<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1997
REGISTRATION NO. 333-31873
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BOX HILL SYSTEMS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW YORK 3572 13-3460176
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
161 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10013
(212) 989-4455
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
PHILIP BLACK
CHIEF EXECUTIVE OFFICER
BOX HILL SYSTEMS CORP.
161 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10013
(212) 989-4455
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
LEO SILVERSTEIN, ESQ. JOHN W. WHITE, ESQ.
BROCK, FENSTERSTOCK, CRAVATH, SWAINE & MOORE
SILVERSTEIN, MCAULIFFE & WADE, LLC WORLDWIDE PLAZA
ONE CITICORP CENTER, 56TH FLOOR 825 EIGHTH AVENUE
153 E. 53RD STREET NEW YORK, NEW YORK 10019
NEW YORK, NEW YORK 10022 (212) 474-1000
(212) 371-2000
</TABLE>
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT MAXIMUM AGGREGATE
OF SECURITIES TO BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(1)(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value................ 5,290,000 $14.00 $74,060,000 $22,442
================================================================================================================
</TABLE>
(1) Includes 690,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any. See "Underwriting."
(2) Estimated solely for purposes of calculating the registration fee, all of
which was previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of the Company*
3.2 Form of Amendment to Certificate of Incorporation authorizing Preferred Stock to be
filed prior to commencement of Offering*
3.3 Amended and Restated By-laws of the Company*
4.1 Form of Common Stock certificate of the Company*
5.1 Opinion of Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC*
10.1 Compensation Plan and Agreement between the Company and Philip Black*
10.2 Employment Agreement between the Company and Carol Turchin
10.3 Employment Agreement between the Company and Benjamin Monderer
10.4 Employment Agreement between the Company and Mark Mays
10.5 Incentive Program of the Company, as amended
10.6 License Agreement with Emulex Corporation*
10.7 Lease Agreement, dated as of December 23, 1993, as extended and modified, related to
the Company's facilities in New York City*
10.8 Employee Stock Purchase Plan
10.9 Voting Agreement dated July 31, 1997 among Dr. Monderer, Ms. Turchin and Mr. Mays*
11.1 Statement regarding computation of pro forma net income per share*
16 Letter re: change in certifying accountants*
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Perelson Weiner*
23.3 Consent of Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC (contained in
Exhibit 5.1)*
24 Power of Attorney (included with the signature page hereof)*
27 Financial Data Schedule*
</TABLE>
(b) FINANCIAL STATEMENT SCHEDULE
Schedule II -- Valuation and Qualifying Accounts*
- ---------------
* Previously filed.
II-1
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on this 11th day of September, 1997.
BOX HILL SYSTEMS CORP.
By: /s/ BENJAMIN MONDERER
------------------------------------
Benjamin Monderer
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- ----------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ BENJAMIN MONDERER Chairman of the Board, September 11, 1997
- ----------------------------------- President and Chief
Benjamin Monderer Technical Officer
CAROL TURCHIN* Executive Vice President and September 11, 1997
- ----------------------------------- Director
Carol Turchin
PHILIP BLACK* Chief Executive Officer and September 11, 1997
- ----------------------------------- Director
Philip Black
R. ROBERT REBMANN, JR.* Chief Financial Officer and September 11, 1997
- ----------------------------------- Treasurer (Principal
R. Robert Rebmann, Jr. Financial and Accounting
Officer)
</TABLE>
*By: /s/ BENJAMIN MONDERER
------------------------------------------
Benjamin Monderer
(Attorney-in-Fact)
II-2
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------------ ----
<S> <C> <C>
1.1 Form of Underwriting Agreement*...............................................
3.1 Certificate of Incorporation of the Company*..................................
3.2 Form of Amendment to Certificate of Incorporation authorizing Preferred Stock
to be filed prior to commencement of Offering*................................
3.3 Amended and Restated By-laws of the Company*..................................
4.1 Form of Common Stock certificate of the Company*..............................
5.1 Opinion of Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC*...........
10.1 Compensation Plan and Agreement between the Company and Philip Black*.........
10.2 Employment Agreement between the Company and Carol Turchin....................
10.3 Employment Agreement between the Company and Benjamin Monderer................
10.4 Employment Agreement between the Company and Mark Mays........................
10.5 Incentive Program of the Company, as amended..................................
10.6 License Agreement with Emulex Corporation*....................................
10.7 Lease Agreement, dated as of December 23, 1993, as extended and modified,
related to the Company's facilities in New York City*.........................
10.8 Employee Stock Purchase Plan..................................................
10.9 Voting Agreement dated July 31, 1997 among Dr. Monderer, Ms. Turchin and Mr.
Mays*.........................................................................
