FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 0-15486
MIKRON INSTRUMENT COMPANY, INC.
-------------------------------
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 22-1895668
- ------------------------------ -------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
16 Thornton Road, Oakland, New Jersey 07436
-------------------------------------------
(Address of Principal Executive Office) (Zip Code)
(201) 405-0900
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(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.
Yes |X| No |_|
The number of shares of registrant's Common Stock, $.003 par value,
outstanding as of June 7, 1999 was 4,285,700 shares.
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MIKRON INSTRUMENT COMPANY, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION:
Balance Sheet - January 31, 1999 3
Statement of Operations - Three months ended January 31,
1999 and 1998 4
Statement of Cash Flows - Three months ended January 31,
1999 and 1998 5
Notes to Financial Statements 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7
PART II - OTHER INFORMATION 8
SIGNATURES 10
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MIKRON INSTRUMENT COMPANY, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
April 30, 1999 October 30, 1998
-------------- ----------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 540,381 $ 415,400
Trade accounts receivable, less allowance for
doubtful accounts of $83,000 751,350 1,057,079
Inventories 2,193,829 2,285,052
Prepaid expenses and other current assets 43,485 93,484
---------- ----------
TOTAL CURRENT ASSETS 3,529,045 3,851,015
---------- ----------
PROPERTY AND EQUIPMENT, net 257,658 286,470
---------- ----------
DEPOSITS 44,802 0
---------- ----------
$3,831,505 $4,137,485
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 386,967 $ 537,038
Current portion of capital lease obligation -- 4,360
---------- ----------
TOTAL CURRENT LIABILITIES 386,967 541,398
---------- ----------
LONG TERM LIABILITIES
Capital lease obligation -- 6,475
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $.003 par value;
authorized - 15,000,000 shares; issued and
outstanding 3,785,700 shares 12,576 12,181
Additional paid-in capital 3,301,675 3,151,831
Retained earnings 130,287 425,600
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 3,444,538 3,589,612
---------- ----------
$3,831,505 $4,137,485
========== ==========
</TABLE>
See notes to financial statements
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MIKRON INSTRUMENT COMPANY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 1,467,033 $ 2,283,596 $ 3,171,540 $ 4,459,323
Royalties 46,000 54,873 74,000 96,541
----------- ----------- ----------- -----------
TOTAL REVENUES 1,513,033 2,338,469 3,245,540 4,555,864
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of goods sold 710,439 1,069,510 1,526,684 2,079,044
Selling, general and administrative 844,647 952,391 1,670,971 1,774,004
Research and development 178,890 199,350 352,309 355,069
----------- ----------- ----------- -----------
TOTAL COSTS AND EXPENSES 1,733,976 2,221,251 3,549,964 4,208,117
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (220,943) 117,218 (304,424) 347,747
----------- ----------- ----------- -----------
OTHER INCOME:
Investment and interest income 4,946 6,052 9,110 7,854
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (215,997) $ 123,270 $ (295,314) $ 355,601
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED $ (0.06) $ 0.03 $ (0.08) $ 0.10
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 3,785,700 3,654,200 3,741,867 3,654,200
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
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MIKRON INSTRUMENT COMPANY, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(295,314) $ 355,601
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 38,397 31,525
Amortization -- 25,000
Changes in assets and liabilities:
Decrease (increase) in trade accounts receivable 305,729 (433,923)
Decrease in inventories 91,223 116,987
Decrease (increase) in prepaid and other current assets 50,000 (46,825)
Increase in deposits (44,802) --
Decrease in accounts payable and accrued liabilities (150,071) (272,839)
--------- ---------
290,476 (580,075)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (4,838) (224,474)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (9,585) (22,437)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (9,585) (22,437)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital lease obligation (10,835) (1,803)
Sale of stock pursuant to exercise of stock options 150,239 --
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 139,404 (1,803)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 124,981 (248,714)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 415,400 547,995
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 540,381 $ 299,281
========= =========
</TABLE>
See notes to financial statements
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MIKRON INSTRUMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements reflect all adjustments which, in
the opinion of management, are necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting principles,
but which is not required for interim reporting purposes has been condensed or
omitted. The accompanying financial statements should be read in conjunction
with the financial statements and notes thereto as of October 31, 1998 contained
in the Company's Annual Report on Form 10-KSB for the fiscal year then ended.
Results of operations for the period ended April 30, 1999 are not necessarily
indicative of the results to be expected for the full year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the financial statements and notes thereto appearing
elsewhere herein.
Results of Operations
Net sales for the six and three month periods ended April 30, 1999 were
$3,171,540 and $1,467,033, respectively, as compared to $4,459,323 and
$2,283,596 for the six and three month periods ended April 30, 1998. These
decreases are attributable to a slow down in sales to the OEM and international
markets in particular those markets which are located in southeast Asia and
Japan.
The cost of sales as a percentage of net sales for the six and three month
periods ended April 30, 1999 was 48% as compared to 47% for the corresponding
periods in 1998. This increase is due to lower margins derived with respect to
the products sold during the fiscal 1999 periods.
Selling, general and administrative expenses for the six and three month
periods ended April 30, 1999 were $1,670,971 and $844,647 as compared to
$1,774,004 and $952,391 for the same periods in 1998. These decreases are
attributable to a $300,000 annual cost reduction in personnel, advertising,
travel and printing expenses commenced by the Company during the three month
period ended April 30, 1999.
Research and development expenses for the six and three month periods
ended April 30, 1999 were $352,309 and $178,890 as compared to $355,069 and
$199,350 for the same periods in 1998. These decreases resulted from the loss of
one engineer.
