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EXHIBIT 10.02
MICRONICS COMPUTERS, INC.
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EMPLOYMENT AGREEMENT
This Agreement is entered into as of March 14, 1997 by and between
Micronics Computers, Inc., a Delaware corporation (the "Company"), having its
principal place of business at 00000 Xxxxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxx
00000, and Xxxxxxx Xxxxxxxx ("Employee"), residing at 0000 Xxxxxx Xxxx Xxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000. In consideration of the terms and conditions set
forth in this Agreement, the parties agree as follows:
1. EMPLOYMENT AND DUTIES.
1.1 APPOINTMENT. The Company hereby continues to employ
Employee and Employee hereby continues to accept employment with the Company
upon the terms and conditions set forth in this Agreement. During the term of
this Agreement, Employee will be President of the Company, and his duties will
be executive in nature, consistent with his title. He will report to the full
Board of Directors (the "Board"). Employee currently serves as a member of the
Board and will be renominated as a member of the Board so long as Employee
remains an employee of the Company on the date of renomination. Employee hereby
represents and warrants to the Company that he is free to enter into and fully
perform this Agreement and the documents referred to herein.
1.2 NATURE OF EMPLOYMENT. During the term of his employment
with the Company, Employee will devote his full skill, efforts, business time
and attention to his employment with the Company. Employee will not perform
services for compensation for any entity or person other than the Company
without the prior express written consent of the Company after approval by
resolution of the Board. However, Employee may participate in investment or
other activities unrelated to employment for another for compensation to the
extent that such activities do not preclude or conflict with his employment
under this Agreement.
2. TERM. The term of this Agreement will commence as of the
date hereof and will terminate on the earlier of the death of the Employee or on
the first anniversary of the date of this Agreement (the "Expiration Date").
3. TERMINATION OF EMPLOYMENT DURING TERM.
3.1 DEFINITIONS.
3.1.1 "Good Cause" shall mean (a) habitual neglect
or malfeasance of duty that continues uncured after 90 days notice by the
Company to Employee, (b) dishonesty, (c) conviction of a felony, (d) inability
to render services under this Agreement for any period in excess of 90 days out
of any twelve-month period (whether due to ill health or otherwise), (e) failure
to cure or cease repeated or a serious violation or violations of the Company's
published and written rules, or of the directions of the Board, that remain or
remains uncured 90 days after receipt of written notice thereof or (f) material
or repeated breach of this Agreement, or of the Proprietary Rights and
Confidentiality Agreement, dated November 12, 1994, between the Company and
Employee (the
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"Proprietary Rights Agreement"), that remains uncured 90 days after receipt of
written notice thereof.
3.1.2 "Severance" shall mean the remaining salary
that may be earned by Employee from the date of such termination to the end of
the term hereof.
3.2 TERMINATION BY EMPLOYEE. Employee, in his sole
discretion, may terminate his employment and his position as an officer of the
Company at any time prior to the Expiration Date upon giving the Company at
least 45 days prior written notice delivered to the other members of the Board
at their last known addresses. Such termination will also terminate this
Agreement.
3.3 TERMINATION BY THE COMPANY. The Company, in the sole
discretion of the Board, may terminate the employment of Employee and his
position as an officer of the Company prior to the Expiration Date, with or
without Good Cause and without prior notice. Termination by the Company for Good
Cause will terminate this Agreement. However, if the Company terminates without
Good Cause, Severance will be paid to Employee over the remaining term of this
Agreement, payable as and when Employee would have been paid had he remained
employed by the Company to the date of each payment and this Agreement will be
terminated in every other respect as of the date Employee ceases to be an
officer and employee of the Company.
4. COMPENSATION AND EXPENSES. In consideration for the services
to be rendered to the Company under this Agreement in all capacities, including,
without limitation, services as an officer, employee, director or member of any
committee of the Board of the Company or any subsidiary thereof, during the term
of this Agreement, Employee will be paid as follows:
4.1 SALARY. Retroactive from October 1, 1995, Employee's
salary will be $230,000 per annum. Changes thereafter, either up or down, will
be determined by the Board, in its sole discretion, at any time or from time to
time. Any such salary will be payable in installments, as earned, less any
normal payroll deductions, in accordance with prevailing payroll practices of
the Company from time to time and shall be proportionately reduced to the extent
that the Employee is not working full time for the Company. For purposes of this
Section 4.l, "full time" shall be defined by the Company's policy, as amended
from time to time, concerning the number of hours which must be worked by an
individual to be considered a full-time employee and, if no policy is set, "full
time" shall mean at least 40 hours per week.