11.1 Statement regarding computation of pro forma net income per share*............
16 Letter re: change in certifying accountants*..................................
23.1 Consent of Arthur Andersen LLP*...............................................
23.2 Consent of Perelson Weiner*...................................................
23.3 Consent of Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC (contained
in Exhibit 5.1)*..............................................................
24 Power of Attorney (included with the signature page hereof)*..................
27 Financial Data Schedule*......................................................
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
Employment Agreement dated as of July 3, 1997 between BOX HILL SYSTEMS
CORP., a New York corporation (the "Company") and Carol Turchin ("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
Executive Vice 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 her time
to the affairs and business of the Company for which she will serve as Executive
President and perform the duties designated by the Board of Directors of the
Company. Executive shall use her best efforts to promote the interests and
welfare of the Company.
4. Salary; Bonus.
(a) As her compensation hereunder, Executive shall be
paid by the Company a base salary of $425,000 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
her 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
<PAGE> 2
subsidiaries equal to (i) 0.5% of the consolidated net revenues of the Company
in excess of $100,000,000, and (ii) 2.5% 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 her husband 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 husband of the Executive,
which policy shall be assigned to the husband 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 her employment a full-paid
four-week vacation.
6. Expenses. The Company shall pay or reimburse Executive for
all expenses normally reimbursed by the Company and reasonably incurred by her
in furtherance of her duties hereunder including, without limitation, travel,
meals, hotel accommodations and the like upon submission by her 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.
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 widower or estate for the 12 month
period following such death the amount of the base
2
<PAGE> 3
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 her 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 her 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 her employment as an Executive by the Company (the
"Non-competition Period"), shall not perform 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
3
<PAGE> 4
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 her family, including her 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
her employment; and, to the extent that such proprietary information shall not
become public knowledge, Executive shall not disclose to others, during her
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 she 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 her services as the Company's employee-for-hire. Without limiting the
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.
4
<PAGE> 5
11. Indemnification.
(a) The Company agrees to indemnify Executive in the
event she 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 she, her 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 her behalf if a judgment or other final adjudication
adverse to her establishes that her 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 she personally gained in fact a financial profit
or other advantage to which she 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
her if and to the extent she 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, she 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 other than
those which arise principally from acts or omissions by her in bad faith or
which were the result of her 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
5
<PAGE> 6
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., 161 Avenue of the
Americas, New York, New York 10013 and if to the Executive at 2 Charlton Street,
#9C, New York, New York 10014. 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 provision in one instance shall
not be deemed a waiver of a breach of such provision in any other circumstance.
6
<PAGE> 7
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/ Philip Black
---------------------------
Name: Philip Black
Title: Chief Executive Officer
EXECUTIVE:
/s/ Carol Turchin
------------------------------
CAROL TURCHIN
7
<PAGE> 1
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 Benjamin Monderer
("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
<PAGE> 2
$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.
2
<PAGE> 3
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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<PAGE> 4
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
4
<PAGE> 5
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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<PAGE> 6
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., 161 Avenue of the
Americas, New York, New York 10013 and if to the Executive at 2 Charlton Street,
#9C, New York, New York 10014. 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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<PAGE> 7
provision in one instance shall not be deemed a waiver of a breach of such
provision in any other circumstance.
7
<PAGE> 8
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/ Philip Black
-----------------------------------
Name: Philip Black
Title: Chief Executive Officer
EXECUTIVE:
/s/ Benjamin Monderer
---------------------------------------
BENJAMIN MONDERER
8
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
Employment Agreement dated as of July 3, 1997 between BOX HILL SYSTEMS
CORP., a New York corporation (the "Company") and Mark A. Mays ("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 Vice
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 Vice
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 $350,000 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 completed fiscal year
ending during the Term as audited by the independent public
<PAGE> 2
accounting firm selected by the Company to audit the consolidated financial
statements of the Company and its subsidiaries equal to 1.5% 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 or continue to
provide, pay or secure, at its own expense for Executive while employed by the
Company pursuant to the Agreement medical, health, disability and business
accident insurance coverage in the forms provided to him during the twelve
months ended June 30, 1997. Executive shall be entitled to a full-paid four-week
vacation during each year of his employment.
6. Expenses. The Company shall 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.
7. Disability. In the event of Executive's disability (as
hereinafter defined) for ninety (90) consecutive calendar days or in the
aggregate one hundred and twenty (120) 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.
"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.
