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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
Employment Agreement dated as of July 3, 1997 between BOX HILL SYSTEMS
CORP., a New York corporation (the "Company") and Xxxxxxxx Xxxxxxxx
("Executive").
WITNESSETH:
WHEREAS, the Company desires to continue the employment of the
Executive and the Executive wishes to continue to be employed by the Company on
the terms and conditions hereinafter contained;
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment. The Company hereby employs Executive as
President of the Company for the Term as defined in paragraph 2 to perform the
duties described in Section 3 hereof.
2. Term. Unless terminated earlier pursuant to the provisions
of Section 7.2 or 8 hereof, the term of employment of Executive covered by this
Agreement shall commence on the date of the closing of the first offering of
securities of the Company which is registered under the Securities Act of 1933,
as amended and shall continue through December 31, 2000 (the "Term").
3. Duties. Executive shall devote substantially all his time
to the affairs and business of the Company for which he will serve as President
and perform the duties designated by the Board of Directors of the Company.
Executive shall use his best efforts to promote the interests and welfare of the
Company.
4. Salary; Bonus.
(a) As his compensation hereunder, Executive shall be
paid by the Company a base salary of $500,000 per annum during the first 12
month period of the Term, with the compensation for each of the remaining 12
month periods to be determined by the Board of Directors but not to be less than
his base compensation for the preceding twelve month period adjusted for the
increase, if any, in the Consumer Price Index for the last month of the
immediately preceding twelve month period. For this purpose the Consumer Price
Index shall mean the Consumer Price Index U.S. City Average, All Items Figure
for Urban Wage Earners and Clerical Workers, published by the Bureau of Labor
Statistics of the U.S. Department of Labor, or any comparable Consumer Price
Index which shall be subsequently published to supersede such designated
Consumer Price Index. The base compensation shall be payable in equal biweekly
installments.
(b) The Company shall pay Executive a bonus within 30
days following the completion of the statement of income of the Company and its
subsidiaries for the most recently completed fiscal year ending during the Term
as audited by the independent public accounting firm selected by the Company to
audit the consolidated financial statements of the Company and its subsidiaries
equal to (i) 0.5% of the consolidated net revenues of the Company in excess of
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$100,000,000, and (ii) 4% of the amount by which the Pre-tax Income for that
year exceeds $20,000,000. Pre-tax Income shall mean the income of the Company
and its subsidiaries before provision for applicable federal, state and local
income taxes, all as determined in accordance with generally accepted accounting
principles.
5. Benefits. The Company shall be obligated to pay, provide or
secure or continue to provide, pay or secure, as the case may be, at its own
expense for Executive while employed by the Company pursuant to the Agreement
the following:
(i) full coverage or reimbursement for all medical
and dental expenses incurred by Executive and his wife and children, but with
respect to each child not beyond the later of the date the child attains the age
of twenty-two (22) or the last day is a full-time student in a college or
graduate school;
(ii) business accident insurance and accidental
death and disability insurance for the benefit of the beneficiary or
beneficiaries specified by the Executive in the amount or amounts provided by
the Company on behalf of its executives or key employees;
(iii) term insurance on the life of the Executive in
the principal amount of not less than $1,000,000 payable to such beneficiary or
beneficiaries as designated from time to time by the wife of the Executive,
which policy shall be assigned to the wife of Executive;
(iv) a disability policy providing payment to the
Executive at the rate of at least $60,000 per annum during the period commencing
the day following the Disability Payment Period described in Section 7.2 and
ending not earlier than the date the Executive attains the age of sixty-five
(65); and
(v) during each year of his employment a full-paid
four-week vacation.
6. Expenses. The Company shall provide Executive with a new
model of a four door large sedan automobile to assist in the performance of his
duties and bear the rental, maintenance, parking and insurance expenses with
respect thereto and pay or reimburse Executive for all other expenses normally
reimbursed by the Company and reasonably incurred by him in furtherance of his
duties hereunder including, without limitation, travel, meals, hotel
accommodations and the like upon submission by him of vouchers or an itemized
list thereof prepared in compliance with such rules relating thereto as the
Board may, from time to time, adopt and as may be required in order to permit
such payments as proper deductions to the Company under the Internal Revenue
Code, as amended from time to time, and the rules and regulations adopted
pursuant thereto now or hereafter in effect.
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7. Death; Disability.
7.1 In the event of Executive's death during the
Term, subject to this Agreement not having been terminated pursuant to Section
8, the Company shall pay to the Executive's widow or estate for the 12 month
period following such death the amount of the base salary at the rate provided
in Section 4 as of the date of death, plus the bonus which would have been
payable at the end of the fiscal year of the Company if the Executive had
survived such year end unless the death of the Executive is prior to the end of
the first quarter of the fiscal year, in which event the bonus, if any, shall be
the amount of bonus earned by the Executive with respect to the fiscal year
ended immediately prior to his death.
