.3(d).

 

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9.4           The
amounts payable under this Section 9.3, shall be paid as follows:

 

a.             Accrued
Compensation shall be paid within ten business days of the Termination Date (or
earlier, if required by applicable law).

 

b.             If the
Continuation Benefits are paid in cash, the aggregate amount of the
Continuation Benefits shall be made on the first day of each month during the
Continuation Period (or earlier, if required by applicable law).

 

c.             The Severance
Payments shall be paid in equal monthly installments over the period during
which the Severance Payments are made, commencing one month after the
Termination Date (or earlier, if required by applicable law) on the Company’s
regular pay dates;

 

9.5           The
Employee shall not be required to mitigate the amount of any payment, including
the value of any Continuation Benefit, provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to the Employee
in any subsequent employment except as provided in Section 1.4.

 

9.6           For
a period of three years following the termination of this Agreement, Employee
agrees that he will not make any negative or derogatory statements in verbal,
written, electronic or any other form about the Company, including, but not
limited to, a negative or derogatory statement made in, or in connection with,
any article or book, on a website, in a chat room or via the internet
except where such statement is required by law or regulation.  During such three year period, none of the
executive officers and directors shall make any negative or derogatory
statements in verbal, written, electronic or any other form about the Employee,
including, but not

 

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limited to, a negative or derogatory statement made in, or in
connection with, any article or book, on a website, in a chat room or via
the internet except where such statement is required by law or regulation.

 

ARTICLE X

 

TERMINATION
OF PRIOR AGREEMENTS

 

10.1         This
Agreement, and the stock option, bonus plan and benefit plans, sets forth the
entire agreement between the parties and supersedes all prior agreements,
letters and understandings between the parties, whether oral or written prior
to the effective date of this Agreement.

 

ARTICLE XI

 

STOCK
OPTIONS

 

11.1         As
an inducement to Employee to enter into this Agreement the Company hereby
grants, as of the date of this Agreement, to Employee options to purchase
shares of the Company’s Common Stock, $.001 par value, as follows:

 

Subject to the terms and conditions of the
Company’s 2000 Employees’ Stock Option Plan (the “Plan”), and the terms and
conditions set forth in the Stock Option Agreement which are incorporated
herein by reference, the Employee is hereby granted options to purchase 300,000
shares of the Company’s Common Stock, of which options to purchase 100,000
shares shall vest on the first anniversary of the Commencement Date and the
balance of 200,000 options shall vest in equal monthly installments over the
next twenty-four (24) months following the first anniversary of the
Commencement Date, as long as Employee continues to be an employee of the
Company but subject to Section 11.2 hereto (the “Options”).  The exercise price of the Options

 

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shall be equal to $4.50 and shall contain such other terms and
conditions as set forth in the stock option agreement. The foregoing Options
shall be qualified as incentive stock options to the maximum extent allowed by
law. The Options provided for herein are not transferable by Employee and shall
be exercised only by Employee, or by his legal representative or executor, as
provided in the Plan.  Such Options shall
terminate as provided in the Plan, except as otherwise modified by this
Agreement.  Subsequently, commencing at
the end of the Company’s 2007 fiscal year (period ending June 30, 2007),
Employee shall be eligible for annual options grants in accordance with Company
practice in the sole discretion of the Compensation Committee of the Board.

 

11.2         In
the event of a termination of Employee’s employment with the Company pursuant
to Section 9.1(c) or by the Employee for Good Reason, notwithstanding
anything herein or in any stock option agreement to the contrary, (a) the
Employee’s right to purchase shares of Common Stock of the Company pursuant to
any stock option or stock option plan shall immediately fully vest and become
exercisable, (b) the exercise period in which Employee may exercise his
options to purchase Company common stock shall be extended to the duration of
their original term, as if Employee remained an employee of the Company, and
the terms of such options shall be deemed amended to take into account the
foregoing provisions.  For purposes of
clarity, Employee and Company agree that the occurrence of a Change in Control
shall not affect the provisions of this Section 11.2.

 

11.3         In
the event of a termination of Employee’s employment with the Company pursuant
to Section 9.1(b), options granted and not exercised as of the Termination
Date shall terminate immediately and be null and void.  In the event of a termination of Employee’s

 

20

 

employment with the Company due to the Employee’s death, or Disability,
the Employee’s (or his estate’s or legal representative’s) right to purchase
shares of Common Stock of the Company pursuant to any stock option or stock
option plan to the extent vested as of the Termination Date shall remain
exercisable for a period of twelve (12) months following the Termination Date,
but in no event after the expiration of the exercise period. In the event of a
termination of Employee’s employment with the Company by the Employee other
than for Good Reason, the Employee’s right to purchase shares of Common Stock
of the Company pursuant to any stock option or stock option plan to the extent
vested as of the Termination Date shall remain exercisable for a period of
three months following the Termination Date, but in no event after the expiration
of the exercise period.

 

ARTICLE XII

 

ARBITRATION
AND INDEMNIFICATION

 

12.1         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 VI or VII hereof shall be settled through final and
binding arbitration before a single arbitrator in the State of New York in
accordance with the Rules of the American Arbitration Association.  The arbitrator shall be selected by the
American Arbitration 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.