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<PAGE> 3
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 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,
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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 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
4
<PAGE> 5
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 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., 161 Avenue of the
Americas, New York, New York 10013 and if to the Executive at 24 Tall Pines
Drive, Weston, CT 06883 . 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
5
<PAGE> 6
of any other (prior or subsequent) breach by the Breaching Party, and waiver of
a breach of a provision in one instance shall not be deemed a waiver of a breach
of such provision in any other circumstance.
6
<PAGE> 7
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/ Philip Black
----------------------------
Name: Philip Black
Title: Chief Executive Officer
EXECUTIVE:
/s/ Mark A. Mays
-------------------------------
MARK A. MAYS
7
<PAGE> 1
Exhibit 10.5
BOX HILL SYSTEMS CORP.
1995 INCENTIVE PROGRAM
AS AMENDED AND RESTATED
AS OF JULY 3, 1997
The 1995 Incentive Program (the "Program") provides for the
grant to officers, directors and employees of Box Hill Systems Corporation and
its direct and indirect subsidiaries (collectively, the "Company"), and certain
consultants to the Company, certain rights to acquire shares of the Company's
common stock, par value $.01 per share (the "Common Stock"). The Company
believes that this Program will cause those persons to contribute materially to
the growth and success of the Company, thereby benefitting its stockholders.
1. ADMINISTRATION.
The Program shall be administered and interpreted by the Board
of Directors of the Company or by one or more Committees appointed by the Board
of Directors of the Company from among its members (the "Plan Administrator").
The Board of Directors may appoint different Committees to handle different
duties under the Program. The Plan Administrator's decisions shall be final and
conclusive with respect to the interpretation and administration of the Program
and any Grant made under it.
<PAGE> 2
2. OPTIONS.
Incentives under the Program shall consist of incentive stock
options and non-qualified stock options (collectively the "Options"). All
Options shall be subject to the terms and conditions set out herein and to such
other terms and conditions consistent with this Program as the Plan
Administrator deems appropriate. The Plan Administrator shall approve the form
and provisions of each Option. Options need not be uniform.
3. ELIGIBILITY.
Options may be granted to any employee, officer, key
executive, director, professional or administrator, consultant or advisor to the
Company or any subsidiary of the Company selected by the Plan Administrator to
receive Options under the Program (persons so selected, the "Optionee(s)").
4. SHARES AVAILABLE FOR GRANT.
(a) Shares Subject to Issuance or Transfer. Subject to
adjustment as provided in Section 4(b), the aggregate number of shares of Common
Stock (the "Shares") that may be issued or transferred under the Program is
725,000 Shares plus, (i) any Shares which are forfeited under the Program after
the Program becomes effective; plus (ii) any Shares surrendered to the Company
in payment of the exercise price of Options issued under the Program. The Shares
may be authorized but unissued Shares or Treasury Shares. The number of Shares
available for Options at any given time shall be reduced by the aggregate of all
Shares previously issued or transferred pursuant to the Program plus the
aggregate of all Shares which may become subject to issuance under
then-outstanding Options.
(b) Adjustments Upon Changes in Capitalization or Other
Events. Upon changes in the Common Stock of the Company by reason of a stock
dividend, stock split, reverse split,
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<PAGE> 3
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization or liquidation, the number and class of Shares
available under the Program as to which Options may be granted (both in the
aggregate and to any one Optionee), the number and class of Shares under each
then-outstanding Stock Option and the Option Price per share of such options,
shall be correspondingly adjusted by the Plan Administrator, such adjustments to
be made in the case of outstanding Stock Options without change in the total
price applicable to such options. In the event of a merger, consolidation,
combination, reorganization or other transaction in which the Company will not
be the surviving corporation, or in which the Company will not be the surviving
corporation, or in which the Company becomes a wholly-owned subsidiary of the
new corporation, a holder of Options under the Program shall be entitled to
options for that number of shares of stock in the new corporation which the
Optionee would have received had the Optionee exercised all of the unexercised
options available to the Optionee under the Program, whether or not then
exercisable, at the instant immediately prior to the effective date of such
transaction. Thereafter, adjustments as provided above shall relate to the
Options of the new corporation. Except as otherwise specifically provided in the
Option, in the event of a Change in Control (as defined below), merger,
consolidation, combination, reorganization or other transaction in which the
shareowners of the Company will receive cash or securities (other than Common
Stock) or in the event that an offer is made to the holders of Common Stock of
the Company to sell or exchange such Common Stock for cash, securities or stock
of another corporation and such offer, if accepted, would result in the offeror
becoming the owner of (a) at least 50% of the outstanding Common Stock of the
Company or (b) such lesser percentage of the outstanding Common Stock which the
Plan Administrator in its sole discretion determines will materially adversely
affect the market value of
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<PAGE> 4