7.2 In the event of Executive's disability (as
hereinafter defined) for one hundred and twenty (120) consecutive calendar days
or in the aggregate one hundred and eighty (180) calendar days during any twelve
(12) months of the Term, the Company shall have the right, by written notice to
Executive, to terminate this Agreement as of the date of such notice, except the
Company shall pay for an additional 12 month period (the "Disability Payment
Period") to the Executive or his legal representative as compensation in
addition to the benefits provided under a group Long Term Disability Policy
which the Company maintains during the term of this Agreement the base
compensation provided in Section 4 at the rate in effect immediately prior to
the Executive being disabled under this Section 7.2. "Disability" for the
purposes of this Agreement shall mean Executive's physical or mental disability
so as to render Executive incapable of carrying out Executive's essential duties
under this Agreement.
8. Termination. The Company shall have the right to discharge
Executive and terminate this Agreement for Cause (as hereinafter defined) by
written notice to Executive and this Agreement shall be deemed terminated as of
the date of such notice. For the purpose of this agreement, "Cause" shall mean
(a) conviction of a felony, (b) gross neglect or gross misconduct (including
conflict of interest) in the carrying out of Executive's duties, (c) repeated or
substantial failure, refusal or neglect to perform Executive's duties in
accordance with paragraph 3 hereof, (d) the engaging by Executive in a material
act or acts of dishonesty affecting the Company, or its subsidiaries, or (e)
drunkenness or the illegal use of drugs by Executive materially and repeatedly
interfering with performance of Executive's obligations under this Agreement. In
the event of a termination by the Company pursuant to this paragraph 8, the
Company shall not be under any further obligation to Executive hereunder except
to pay Executive, subject to the rights and remedies of the Company in the
circumstances, (i) salary and benefits accrued and payable up to the date of
such termination, and (ii) reimbursement for expenses accrued and payable under
paragraph 6 hereof through the date of termination.
9. Non-Competition.
9.1 Subject to the Company not then being in default
of its obligations under this Agreement, Executive, for a period ending one year
following the last day of his employment as an Executive by the Company (the
"Non-competition Period"), shall not perform
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services or otherwise act in any capacity (including without limitation as an
employee, independent contractor, officer, director or consultant) for, or
otherwise be engaged by or have any financial interest in or affiliation with,
any individual corporation, partnership or any other entity involved in or
connected with the business in which the Company (for purposes of Sections 9, 10
and 11, "Company" shall also include the Company and the subsidiaries of the
Company) is engaged other than for or on behalf of the Company; provided,
however, that nothing contained in this Section 9.1 shall prevent Executive from
purchasing as an investment securities of any corporation whose securities are
regularly traded on any national securities exchange or in the over-the-counter
market, provided that the amount of such securities along with securities held
at or after such purchase by other members of his family, including his parents,
siblings and members of their families do not aggregate at least 5% of the
outstanding securities of such corporation.
9.2 During the Non-competition Period and subject to
the Company's not being in default of this Agreement, Executive shall not
solicit or induce any Executive of the Company to leave the employ of the
Company.
10. Confidential Information.
10.1 Executive shall regard and preserve as
confidential all trade secrets and other proprietary information pertaining to
the business of the Company or its subsidiaries that Executive may obtain during
his employment; and, to the extent that such proprietary information shall not
become public knowledge, Executive shall not disclose to others, during his
employment or thereafter, any of such proprietary information.
10.2 Executive agrees that any inventions,
copyrightable material, secret processes, formulae, trademarks, products or
improvements that he may invent, produce, prepare, acquire or suggest during the
term of this Agreement, relating generally to any matter or thing connected in
any way with or relating to the work, products or projects carried on by
Executive for the Company shall become the absolute property of the Company; and
Executive further agrees to assign without further compensation all such
inventions, copyrightable material, trade secrets, secret processes, formulae,
trademarks, products and improvements and all rights thereto, domestic and
foreign, to the Company and to execute all documents whatsoever that may be
necessary to transfer to and vest in the Company all right, title and interest
in and to such inventions, copyrightable material, trade secrets, secret
processes, formulae, trademarks, products and improvements.
10.3 The Company shall own forever and throughout the
world (exclusively during the current and renewed or extended term of any patent
anywhere in the world and thereafter, non-exclusively) all rights of any kind or
nature now or hereafter known in and to all of the product of Executive's
services hereunder in any capacity and any and all parts thereof, including,
without limitation, patent, copyright and all other property or proprietary
rights in or to any ideas, concepts, designs, drawings, plans, prototypes or any
other similar creative works and to the product of any or all of such services.
