COMPENSATION PLAN AND AGREEMENT
This Agreement is made as of the 1st day of January 1999, by Box Hill
Systems Corp., a New York Corporation, with offices at 161 Avenue of the
Americas, New York, N.Y. 10003 ("BH") and Xxxxxx Xxxxx, individually, residing
at 00 Xxxxxx Xxxxx, Xxxxxxx Xxxxxx, XX 00000 ("PB").
BH and PB each recognize that:
BH is in the business of providing a variety of unique products and
services to its clients and PB is an individual with unique executive management
capabilities;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set out below, and as an integral part of the terms of PB's employment with BH,
PB and BH, intending to be legally bound, agree as follows:
I. POSITION & APPLICATION OF AGREEMENT
PB is hired by BH, subject to the terms and conditions of this Agreement,
as the Chief Executive Officer ("CEO") of BH. This Agreement will remain in
effect unless terminated in accordance with its terms.
PB is an Employee At Will of BH and PB's employment with BH may be
terminated by PB or BH in accordance with the provisions hereof.
PB's position may be changed by BH, at its option, from time to time, upon
30 days prior written notice to PB. Any change of position of PB effected by BH
and not voluntarily accepted by PB, shall be treated as a termination of PB for
"Convenience" and without "Cause" by BH, as provided for by the termination
provisions of this Agreement.
PB shall devote his full time and attention to his position with BH.
PB shall work at the direction of the Board of Directors of BH. PB will be
a member of the Executive Committee established by the Board of Directors of BH.
PB will perform such work, as is consistent and commensurate with PB's
position and will make all best efforts to properly discharge all of PB's
performance obligations under this Agreement.
PB has been requested by BH to serve as a member of the Board of Directors
of BH. PB has agreed to accept such appointment without additional compensation.
BH's entire obligation and liability to PB is established by this Agreement
unless limited by applicable
law.
PB understands that certain provisions of this Agreement will continue to
apply to PB and will continue to bind PB following the termination of this
Agreement, for any reason whatsoever.
II. WARRANTIES & REPRESENTATIONS OF PB
PB warrants and represents to BH that he has fully disclosed to BH all
information which would influence BH's decision to enter into this Agreement
with PB and that he is not subject to any claims, actions, proceedings,
obligations, or liabilities which PB has not fully disclosed to BH.
PB warrants and represents to BH that he has fully investigated and
explored the opportunities and risks presented by this Agreement and that he is
not entering into this Agreement on the basis of any promise or commitment not
expressly set forth herein.
PB warrants and represents to BH that he fully understands and agrees that
BH may enter into understandings and agreements with other parties for other
positions which may be similar, or different from those as established hereby
and nothing in this Agreement or otherwise shall restrict BH from entering into
such understandings or agreements.
PB warrants and represents to BH that he is free to enter into this
Agreement and that he is not subject to any restrictions or limitations of any
form, irrespective of whether such have been enforced.
III. RESTRICTIONS ON PB
Without limiting the applicability of the other provisions hereof, the
following restrictions apply to PB while this Agreement is in effect:
PB may not offer, promise, give, assign, or pay any portion or all of his
compensation to any other individual or entity without the prior approval of BH.
While actively employed by BH, PB shall not, without the written consent of
the Board of Directors of BH, participate directly in any business activity that
is competitive with the current business of BH.
PB agrees that he is subject to a code of ethical conduct and all
applicable laws, regulations and rules and shall perform the work under this
Agreement in accordance with all applicable laws, regulations and rules and
ethical standards.
IV. COMPENSATION & TAXES
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Compensation shall be payable by BH to PB, as described in Attachment A.
PB shall only be entitled to compensation for and during the time in which
this Agreement is in effect, except as otherwise expressly provided for herein.
PB is responsible for all taxes, duties, or similar charges arising out of
compensation paid by BH to PB under this Agreement or any other benefits
provided by BH to PB under this Agreement, including, the grant by BH to PB of
any stock options as to the stock of BH.
V. INTELLECTUAL PROPERTY RIGHTS
PB does hereby assign and grant to BH the entire right, title and interest
of PB, in and to, any work PB furnishes or produces or which results from this
Agreement (whether or not copyrightable or patentable) irrespective if such work
is conceived or first actually reduced to practice in the course of performance
of this Agreement.