the Common Stock after the tender or exchange offer, the Plan Administrator
shall have the right, but not the obligation, in the exercise of its business
judgment, prior to the shareowners' vote on such transaction or prior to the
expiration date (without extensions) of the tender or exchange offer, (i)
accelerate the time of exercise so that all Options which are outstanding shall
become immediately exercisable in full, without regard to any limitations of
time, performance or amount otherwise contained in the Program or in the Options
and/or (ii) determine that the Options shall be adjusted and make such
adjustments by substituting for Common Stock of the Company subject to Options,
common stock of the surviving corporation or offeror if such stock of such
corporation is publicly traded or, if such stock is not publicly traded, by
substituting common stock of a parent of the surviving corporation or offeror if
the stock of such parent is publicly traded, in which event the aggregate option
price shall remain the same and the number of shares subject to outstanding
Options shall be the number of shares which could have been purchased on the
closing day of such transaction or the expiration date of the offer with the
proceeds which would have been received by the Optionee if the Option had been
exercised in full prior to such transaction or expiration date and the Optionee
had exchanged all of such shares in the transaction or sold or exchanged all of
such shares pursuant to the tender or exchange offer. For purposes of this
Section 4(b), "Change in Control" means (i) any "person", as such term is used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the shareowners of the Company in
substantially the same proportion as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
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<PAGE> 5
Company representing 30% or more of the combined voting power of the Company's
then outstanding securities without the approval of the Board of Directors of
the Company; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (i), (iii) or (iv) of
this sentence) whose election by the Board or nomination for election by the
Company's shareowners was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof; (iii) the
shareowners of the Company approve a merger or consolidation of the Company with
any other company, other than (1) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or (2) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Company's then outstanding securities; or (iv) the
shareowners of the Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets and properties.
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5. OPTION GRANTS.
The Plan Administrator may grant options qualifying as
incentive stock options under the Internal Revenue Code of 1986, as amended
("Incentive Stock Options"), or non-qualified options not entitled to special
tax treatment under Section 422 of the Internal Revenue Code of 1986 (the
"Code"), as amended (collectively, "Stock Options"). The following provisions of
this Section 5 shall apply to such Stock Options:
(a) Exercise of Option. An Optionee may exercise an Option by
delivering a notice of exercise to the Company, either with or without
accompanying payment of the option price (the "Option Price"). The notice of
exercise, once delivered, shall be irrevocable.
(b) Satisfaction of Option Price. The Optionee shall pay the
Option Price in cash or by delivering shares of Common Stock which have been
owned by the Optionee for a minimum of six (6) months and which have a Fair
Market Value on the date of exercise equal to the Option Price or by
surrendering the right to acquire such number of shares of Common Stock which
when multiplied by the amount by which the Fair Market Value of Common Stock on
the exercise date exceeds the Option Price equals the total amount of the
exercise price (the "Terminated Shares"), or a combination of cash and the
Terminated Shares. The Optionee shall pay the Option Price not later than thirty
(30) days after the date of a statement from the Company following exercise
setting forth the Option Price, Fair Market Value of Common Stock on the
exercise date, the number of shares of Common Stock that may be delivered and
the number of Terminated Shares that may be surrendered in payment of the Option
Price, and the amount of withholding tax due, if any. If the Optionee fails to
pay the Option Price within the thirty (30) day period, the Plan Administrator
shall have the right to take whatever action it deems appropriate, including
voiding the option exercise. The Company shall not issue or transfer shares of
Common Stock upon exercise of an Option until the Option Price is fully paid.
(c) Share Withholding. With respect to any non-qualified
option, the Plan Administrator may, in its discretion and subject to such rules
as the Plan Administrator may adopt (including, without limitation, rules
relating to minimum holding periods for Common Stock),
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<PAGE> 7
permit the Optionee to satisfy, in whole or in part, any withholding tax
obligation which may arise in connection with the exercise of a non-qualified
option by electing to have the Company withhold shares of Common Stock having a
Fair Market Value equal to the amount of the withholding tax. Notwithstanding
the foregoing, as a condition of the grant of any Option to any officer or
director of the Company subject to the reporting requirements (a "Reporting
Person") of Section 16 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Plan Administrator shall require, upon the
exercise of any Option by any Reporting Person, at a time when the Company shall
be required to file periodic reports under Section 13 of the Exchange Act, that
the number of shares of Common Stock otherwise issuable upon the exercise of
such Option shall be reduced by the number of shares of Common Stock having an
aggregate Fair Market Value equal to the amount of the Reporting Person's
liability for any and all taxes required by law to be withheld.