 

12.2         The
Company hereby agrees to indemnify, defend, and hold harmless the Employee for
any and all claims arising from or related to his employment by the Company at
any time asserted, at any place asserted, to the fullest extent permitted by
law.  The Company

 

21

 

shall maintain such insurance as is necessary and reasonable (with
minimum coverage of not less than $5,000,000) to protect the Employee from any
and all claims arising from or in connection with his employment by the Company
during the term of Employee’s employment with the Company and for a period of
six (6) years after the date of termination of employment for any reason.
The provisions of this Section are in addition to and not in lieu of any
indemnification, defense or other benefit to which Employee may be entitled by
statute, regulation, common law or otherwise.

 

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

 

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 (a) personally delivered
or (b) sent by (i) a nationally recognized overnight courier service
or (ii) certified mail, return receipt requested, postage prepaid and in
each case addressed to the respective addresses as set forth below or to any
such other address as the party to receive the notice shall advise by due
notice given in accordance with this paragraph. All notices and communications shall
be deemed to have been received on (A) if delivered by personal service,

 

22

 

the date of delivery thereof; (B) if delivered by a nationally
recognized overnight courier service, on the first business day following
deposit with such courier service; or (C) on the third business day after
the mailing thereof via certified mail. 
Notwithstanding the foregoing, any notice of change of address shall be
effective only upon receipt.

 

The current addresses of the parties are as
follows:

 

	
  IF TO THE COMPANY:

  	
  Authentidate Holding Corp.

  
	
   

  	
  Three Connell Drive, 5th Floor

  
	
   

  	
  Berkeley Heights, NJ 07922

  
	
   

  	
   

  
	
  WITH A COPY TO:

  	
  Victor J. DiGioia

  
	
   

  	
  Goldstein & DiGioia, LLP

  
	
   

  	
  45 Broadway

  
	
   

  	
  New York, NY 10006

  
	
   

  	
   

  
	
  IF TO THE EMPLOYEE:

  	
  William A. Marshall

  

 

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.

 

23

 

ARTICLE XVII

 

GOVERNING
LAW

 

This Agreement has been negotiated and
executed in the State of New York.  The
law of the State of New York shall govern the construction and validity of this
Agreement.

 

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 and the
Company each hereby consent 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.

 

 

Signature page to
Employment Agreement follows.

 

24

 

IN WITNESS WHEREOF,
the parties hereto have executed this Employment Agreement and affixed their
hands and seals the day and year first above written.

 

	
   

  	
  Authentidate Holding Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Surendra B. Pai,

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Employee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  William A. Marshall

  
	
   

  	
  Employee

  

 

25Exhibit 10.37

 

PROMISSORY NOTE

 

	
  $17,325,000.00

  	
   

  	
  New York, New York

  As of February 10, 2006

  

 

FOR VALUE RECEIVED, MB PITTSBURGH BRIDGESIDE
DST, a Delaware statutory trust, having its principal place of
business at 2901 Butterfield Road, Oak Brook, Illinois 60523, as maker
hereunder (referred to herein as “Borrower”),
hereby unconditionally promises to pay to the order of NOMURA
CREDIT & CAPITAL, INC., a Delaware corporation, as payee, having
an address at 2 World Financial Center, Bldg. B, New York, New York 10281 (“Lender”), or at such other place as
the holder hereof may from time to time designate in writing, the principal sum
of SEVENTEEN MILLION THREE HUNDRED TWENTY-FIVE
THOUSAND AND 00/100 DOLLARS ($17,325,000.00), in lawful money of the
United States of America with interest thereon to be computed from the date of
this Note at the Interest Rate, and to be paid in accordance with the terms of
this Note and that certain Loan Agreement, dated as of the date hereof, between
Borrower and Lender (the “Loan Agreement”).  All capitalized terms not defined herein
shall have the respective meanings set forth in the Loan Agreement.

 

ARTICLE 1

 

PAYMENT TERMS

 

Borrower agrees to pay interest on the unpaid
principal sum of this Note from time to time outstanding at the rates and at
the times specified in the Loan Agreement and the outstanding balance of the
principal sum of this Note and all accrued and unpaid interest thereon shall be
due and payable on the Maturity Date. 
This Note shall be the “Note” as defined in the Loan Agreement.

 

ARTICLE 2

 

DEFAULT AND ACCELERATION

 

The Debt shall without notice become immediately due
and payable at the option of Lender if any payment required in this Note is not
paid on or prior to the date when due or if not paid on the Maturity Date or on
the happening of any other Event of Default.

 

ARTICLE 3

 

LOAN DOCUMENTS

 

This Note is secured by the Mortgage and the other
Loan Documents.  All of the terms,
covenants and conditions contained in the Loan Agreement, the Mortgage and the
other Loan Documents are hereby made part of this Note to the same extent and
with the same force as if they were fully set forth herein.  In the event of a conflict or inconsistency
between the terms

 

 

of
this Note and the Loan Agreement, the terms and provisions of the Loan
Agreement shall govern.