PB does hereby assign and grant to BH the entire right, title and interest
of PB in and to all ideas, concepts, know-how, inventions, improvements,
discoveries or other intellectual property, (whether or not copyrightable or
patentable), conceived or first actually reduced to practice in the course of
performance of this Agreement.
PB will, without charge to BH and at BH's request execute such documents
and instruments, including, but not limited to, an assignment of title, to
reflect the foregoing.
VI. CONFIDENTIALITY
PB expressly covenants and agrees that he will not at any time, whether
during the term of employment hereunder or thereafter, unless expressly
permitted to do so by BH, reveal or disclose to any firm, person, or entity, nor
permit to be revealed or disclosed, any confidential information or data
concerning, BH's business, finances, products and services or the business,
finances, products and services of BH's clients, suppliers, employees and
subcontracts, nor shall PB, directly or indirectly, use any such information,
except, as expressly permitted to do so by BH. Except where information is in
the public domain, PB specifically acknowledges and agrees that information and
data regarding computer hardware, computer software programs, systems developed
or improved by BH personnel, the identity of BH's actual and potential clients
and client representatives and contacts, the nature of the products or services
provided by BH and the prices charged
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therefore, the identities of BH's actual and prospective employees, suppliers
and subcontractors, and the specific skills possessed by BH's actual and
prospective employees, suppliers and subcontractors are to be treated as
confidential and proprietary, and that such information and data constitute BH
trade secrets or are otherwise confidential and proprietary to BH.
Upon termination, PB agrees not to, directly or indirectly, use for any
purposes whatsoever such confidential information and data and that PB will
continue to protect such confidential information and data from disclosure to
any other party.
Upon termination, PB agrees to promptly deliver to BH all materials or
property in his possession or control belonging to BH, or its clients, suppliers
and subcontractors, in any and all forms, and any and all copies thereof,
including, but not limited to, any and all sales information, files and reports,
data bases, telephone directories, manuals, procedures, visual aids, customer
lists, correspondence and any other material and property relating to the
business of BH, or its clients suppliers and subcontractors.
PB shall not divulge or furnish to BH or any third party with whom PB may
be in contact with as a result of this Agreement, any information or data which
PB does not have the right to divulge or furnish and PB shall not infringe upon
any property right of BH or any third party in the performance of this
Agreement.
VII. TERMINATION
BH may terminate this Agreement and PB's employment hereunder for "Cause",
arising from PB's substantial and material breach of this Agreement or any other
reason constituting "Cause" as established by applicable law, upon written
notice to PB.
PB may terminate this Agreement and PB's employment hereunder, for "Cause",
upon written notice to BH, arising from BH's substantial and material breach of
this Agreement.
BH may terminate this Agreement and PB's employment hereunder, for
"Convenience" and without "Cause", at any time, upon 30 days prior written
notice to PB.
PB may terminate this Agreement and PB's employment hereunder, for
"Convenience" and without "Cause", at any time, upon 30 days prior written
notice to the BH.
In the event of termination of PB by BH for "Cause" as provided for above
or if PB terminates this Agreement for "Convenience" and without "Cause", PB
shall only be entitled to compensation actually earned
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by PB, as of the effective date of termination. Compensation for purposes of
this paragraph and the next paragraph means salary earned by PB as of the
effective date of termination plus commission and bonus on positive revenue and
profits as of the effective date of termination, plus any other earnings accrued
to the effective date of termination pursuant to Attachment A hereto.