Executive acknowledges and agrees that for the foregoing purposes, Executive is
performing his services as the Company's employee-for-hire. Without limiting the
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generality of the previous sentence, Executive acknowledges and agrees that all
memoranda, notes, records and other documents made or compiled by Executive or
made available to Executive during the Term concerning the business of the
Company, shall be the property of the Company, and shall be delivered by
Executive to the Company, upon termination of this Agreement or at any other
time at the Company's request.
11. Indemnification.
(a) The Company agrees to indemnify Executive in the
event he is made or threatened to be made a party to any action, suit or
proceeding, whether civil or criminal, and whether or not by or in the right of
the Company or any other corporation of any type or kind, domestic or foreign,
or any partnership, joint venture, trust, employee benefit plan or other
enterprise, by reason of the fact that he, his testator or intestate, is or was
a director or officer of the Company or served any other corporation of any type
or kind, domestic or foreign, or any partnership, joint venture, trust, employee
or officer of the Company or served any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise in any capacity at the request of the Company, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorney's fees, actually and necessarily incurred as a result of such action,
suit or proceeding, or any appeal therein, provided that (i) no indemnification
may be made to or on his behalf if a judgment or other final adjudication
adverse to him establishes that his acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled; (ii) no indemnification
shall be required in connection with the settlement of any pending or threatened
action or proceeding, or any other disposition thereof except a final
adjudication, unless the Company has consented to such settlement or other
disposition, and (iii) the Company shall not be obligated to indemnify him if
and to the extent he is entitled to be indemnified under a policy of insurance
as such policy would apply in the absence of this Agreement.
Executive shall be paid or reimbursed by the Company
reasonable expenses, including attorneys' fees, incurred in defending any action
or proceeding, whether threatened or pending, in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of the
Executive to repay such amount to the Company to the extent, if any, he is
ultimately found not to be entitled to indemnification.
(b) The Company agrees to maintain at its expense
insurance in the principal amount of at least $20,000,000 from a reputable and
financially capable insurance company insuring the officers and directors of the
Company including the Executive against all claims, actions, judgment, fines and
amounts paid in settlement and reasonable expenses arising from their acts or
omissions as officers or directors of the Company individually or collectively,
including claims or actions arising under the United States Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the
securities laws of other jurisdictions or the common law
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other than those which arise principally from acts or omissions by him in bad
faith or which were the result of his actions and deliberate dishonesty.
12. Remedies.
12.1 Nothing herein contained is intended to waive or
diminish any rights the Company may have at law or in equity at any time to
protect and defend its legitimate property interests including its business
relationship with third parties, the foregoing provisions being intended to be
in addition to and not in derogation or limitation of any other rights the
Company may have at law or in equity.
12.2 A breach by Executive of the provisions of
Section 9.1, 9.2, 10.1, 10.2 or 10.3 of this Agreement may cause the Company
irreparable injury and damage. Executive therefore agrees that damages may be an
inadequate remedy and the Company shall be entitled to injunctive and/or other
equitable relief to prevent any breach of such Section of this Agreement and to
secure its enforcement, without being required to provide any security or post
any bond.
13. Notices. Any notices pertaining to this Agreement if to
the Company shall be addressed to Box Hill Systems Corp., 000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and if to the Executive at 0 Xxxxxxxx Xxxxxx,
#0X, Xxx Xxxx, Xxx Xxxx 00000. All notices shall be in writing and shall be
deemed duly given if personally delivered or sent by registered or certified
mail, overnight or express mail or by telefax. If sent by registered or
certified mail, notice shall be deemed to have been received and effective three
days after mailing; if by overnight or express mail or by telefax, notice shall
be deemed received the next business day after being sent. Any party may change
its address for notice hereunder by giving notice of such change in the manner
provided herein.
14. Entire Agreement. This Agreement contains the entire
agreement of the parties respecting the subject matter contained herein. No
modification of any provision hereof shall be effective except by a written
agreement signed by the parties hereto.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
entirely made and performed therein.
(b) This Agreement shall be binding upon and inure to
the benefit of the parties, their respective successors, heirs and assigns
(where permitted).
(c) The waiver by one party hereto of any breach by
the other (the "Breaching Party") of any provision of this Agreement shall not
operate or be construed as a waiver of any other (prior or subsequent) breach by
the Breaching Party, and waiver of a breach of a
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provision in one instance shall not be deemed a waiver of a breach of such
provision in any other circumstance.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the year and date first above written.
BOX HILL SYSTEMS CORP.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxxxx Xxxxxxxx
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