(d) Price and Term. The Option Price per share, term and other
provisions of Options Optioned under the Program shall be specified in the
Option, as limited, in the case of Incentive Stock Options, by the provisions of
Section 5(e) below, if granted pursuant to such Section. In addition, the Plan
Administrator may prescribe such other conditions as it may deem appropriate,
which conditions shall be specified in the instrument of Option.
(e) Limits on Incentive Stock Options. The aggregate fair
market value of the stock covered by Incentive Stock Options granted under the
Program or any other stock option plan of the Company or any subsidiary or
parent of the Company that become exercisable for the first time by any employee
in any calender year shall not exceed $100,000. The aggregate Fair Market Value
will be determined at the time of the grant. The period for exercise of an
Incentive Stock
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<PAGE> 8
Option shall not exceed ten (10) years from the date of the Option (or five
years if the Optionee is also a 10% stockholder). The Option Price at which
Common Stock may be purchased by the Optionee under an Incentive Stock Option
shall be the Fair Market Value (or 110% of the Fair Market Value if the Optionee
is a 10% stockholder) of the Common Stock on the date of the grant. Incentive
Stock Options may only be granted to employees of the Company or any subsidiary
or parent of the Company. Incentive Stock Options by their terms shall not be
transferrable by the Optionee other than by the laws of descent and
distribution, and shall be exercisable, during the lifetime of the Optionee,
only by the Optionee.
6. AMENDMENT AND TERMINATION OF THE PROGRAM.
(a) Amendment. The Board of Directors of the Company may from
time to time amend, alter, suspend or discontinue the Program, subject to any
requirement of stockholder approval required by applicable law, rule or
regulation, including Section required by applicable law, rule or regulation,
including Section 162(m) of the Code or, if the Common Stock is then listed or
admitted for trading on any United States securities exchange or on the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"),
any requirement for shareholder approval required under the rules of such
exchange or NASDAQ, as the case may be; provided, however, that no amendment
shall be made without shareholder approval if such amendment would (1) increase
the maximum number of shares of Common Stock available for issuance under this
Program (subject to Section 4(b)), (2) reduce the minimum Option Price, (3)
effect any change inconsistent with Section 422 of the Code or (4) extend the
term of this Program.
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<PAGE> 9
(b) Termination of the Program. The Program shall terminate on
the tenth anniversary of its effective date unless terminated earlier by the
Board or unless extended by the Board.
(c) Termination and Amendment of Outstanding Options. A
termination or amendment of the Program that occurs after an Option has been
granted shall not result in the termination or amendment of the Option unless
the Optionee consents or unless the Plan Administrator acts under Section 7(d).
The termination of the Program shall not impair the power and authority of the
Plan Administrator with respect to outstanding Options. Whether or not the
Program has terminated, an outstanding Option may be terminated or amended under
Section 7(d) or may be amended by agreement of the Company and the Optionee on
terms consistent with the Program.
7. GENERAL PROVISIONS.
(a) Prohibitions Against Transfer. Only an Optionee or his or
her authorized representative may exercise rights under an Option. Such persons
may not transfer those rights, except as to non-qualified option upon the
express written consent of the Company, which may be granted or denied in the
Company's discretion. Except as otherwise expressly provided herein or in the
Options, when an Optionee dies, the personal representative of the Options may
exercise the rights. The Personal representative must furnish proof satisfactory
to the Plan Administrator of his or her right to receive the Option under the
Optionee's will or under the applicable laws of descent and distribution.
(b) Suitable Options. The Plan Administrator may grant an
Option to an employee of another corporation who becomes eligible to receive the
Option by reason of a
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<PAGE> 10
corporate merger, consolidation, acquisition of stock or property, share
exchange, reorganization or liquidation involving the Company in substitution
for an Option previously granted by such corporation (the "Original Options").
The terms and conditions of the substitute Option may vary from the terms and
conditions required by the Program and from those of the Original Options. The
Plan Administrator shall prescribe the exact provisions of the substitute
Options, preserving where possible the provisions of the Original Options.
(c) Subsidiaries. The term "subsidiary" means a corporation in
which the Company owns directly or indirectly 50% or more of the voting power.
(d) Compliance with Law. The Program, the exercise of Options,
and the obligations of the Company to issue shares of Common Stock upon exercise
of Options shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. The Plan Administrator may
revoke any Option if it is contrary to law or modify an Option to bring it into
compliance with any valid and mandatory government regulation.
(e) Ownership of Stock. An Optionee shall have no rights as a
stockholder of the Company with respect to any Shares covered by an Option until
the Shares are issued to the Optionee or his representative on the Company's
books.
(f) No Right to Employment. The Program and the Options under
it shall not confer upon any Optionee the right to continue in the employment of
the Company or affect in any way the right of the Company to terminate the
employment of an Optionee at any time.