In the event of termination by PB for "Cause" as provided for above or if
BH terminates this Agreement for "Convenience" and without "Cause", provided PB
observes all the other provisions of this Agreement including, the
confidentiality, non-interference and non-competition provisions of this
Agreement, PB shall be entitled to the compensation as specified in the
preceding paragraph plus Severance Compensation. Severance Compensation for
purposes of this paragraph shall mean PB's base salary for the four quarters
prior to the effective date of termination plus an amount equal to the
commissions and bonus on positive revenue and profits earned during the prior
four quarters plus any other earnings accrued to the effective date of
termination pursuant to Attachment A hereto. Severance Compensation (except as
to the commission component thereof) is payable in installments over the year
subsequent to the effective date of termination in the same manner as
remuneration is paid by BH. The commission component of the Severance
Compensation is payable at the end of the month following the month during which
the commissions were earned. During any period of time that severance payments
are being made and that PB is not otherwise employed, all fringe benefits
provided for in Attachment A shall be maintained and provided to PB at the
expense of BH. PB acknowledges that certain companies are direct competitors of
BH ("Competitors"), including but not limited to: Andataco, Artecon, EMC, Data
General-Clariion, Compaq, Dell, Ciprico, IBM, MTI, Hewlett Packard, Sun, Data
Link, Cranel, Vanguard, Raid Power, StorageTek and any successors thereto. If
the circumstances of PB's termination otherwise entitle PB to Severance
Compensation, as set forth in Section VII, and if PB chooses to be employed by
any Competitors during the year-long period that PB would otherwise receive
Severance Compensation, PB agrees he shall not receive and shall forfeit
Severance Compensation, including benefits, for any period during which his
employment with a Competitor overlaps the year during which he is entitled to
Severance Compensation.
PB shall not be entitled to any other amount or form of compensation from
BH, except as expressly set forth in this Agreement.
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VIII. NON-COMPETITION
Both PB and BH acknowledge that the unique qualities and characteristics
and capabilities which PB has are a result of his extensive knowledge of the
industry, the companies in the industry as customers, and the companies in the
industry as providers of services. BH acknowledges that PB has 25 years of
experience in the computer/telecoms industry and has developed numerous
contacts, expertise, skills and extensive information, all which are valuable
and useful to BH, and provides the basis for BH employing PB. BH understands
that should PB's employment with BH terminate for any reason, in all likelihood,
for PB to be a productive person, obtain appropriate work and earn appropriate
compensation, such work would be in the industry of computer/data processing,
including but not limited to the industry segment for data storage and backup.
Therefore, as of the effective date of any termination,and for a period eighteen
months, PB agrees not to take any action with the intent of causing any
then-customer or supplier of BH to cease or diminish doing business with BH and
to do business with any person or entity directly or indirectly associated with
PB. In addition, for a period eighteen months, PB will not solicit or have
contact with, directly or indirectly, any employee of BH with the intention of
effecting a termination of employment with BH for any purpose.
Subject to the foregoing, BH agrees that in the event of termination, PB
may enter into employment or otherwise engage in business in the
computer/telecoms industry, as had PB prior to employment by BH; without
interference from BH.
BH and PB agree that the period of time and other specifications set forth
are reasonable in view of the nature of the business in which BH is engaged and
proposes to engage and PB's position and knowledge of its business. However, if
any of such periods or such area should be judged unreasonable in any
proceedings, then such period of time shall be reduced by elimination of such
portion thereof, or both, as are deemed unreasonable, so that this covenant may
be enforced in such area and during such period of time as is adjudged to be
reasonable.
IX. INDEMNIFICATION
Provided PB fulfills his obligations under this Agreement to BH, BH will
hold PB harmless from any loss, liability, cost, damage or expense which PB may
sustain, including reasonable attorneys' fees incurred by PB, as to any claims
by a third party, relating to the proper performance of his duties for BH, under
this
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Agreement. The foregoing shall not apply in the event any claims by a third
party arise and PB has been or is discharged for "Cause" and such discharge for
"Cause" is held, at any time, in arbitration or by a court of competent
jurisdiction, to be in violation of this Agreement. The contractual
indemnification provided for herein is in addition to and not in lieu of any
other indemnification protection afforded to PB from BH as an employee, officer
or director of BH.
X. SEVERABILITY
If any of the provisions of this Agreement, or the application of any term
or provision to any persons or circumstances is invalid or unenforceable to any
extent, then the remainder of this Agreement or the application of the term or
provision to persons or circumstances, other than those to which it is held
invalid or unenforceable, shall not be affected thereby and each term or
provision of this Agreement shall be valid and enforceable to the extent
permitted by law and a commercially reasonable construction shall be given to
the invalid or unenforceable part of this Agreement so as to most closely
express the intent of the parties as embodied herein.
XI. ASSIGNMENT AND SURVIVAL
The rights and obligations of the parties created while this Agreement is
in effect shall survive after the termination of this Agreement and shall inure
to the benefit of and are binding upon the successors and assigns of each party.