4.2 SEMI-ANNUAL BONUSES. The Board, in its sole discretion,
may determine by resolution to pay Employee all or any portion of the following
semi-annual bonuses upon the achievement of the following milestones in any Half
Fiscal Year (defined below):
4.2.1 Definitions.
(a) "Half Fiscal Year" shall mean a six-
month period commencing on April 1 or on October 1 in any calendar year during
the term of this Agreement and until April 1, 1998 so long as Employee is
employed full-time by the Company for the entire six-month period, with the
first such Half Fiscal Year to commence on April 1, 1997 and the last such Half
Fiscal Year to commence October 1, 1997.
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(b) "Net Income" shall mean net income of
the Company, determined in accordance with generally accepted accounting
principles for financial reporting purposes, consistently applied.
(c) "Budget" shall mean the Company's Net
Income appearing in the Company's budget prepared and approved by the Board just
prior to, or within 30 days after commencement of, the Company's full fiscal
year in which the Half Fiscal Year falls, as such budget may be amended by
resolution of the Board and, if no such budget is prepared or approved with
respect to any Half Fiscal Year, the term "Budget" shall mean at least $500,000
in Net Income for that Half Fiscal Year.
4.2.2 Net Income Bonus. If actual Net Income for
any Half Fiscal Year is 80% or more of Budget, then, a "net income bonus,"
calculated as follows, will be payable in the Board's sole discretion with
respect to such Half Fiscal Year: (a) an amount between zero and $60,000, in
direct proportion to the amount of actual Net Income between 80% and 100% of
Budget (e.g., if actual net income is 82% of Budget, then the amount is $6,000,
or one-tenth of $60,000); plus (b) $5 for each $1,000 that actual Net Income
exceeds Budget.
4.2.3 Other Bonuses. If other milestones or
achievements that are approved by resolution of the Board for the payment of
bonuses to Employee are achieved, then a bonus in an amount up to $20,000 will
be payable in the Board's sole discretion with respect to any Half Fiscal Year.
During the term of this Agreement, Employee will not be entitled to any payments
under the Company's Cash Bonus Plan and Profit Sharing Plan.
4.2.4 Bonus Limitation. Notwithstanding any
other provision of this Section 4.2, no bonus described in this Section 4.2
shall be paid to Employee in respect of any Half Fiscal Year if actual Net
Income for such Half Fiscal Year is zero or a negative number and the total of
the bonuses described in this Section 4.2 for any Half Fiscal Year shall be no
greater than the amount by which actual Net Income exceeds zero with respect to
such Half Fiscal Year.
4.3 ACQUISITION BONUS. In addition to the bonuses
provided for in Section 4.2, the Company will pay to Employee a cash bonus of
$100,000, payable at the sole discretion of the Board, if, during the term
hereof and prior to September 15, 1997, the Company consummates (a) a merger,
consolidation, reorganization or other business combination pursuant to which
the business of the Company is combined with that of another party and the
shareholders of the Company cease to hold at least a majority of the voting
power of the surviving party or (b) the acquisition, directly or indirectly, by
another party of more than 50% of the capital stock or assets of the Company by
way of a negotiated purchase (each case under clauses (a) or (b) above being
referred to as a "Corporate Event").
4.4 WHEN BONUS EARNED AND PAID. Each bonus provided for
under this Section 4 shall be paid to Employee within 10 days after the Board
has approved the same, in its discretion, by resolution duly adopted at a
meeting or by written consent and (a) with respect to the bonuses described in
Section 4.2, actual Net Income has been determined for such Half Fiscal Year or
(b) with respect to the bonus described in Section 4.3, after the closing of the
Corporate Event. For purposes of such meeting or written consent, Employee may
be counted to establish a quorum
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but Employee's vote will not be counted in connection with such approval and
such approval may occur subsequent to the termination of this Agreement.
Accordingly, computation of any amount available for distribution shall not be
construed to create Employee's rights to receive "wages" until Board approval
has been obtained and such 10 day period has run.
4.5 BENEFITS. Except as to participation in the Company's
Cash Bonus Plan or its Profit Sharing Plan, Employee will be provided with such
vacation, disability, insurance and other benefits as are generally provided to
any employee of the Company.
4.6 EXPENSES. The Company will reimburse Employee for all
reasonable and necessary expenses incurred by Employee in connection with the
Company's business, provided that such expenses are deductible to the Company,
are in accordance with applicable policy set by the Board from time to time and
are properly documented and accounted for in accordance with the policy of the
Company and with the requirements of the Internal Revenue Service.