 

ARTICLE 4

 

SAVINGS CLAUSE

 

Notwithstanding anything to the contrary, (a) all
agreements and communications between Borrower and Lender are hereby and shall
automatically be limited so that, after taking into account all amounts deemed
interest, the interest contracted for, charged or received by Lender shall
never exceed the maximum lawful rate or amount, (b) in calculating whether any
interest exceeds the lawful maximum, all such interest shall be amortized, prorated,
allocated and spread over the full amount and term of all principal
indebtedness of Borrower to Lender, and (c) if through any contingency or
event, Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of Borrower to
Lender, or if there is no such indebtedness, shall immediately be returned to
Borrower.

 

ARTICLE 5

 

NO ORAL CHANGE

 

This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

 

ARTICLE 6

 

WAIVERS

 

Borrower and all others who may become liable for the
payment of all or any part of the Debt do hereby severally waive presentment
and demand for payment, notice of dishonor, notice of intention to accelerate,
notice of acceleration, protest and notice of protest and non-payment and all
other notices of any kind.  No release of
any security for the Debt or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note, the Loan Agreement or the other Loan Documents made by agreement
between Lender or any other Person shall release, modify, amend, waive, extend,
change, discharge, terminate or affect the liability of Borrower, and any other
Person who may become liable for the payment of all or any part of the Debt,
under this Note, the Loan Agreement or the other Loan Documents.  No notice to or demand on Borrower shall be
deemed to be a waiver of the obligation of Borrower or of the right of Lender
to take further action without further notice or demand as provided for in this
Note, the Loan Agreement or the other Loan Documents.  If Borrower is a partnership, the agreements
herein contained shall remain in force and applicable, notwithstanding any
changes in the individuals comprising the partnership, and the term “Borrower,”
as used herein, shall include any alternate or successor partnership, but

 

2

 

any
predecessor partnership and their partners shall not thereby be released from
any liability. If Borrower is a limited liability company, the agreements
herein contained shall remain in force and applicable, notwithstanding any
changes in the members comprising the company, and the term “Borrower,” as used
herein, shall include any alternate or successor company,
but any predecessor company shall not thereby be released from any
liability.  If Borrower is a corporation,
the agreements contained herein shall remain in full force and applicable
notwithstanding any changes in the shareholders comprising, or the officers and
directors relating to, the corporation, and the term “Borrower” as used herein,
shall include any alternative or successor corporation, but any predecessor
corporation shall not be relieved of liability hereunder.  (Nothing in the foregoing sentence shall be
construed as a consent to, or a waiver of, any
prohibition or restriction on transfers of interests in such entity which may
be set forth in the Loan Agreement, the Mortgage or any other Loan Document.)

 

ARTICLE 7

 

TRANSFER

 

Upon the transfer of this Note, Borrower hereby
waiving notice of any such transfer except as provided in the Loan Agreement,
Lender may deliver all the collateral mortgaged, granted, pledged or assigned
pursuant to the Loan Documents, or any part thereof, to the transferee who
shall thereupon become vested with all the rights herein or under applicable
law given to Lender with respect thereto, and Lender shall from that date
forward forever be relieved and fully discharged from any liability or
responsibility in the matter; but Lender shall retain all rights hereby given
to it with respect to any liabilities and the collateral not so transferred.

 

ARTICLE 8

 

EXCULPATION

 

The provisions of Section 9.4 of the Loan Agreement
are hereby incorporated by reference into this Note to the same extent and with
the same force as if fully set forth herein.

 

ARTICLE 9

 

GOVERNING LAW

 

THIS NOTE SHALL BE DEEMED TO BE A
CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE IN WHICH THE PROPERTY
IS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND
APPLICABLE FEDERAL LAWS.

 

3

 

ARTICLE 10

 

NOTICES

 

All notices or other written communications hereunder
shall be delivered in accordance with Section 10.6 of the Loan Agreement.

 

 

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

 

4

 

IN WITNESS WHEREOF, Borrower has duly executed this
Note as of the day and year first above written.

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  MB PITTSBURGH BRIDGESIDE DST,
  a

  
	
   

  	
    Delaware
  statutory trust

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MINTO BUILDERS (FLORIDA), INC.,
  a

  
	
   

  	
   

  	
   Florida
  corporation, Its Signatory Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Valerie Medina

  	
   

  
	
   

  	
   

  	
  Name:  Valerie Medina

  
	
   

  	
   

  	
  Title:  Assistant Secretary

  

 

 

ACKNOWLEDGMENT

 

 

STATE OF ILLINOIS

COUNTY OF DUPAGE

 

On this      
day of February, 2006, before me, a Notary Public the undersigned officer,
personally appeared                                  
who acknowledged himself/herself to be the                                   of MINTO
BUILDERS (FLORIDA), INC., a Florida corporation, the signatory
trustee of MB PITTSBURGH BRIDGESIDE DST, a
Delaware statutory trust and that he/she as such                                  ,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself/herself as                                  .

 

IN
WITNESS WHEREOF, I hereunto set my hand and official seal.

 

	
   

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  
	
  Notary Public

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