(g) Effective Date of the Program. The effective date of the
Program is May 23, 1995.
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<PAGE> 11
(h) Fair Market Value. For the purposes of the Program, the
term Fair Market Value means, as of any date, the closing price of a share of
Common Stock of the Company on such date. The closing price shall be (i) if the
Common Stock is then listed or admitted for trading on any national securities
exchange, or if not so listed or admitted for trading, is listed or admitted for
trading on NASDAQ, the last sale price of the Common Stock, regular way, or the
mean of the bid and asked prices thereof for any trading day on which no such
sale occurred, in each case as officially reported on the principal securities
exchange on which the Common Stock is listed or admitted for trading or on
NASDAQ, as the case may be, or (ii) if not so listed or admitted for trading on
a national securities exchange or NASDAQ, the mean between the closing high bid
and low asked quotations for the Common Stock in the over-the-counter market as
reported by NASDAQ, or any similar system for the automated dissemination of
securities prices then in common use, if so quoted, as reported by any member
firm of the New York Stock Exchange selected by the Company; provided, however,
that if, by reason of extended or continuous trading hours on any exchange or in
any market or for any other reason, the time, with respect to any trading day,
of the close of trading for the purpose of determining the "last sale price" or
the "closing" bid and asked prices is not objectively determinable, the time on
such trading day used for the purpose of reporting any compilation of last sale
prices or closing bid and asked prices in The Wall Street Journal shall be the
time on such trading day as of which the "last sale price" or "closing" bid and
asked prices are determined for purposes of this definition. If the Common Stock
is quoted on a national securities or central market system in lieu of a market
or quotation system described above, the closing price shall be determined in
the manner set forth in clause (i) of the preceding sentence if actual
transactions are reported, and in the manner set forth in clause (ii) of the
preceding sentence
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<PAGE> 12
if bid and asked quotations are reported but actual transactions are not. If on
the date in question, there is no exchange or over-the-counter market for the
Common Stock, the "fair market value" of such Common Stock shall be determined
by the Plan Administrator acting in good faith.
(i) Application of Funds. The proceeds received by the Company
from the exercise of Options pursuant to the Program will be used for general
corporate purposes.
(j) No Obligation to Exercise Option. The granting of an
Option under the Program shall impose no obligation upon the Optionee to
exercise such option.
(k) Severability. If any provision of the Program, or any term
or condition of any Option granted or form executed or to be executed
thereunder, or any application thereof to any person or circumstances is
invalid, such provision, term, condition or application shall to that extent be
void (or, in the discretion of the Plan Administrator, such provision, term or
condition may be amended so as to avoid such invalidity or failure), and shall
not affect other provisions, terms or conditions or applications thereof, and to
this extent such provisions, terms and conditions are severable.
(l) Option Agreement. Each grant under this Program shall be
evidenced by an option agreement (i.e., an instrument of Option) setting forth
the terms and conditions applicable to such Option. No Option shall be valid
until an agreement is executed by the Company and the Optionee and, upon
execution by each party and delivery of the agreement to the Company, such
Option shall be effective as of the effective date set forth in the Agreement.
(m) Restricted Shares. Each award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock subject to
such Option upon any securities exchange or under any
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<PAGE> 13
law, or the consent or approval of any governmental body, or the taking of any
other action is necessary or desirable as a condition of, or in connection with,
the delivery of shares thereunder, such shares shall not be delivered unless
such listing, registration, qualification, consent, approval or other action
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company may require that certificates evidencing shares of
Common Stock delivered upon an exercise of any Option bear a legend indicating
that the sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
(n) Program Controls. In the case of any conflict or
inconsistency between the terms of this Program and the terms of any instrument
of Option, the terms of this Program will control, unless the instrument of
Option expressly provides that the terms of such instrument of Option will
control.
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EXHIBIT 10.8
Box Hill Systems Corp.
1997 Employee Stock Purchase Plan
The following constitute the provisions of the 1997 Employee Stock
Purchase Plan of Box Hill Systems Corp.
1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company,
or a committee of the Board appointed in accordance with Section 13.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Box Hill Systems Corp., and any
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings paid in cash including commissions, overtime, shift premium, incentive
compensation, incentive payments, bonuses and other cash compensation, but
excluding any income received from the exercise of options.
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and at least six (6) months as of the first day
of the applicable offering period. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds 90 days and the individual's right to re-employment is not
guaranteed either by statute or by contract, the employment relationship shall
be deemed to have terminated on the 91st day of such leave.
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(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last trading day of each
Purchase Period, if any, or each Offering Period.