5. COMPANY STOCK. Employee has been granted, as of the date
hereof four separate options for the purchase in the aggregate of shares of the
Company's Common Stock, described as follows:
Date of Grant Number of Shares Exercise Price Per Share
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11/14/94 50,000 $4.75
08/01/95 50,000 $4.00
11/30/95 50,000 $3.375
01/17/96 50,000 $3.375
An additional option for 75,000 shares of the Company's Common Stock will be
granted under the 1989 Stock Option Plan of the Company subsequent to the
execution of this Agreement at an exercise price equal to the closing price of
the Company's Common Stock on the Nasdaq National Market on the day preceding
the date of Board approval of such grant. The new option will be (a) exercisable
over a five-year period, (b) will vest monthly, in arrears, over a four-year
vesting period commencing as if the option had commenced vesting on September 1,
1996 and (c) will be an Incentive Stock Option to the extent possible given the
$100,000 per annum vesting restriction of applicable tax laws relating to
Incentive Stock Options. Any further options granted to Employee will be at the
sole discretion of the Board.
6. COLLATERAL AGREEMENTS. Employee and the Company acknowledge
that the Indemnification Agreement and the Proprietary Rights Agreement
previously entered into between Employee and the Company will continue in full
force and effect in accordance with their terms and will not terminate as a
result of expiration or termination of this Agreement.
7. GENERAL PROVISIONS.
7.1 ARBITRATION. Employee and the Company shall submit to
binding arbitration in any controversy or claim arising out of, or relating to,
this Agreement or any breach hereof, provided, however, that the Company retains
its right to, and shall not be prohibited, limited or in any other way
restricted from, seeking or obtaining equitable relief from a court having
jurisdiction
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over the parties. Such arbitration shall be conducted in accordance with the
Rules of the American Arbitration Association in effect at that time, and
judgment upon the determination or award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Cost of the arbitration
(including, without limitation, reasonable attorney's fees and disbursements)
will be borne by the Company.
7.2 ENFORCEABILITY. If any provision of this Agreement shall
be found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, the parties hereby waive such provision to the extent that it is
found to be invalid or unenforceable and to the extent that to do so would not
deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect. Remedies provided for in this
Agreement are cumulative and are in addition to any other right or remedy
granted to any party by contract, at law, in equity or otherwise.
7.3 NO WAIVER. The failure by either party at any time to
require performance or compliance by the other of any of its obligations or
agreements shall in no way affect the right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of any
provision hereof shall not be taken or held to be a waiver of any preceding or
succeeding breach of such provision or as a waiver of the provision itself. No
waiver of any kind shall be effective or binding, unless it is in writing and is
signed by the party against whom such waiver is sought to be enforced.
7.4 ASSIGNMENT. This Agreement and all rights hereunder are
personal to Employee and may not be transferred or assigned by Employee at any
time. The Company may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, in connection with
any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes the
Company's obligations hereunder. This Agreement shall be binding upon, and inure
to the benefit of, the permitted successors and personal representatives of the
respective parties hereto.
7.5 WITHHOLDING. All sums payable to Employee hereunder
shall be reduced by federal, state, local and other withholding and similar
taxes or payments required by applicable law.
7.6 ENTIRE AGREEMENT; AMENDMENT. Except as specifically
provided herein, this Agreement constitutes the entire and only agreement
between the parties relating to employment of Employee by the Company, and
supersedes and cancels any and all previous contracts, arrangements or
understandings with respect thereto. This Agreement may be amended, modified,
superseded, canceled, renewed or extended only by an agreement in writing
executed by both parties hereto.
7.7 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered personally or mailed by certified mail,
return receipt requested, postage prepaid to the address of the
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relevant party as set forth above or as may be changed by notice given hereafter
in accordance with the provisions of this Section 7.7.
7.8 GENERAL INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall in no way affect the meaning
or interpretation of this Agreement. In this Agreement, the singular includes
the plural, the plural includes the singular, and the masculine gender includes
both male and female referents. This Agreement maybe executed in two or more
counterparts, each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement. This Agreement and the
rights and obligations of the parties hereto shall be construed in accordance
with the laws of the State of California, without giving effect to the
principles of conflict of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
EMPLOYEE: MICRONICS COMPUTERS, INC.
/s/ Xxxxxxx Xxxxxxxx By: /s/ Wm. X. Xxxxxxxxx
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Xxxxxxx Xxxxxxxx Wm. X. Xxxxxxxxx
Authorized Signatory
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