PB may not assign this Agreement or subcontract the work under this
Agreement. BH may assign this Agreement upon written notice to PB.
XII. WAIVER OF BREACH
The waiver by either party of any breach of this Agreement shall not
operate as or be construed to be a waiver of any subsequent breach. No course
of dealing, course of performance or usage of trade nor any delay on the part
of either party in exercising or enforcing their rights under this Agreement
shall operate as a waiver of such rights.
XIII. ENTIRE AGREEMENT & MODIFICATION
This Agreement contains the entire Agreement of the parties and supersedes
all prior Agreements or understandings pertaining to the subject matter hereof,
whether written or oral.
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BH at its sole discretion may change any portion of this Agreement,
including Attachment A, by providing 30 days prior written notice to the PB.
Unless such written notice otherwise states a date for the change to occur, the
change will become effective immediately on the 30th day after such notice is
given. Any change of this Agreement initiated by BH and not voluntarily accepted
by PB, shall be treated as a termination of PB for "Convenience" and without
"Cause" by BH in accordance with the termination provisions of this Agreement.
No other modification or amendment of this Agreement shall be effective
unless in a written instrument, executed by the parties.
XIV. GOVERNING LAW AND FORUM
Irrespective of the present or future residence of either of the parties
hereto, this Agreement shall in all respects be governed by the laws of the
State of New York, without giving effect to principles of conflicts of laws.
Without diminishing the applicability of the arbitration provision hereof, BH
and PB consent to the jurisdiction of any Federal or State court located in New
York, New York, with respect to any claim or controversy arising in connection
with this Agreement, and each waives any claim of inconvenient forum which such
party may have in connection with such jurisdiction.
XV. NOTICES
Any notices or other communication required or permitted hereunder shall be
sufficiently given when in writing and if given or sent: (i) in person, (ii)
overnight delivery with written confirmation of delivery to the address
designated below or (iii) facsimile transmission with an original mailed by
first class U. S. Mail, postage prepaid, addressed to the address designated
below:
Addresses:
To BH: Chairman of the Board, Box Hill Systems Corp.,
000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, X.X. 00000
To PB: 00 Xxxxxx Xxxxx, Xxxxxxx Xxxxxx, XX 00000
or in each case to such other address as shall have last been furnished by like
notice. Each notice or communication shall be deemed to have been given as of
the date so delivered or mailed or as the case may be; provided, however that
any notice sent by
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facsimile shall be deemed to have been given as of the date sent by facsimile,
if a copy of such notice is also mailed by first class mail on the date sent by
facsimile, if the date of mailing is not the same as the date of sending by
facsimile; then the date of mailing by first class mail shall be deemed to be
the date upon which notice given.
XVI. SEPARATE COUNSEL
PB acknowledges he has had the opportunity to retain and consult with
separate counsel of his own selection acting on his behalf in connection with
the negotiation, execution and consummation of this Agreement, and covenants
that he, alone shall be liable and responsible for (and shall not look to BH in
connection with) the fees and expenses of such separate counsel.
XVII. EFFECT
The parties agree to execute any and all such further instruments and
documents, and to take any and all such further actions which are reasonably
required to effectuate the express terms of this Agreement and the intents and
purposes hereof.
XVIII. BINDING AGREEMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, personal
representatives, successors and permitted assigns.
XIX. COUNTERPARTS
This Agreement may be executed simultaneously in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
XX. NON-DISCLOSURE
PB shall keep confidential and shall not disclose the contents of this
Agreement, including, Attachment A to any other party, except to the extent that
such disclosure is necessary to enforce the provisions hereof.
PB ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS HIS
OBLIGATIONS UNDER THIS AGREEMENT.
BOX HILL SYSTEMS CORP. XXXXXX XXXXX
Signature: Signature:
Xxxxxxxx Xxxxxxxx, Chairman of the Board
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ATTACHMENT A
COMPENSATION PLAN
XXXXXX XXXXX - CHIEF EXECUTIVE OFFICER
("CEO")
COMPENSATION
Annual Salary
$350,000.00 per calendar year paid in accordance with the regular pay
practices of BH.