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any
established stock exchange or a national
market system, including without limitation
the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing
sales price for such stock (or the closing
bid, if no sales were reported) as quoted on
such exchange or system for the last market
trading day prior to the time of
determination, as reported in The Wall
Street Journal or such other source as the
Board deems reliable, or;
(2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling
prices are not reported, its Fair Market
Value shall be the mean of the closing bid
and asked prices for the Common Stock on the
date of such determination, as reported in
The Wall Street Journal or such other source
as the Board deems reliable, or;
(3) In the absence of an established market for
the Common Stock, the Fair Market Value
thereof shall be determined in good faith by
the Board.
(4) For purposes of the Enrollment Date under
the first Offering Period under the Plan,
the Fair Market Value shall be the initial
price to the public as set forth in the
Prospectus filed pursuant to Rule 424(b)
under the Securities Act of 1933, as amended
with respect to the registration statement
of the Company on Form S-1 filed with the
Securities and Exchange Commission for the
initial public offering of the Company's
Common Stock (Registration Statement No.
333-31873).
(k) "Offering Period" shall mean the period beginning with the
date an option is granted under the Plan and ending with the date determined by
the Board. During the term of the Plan, the duration of each Offering Period
shall be determined from time to time by the Board, provided that no Offering
Period may exceed twelve (12) months in duration. If determined by the Board, an
Offering Period may include one or more Purchase Periods. The first Offering
Period shall begin on the effective date of the foregoing Registration Statement
relating to the Company's
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<PAGE> 3
initial public offering of its Common Stock registered with the Securities and
Exchange Commission (the "Effective Date") and shall end on March 31, 1998.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Purchase Period" shall mean the period commencing on an
Enrollment Date or after an Exercise Date and which is of such duration as the
Board shall determine.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceed Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering and Purchase Periods. The Plan shall be implemented
by consecutive, overlapping Offering Periods, each of which shall be of such
duration (not to exceed 12 months) as the Board shall determine from time to
time in its discretion, and each of which shall consist of such number of
Purchase Periods as the Board shall
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<PAGE> 4
determine from time to time in its discretion. The Plan shall continue until
terminated in accordance with Section 19 hereof. The initial Offering Period
shall commence on the Effective Date and shall end on the last Trading Day on or
before March 31, 1998. Unless otherwise specified by the Board, or a Committee
of the Board (the "Committee") Offering Periods subsequent to the initial
Offering Period shall be six months in duration, without any Purchase Periods,
with the second Offering Period commencing on the first Trading Day on or after
April 1, 1998 and ending on the last Trading Day on or before September 30,
1998. The Board shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) at any time or from time to time, and
shall have the power to implement multiple Purchase Periods within any Offering
Period, provided that (except as the shareholders may otherwise approve) any
such change shall be effected only with respect to Offering Periods commencing
after the date on which the change is made.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period. The Board shall have the power to change the payroll deduction rate up
to a maximum rate of twenty percent (20%) at any time or from time to time;
provided that (except as the stockholders may otherwise approve) any such change
shall be effected only with respect to Offering Periods commencing after the
date the change is made.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase (subject to the limit
set forth in Section 6(a)) or decrease the rate of his or her payroll deductions
during the Offering Period by completing or filing with the Company
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<PAGE> 5
a new subscription agreement authorizing a change in payroll deduction rate. The
Board or Committee may, in its discretion, limit the number of participation
rate changes during any Offering Period. The change in rate shall be effective
with the first full payroll period following five (5) business days after the
Company's receipt of the new subscription agreement unless the Company elects to
process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b) (8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at such
time during any Purchase or Offering Period. Payroll deductions shall recommence
at the rate provided in such participant's subscription agreement at the
beginning of the first Offering Period, or, if applicable, first Purchase Period
which is scheduled to end in the following calendar year, unless terminated by
the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price. In no event shall an Employee be
permitted to purchase during each Offering Period, or Purchase Period, if
applicable, more than $12,500 worth of Common Stock valued at the Fair Market
Value on the first day of such Offering Period; provided, however, that for the
first Offering Period under the Plan an Employee shall not be permitted to
purchase more than $25,000 worth of Common Stock valued at the Fair Market Value
on the first day of the first Offering Period; and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 12
hereof, including limitations on purchases in subsequent offerings during the
same calendar year to assure compliance with Section 3(b). Exercise of the
option shall occur as provided in Section 8 hereof, unless the participant has
withdrawn pursuant to Section 10 hereof. The option shall expire on the last day
of the Offering Period.