Commissions and Bonus for Calendar Year 1999
Commissions shall be paid at the rate of 0.20% of revenue for calendar year
1999. A quarterly bonus will be paid based on 1.12% of each quarter's pre-tax
income. Net revenue and net pre-tax profits of BH are computed in accordance
with generally accepted accounting principles, consistently applied, for tax
purposes, excluding Officers' bonuses but including Officers' base salary,
including that of PB. Such bonus or payment thereof to PB as to net revenue or
net profits of PB is to be determined solely by the accountants of BH. In the
event PB disagrees with such determination, PB will notify BH within 15 days
after receipt of notification from BH of such determination of the accountants
for BH. All commissions and bonuses will be calculated based upon generally
accepted accounting principles consistently applied and shall be conclusive
absent fraud or manifest error. Commissions and bonus are to be paid pursuant to
the terms of the Agreement and the regular pay practices of BH.
However, if Box Hill engages in any mergers and/or acquisitions during 1999
which alter the revenues and/or profit goals of Box Hill, the commission package
set forth above will be subject to re-negotiation with the intention of offering
PB a package that is of equal or greater value to him taking into consideration
the financial impact of any such merger and/or acquisitions.
Compensation for Years after 1999
For each year subsequent to 1999 that PB remains employed under this
agreement, BH shall offer PB a package with potential, "on plan" total
compensation (salary plus incentive compensation) of at least
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$718,000.00
Other Expenses
An expense reimbursement account will be maintained by BH for PB, pursuant
to which, PB shall be reimbursed by BH, for all reasonable and customary out of
pocket expenses (including expenses for cellular telephone and beeper service,
actually incurred by PB, on behalf of BH, solely in the conduct of BH's
business, based upon full and complete itemized vouchers, submitted promptly by
PB in accordance with BH's policies and procedures.
Fringe Benefits
PB shall be entitled to those fringe benefits such as medical and dental
benefits, which are provided to all BH full time employees, as may be
established and changed from time to time by BH and as are established by the
employee benefits handbook published by BH. Holidays, sick days and personal
days applicable to PB shall be in accordance with the employee benefits handbook
published by BH. PB shall be entitled to paid vacation of 4 weeks for 1999 and 4
weeks in each calendar year thereafter. Vacation time will accrue in accordance
with the employee benefits handbook published by BH.
Death
Upon the occurrence of the death of PB, this Agreement shall be terminated
and shall be deemed terminated, as if PB had terminated for "Convenience" 90
days from the date of death. Compensation, which shall include base salary and
commissions as set forth in the Agreement, will be payable to the effective date
of termination pursuant to the terms of the Agreement.
Disability
For purposes of this Agreement, the term "Disability" shall mean the
failure or inability of PB for reasons of health, to perform his usual and
customary duties on behalf of the BH in the usual and customary manner for a
total of more than 90 consecutive business days (excluding Saturdays, Sundays
and Holidays, as
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specified below) out of any consecutive period of 365 days, including Saturdays,
Sundays and Holidays. The term "Holidays" shall include New Year's Day,
President's Birthday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, Christmas Day, and any other weekday on which Federal and/or State banks
are closed in the State of New York. In such event, Disability shall be deemed
to have occurred on the 90th such business day that PB shall fail or be unable
to perform his usual and customary duties on behalf of the BH in the usual and
customary manner. Until the date upon which Disability shall have occurred, PB's
compensation and status as an employee under this Agreement shall continue. If
the parties are unable to agree with respect to any question with respect to
Disability, including, but not limited to, the following: (i) whether PB is
Disabled, (ii) the date upon which the Disability of PB commenced or (iii) the
date upon which either the Disability of PB terminated or the Disability
occurred, then such dispute shall be determined by arbitration in accordance
with this Agreement.
Upon an occurrence of Disability, this Agreement shall be terminated and
shall be deemed terminated, as if PB had terminated for "Convenience". Following
an occurrence of Disability, PB shall be entitled, on a one time basis, to 60%
of the base salary and commissions that he earned during the 12-month period
immediately prior to the occurrence of such Disability. Such amounts shall be
paid over a 12-month period in accordance the regular pay practices of BH.
BOX HILL SYSTEMS CORP. XXXXXX XXXXX
Signature: Signature:
Name: Xxxxxxxx Xxxxxxxx, Chairman of the Board
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