8. Exercise of Option.
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<PAGE> 6
(a) Unless a participant withdraws from the Plan as provided
in Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, or, if applicable, Purchase Period subject to earlier
withdrawal by the participant as provided in Section 10 hereof. Any other monies
left over in a participant's account after the Exercise Date shall be returned
to the participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
(b) On any given Exercise Date, the number of shares with
respect to which options are to be exercised shall not exceed 125,000 shares
(which number gives effect to a 3.3 for 1 split of the Common Stock approved by
the Board in July 1997 to be effective immediately prior to the initial public
offering of the Common Stock of the Company), provided, however, for the
Exercise Date of the first Offering Period under the Plan, the number of shares
with respect to which options are to be exercised shall not exceed 100,000
shares (which number gives effect to a 3.3 for 1 split of the Common Stock
approved by the Board in July 1997 to be effective immediately prior to the
initial public offering of the Common Stock of the Company). If, on a given
Exercise Date, the number of shares with respect to which options are to be
exercised exceeds the share limit described in this subsection, the Company
shall make a pro rata allocation of the shares remaining available for purchase
in as uniform a manner as shall be practicable and as it shall determine to be
equitable.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of the shares purchased upon exercise of his
or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee, for any
reason, he or she shall be deemed to have elected to withdraw from the Plan and
the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option shall be returned to
such participant or, in the case of his or her death, to the person or persons
entitled
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<PAGE> 7
thereto under Section 14 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
(c) A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 250,000 shares
(which number gives effect to a 3.3 for 1 split of the Common Stock approved by
the Board in July 1997 to be effective immediately prior to the initial public
offering of the Common Stock of the Company), subject to adjustment upon other
changes in capitalization of the Company as provided in Section 18 hereof. If,
on a given Exercise Date, the number of shares with respect to which options are
to be exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant shall have no interest or voting right in
shares covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such
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participant's death subsequent to an Exercise Date on which the option is
exercised but prior to delivery to such participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the Reserves, as well as the price per share
and the number of shares of Common Stock covered by each option under the Plan
which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company, provided, however, that conversion of any
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convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall effect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of a proposed
dissolution or liquidation of the Company, the Offering Period shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, any Offering Periods then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date") and
any Offering Periods then in progress shall end on the New Exercise Date. The
New Exercise Date shall be before the date of the Company's proposed sale or
merger. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
19. Amendment or Termination.
(a) The Board may at any time and for any reason terminate or
amend the Plan. Except as provided in Section 18 hereof, no such termination can
affect options previously granted, provided that an Offering Period may be
terminated by the Board on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
shareholders. Except as provided in Section 18 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Section 423 of the Code
(or any successor rule or provision or any other applicable law or regulation),
the Company shall obtain shareholder approval in such a manner and to such a
degree as required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's
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Compensation, and establish such other limitations or procedures as the Board
(or its committee) determines in its sole discretion advisable which are
consistent with the Plan.
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
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EXHIBIT A
BOX HILL SYSTEMS CORP.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary (ies)
1. ____________hereby elects to participate in the Box Hill Systems Corp.
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of __% of my Compensation on each payday for the Offering Period on
each payday for subsequent Offering Periods (from 1 to 10%). Such
amounts shall be deducted each payday during the Offering Period in
accordance with the Employee Stock Purchase Plan. (Please note that no
fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the completed Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and spouse only):
___________.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within two (2) years after the Enrollment Date (the first day
of the Offering Period during which I purchased such shares) or one
(1)year after the Exercise Date, I will be treated for federal income
tax purposes as having received ordinary income at the time of such
disposition in an amount equal to the excess of the fair market value
of the shares at the time such shares were purchased by me over the
price which I paid for the shares. I hereby agree to notify the Company
in writing within 30 days after the date of any disposition of my
shares and I will make adequate provision for Federal, state or other
tax withholding obligations, if any, which arise upon the disposition
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of the Common Stock. The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the two year
and one year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time
of such disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2)
15% of the lesser of the fair market value of the shares on the first
day of the Offering Period or the fair market value of the shares on
the Purchase Date. The remainder of the gain, if any, recognized on
such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) _________________________________________________________
(First) (Middle) (Last)
_________________________________ ___________________________________________
(Relationship) (Address)
___________________________________________
Employee's Social
Security Number: ___________________________________________
Employee's Address: ___________________________________________
___________________________________________
___________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ______________ __________________________________________
Signature of Employee
__________________________________________
Spouse's Signature (If beneficiary other
than spouse)
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EXHIBIT B
BOX HILL SYSTEMS CORP.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Box Hill
Systems Corp. Employee Stock Purchase Plan which began on _______, 19__ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purpose of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
______________________________________
______________________________________
______________________________________
Signature:
______________________________________
Date: ________________________________
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