Other income for the six and three months ended April 30, 1999 were $9,110
and $4,946 as compared to $7,854 and $6,052 for the corresponding periods in
1998.
Liquidity and Capital Resources
The Company's working capital decreased from $3,309,617 at October 31,
1998 to $3,142,078 at April 30, 1999.
At April 30,1999, the Company's capital resources and its sources of
liquidity were $540,381 in cash and temporary cash investments and $751,350 in
accounts receivable.
Management does not believe that a return of inflation will have a
material adverse effect on the Company's operations because it believes that the
Company will be able to increase its selling prices to reflect most increases in
its cost.
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PART II - OTHER INFORMATION
Item 5 - Other Information
On May 3, 1999, Messrs. Gerald D. Posner and Dennis Stoneman purchased
333,333 and 166,667 unregistered shares, respectively, of the Company's common
stock in private investment transactions effected directly by them with the
Company. In connection therewith:
(a) Messrs. Posner and Stoneman, and Mr. Paul M. Bronson became directors
of the Company with effect from May 3, 1999;
(b) Mr. Posner became employed, with effect from May 17, 1999, as the
Company's President and Chief Executive Officer, and Mr. Stoneman became
employed, also with effect from May 17, 1999, as a Vice President of the
Company; and
(c) in connection with these new changes in management, Keikhosrow Irani
relinquished his position as the Company's President and was appointed to the
new senior executive position of Chief Technical Officer of the Company, and
Steven N. Bronson, the Company's Chairman and Chief Executive, relinquished his
position as Chief Executive to Mr. Posner.
Mr. Posner is the former President and a major shareholder of Electronic
Measurements, Inc., a New Jersey based manufacturer of power supplies. Under Mr.
Posner's leadership, a successful LBO creating significant investor appreciation
was completed in 1998, resulting in the sale of Electronic Measurements, Inc. to
Siebe, plc. Prior to his involvement at Electronic Measurements, Mr. Posner was
President of Eurotherm plc's temperature instrumentation subsidiary in the U.S.
Mr. Stoneman has spent the past 14 years working in various capacities for
several U.S. and overseas subsidiaries of Eurotherm plc. Since 1996, Mr.
Stoneman has served as Eurotherm's Director of Business Development, primarily
concerned with the acquisition of companies in the field of instrumentation,
controls, solid state relays, AC and DC variable speed motor controls. Between
1993 and 1996, Mr. Stoneman was President of Eurotherm Instrumentation and
Controls world wide where he was in charge of five manufacturing, three research
and development, and seven sales operations generating $125 million annually.
Mr. Bronson, who is the brother of Steven N. Bronson, the Chairman of the
Company's Board of Directors, has been employed by Lighting Division of Philips
Electronics during the past 13 years in various process and manufacturing
engineering and supervisory capacities. Most recently, he has served as a senior
engineer in that Division's phosphor metals department. Mr. Bronson holds a B.S.
in ceramic engineering from Alfred University.
Messrs. Posner and Stoneman have entered into four year employment
agreements with the Company which provide for the payment of annual salaries of
$200,000 and $100,000, respectively, subject to such merit increases, in each
case, as the Company's Board, or the Compensation Committee thereof, shall
determine to grant. Such employment agreements further require the
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Company to establish an incentive stock option plan for the executives,
employees and directors of the Company (the "Plan"). The participants in the
Plan shall be entitled to purchase, pursuant to the options to be granted
thereunder (which may be "incentive stock options" within the meaning of Section
422(b) of the Internal Revenue Code, or non-incentive stock options) an
aggregate number of 857,140 shares of the Company's common stock. Further in
accordance with such employment agreements, Messrs. Posner and Stoneman, and
such other executives as shall be hired by Mr. Posner during the term of his
employment agreement, shall be entitled to purchase, pursuant to the options to
be granted under the Plan up to an aggregate of 428,570 shares of common stock
at an exercise price of $1.00 per share. The vesting of such options shall occur
at the rate of 25% per annum at the end of each one year period during the term
of each agreement, and the exercise of all vested options shall be conditioned
upon the achievement of a set of pre-determined earnings, revenue and other
performance targets to be formulated mutually by each executive and the Board or
the committee administering the Plan (the "Performance Targets"). The term of
such options shall be the 51 month period commencing on May 17, 1999. In
accordance with the above-described terms of their respective employment
agreements, the company's Board has agreed to grant options to purchase 171,428
shares of common stock to each of Messrs. Posner and Stoneman, pursuant to
Performance Targets which have not, as of the date of filing of this Report,
been finally determined.
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The exhibit listed below is filed as part of this report.
Exhibit 10.13 Employment agreement dated as of May 3, 1999 between the Company
and Gerald D. Posner
Exhibit 10.14 Employment agreement dated as of May 3, 1999 between the Company
and Dennis Stoneman
Exhibit 10.15 Form of indemnification agreement between the Company and each of
its directors
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
for which this report has been filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
June 8, 1999
MIKRON INSTRUMENT COMPANY, INC.
By: /s/ Gerald D. Posner
------------------------------------------------
Gerald D. Posner, President (Principle Executive
Officer), as Registrant's duly authorized officer
10
Exhibit 10.13
EMPLOYMENT AGREEMENT made and entered into as of May 3, 1999, between
MIKRON INSTRUMENT COMPANY, INC., a New Jersey corporation (the "Company") and
GERALD D. POSNER (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, upon the terms and conditions hereinafter
provided,
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Employment
(a) The Company hereby employs the Executive as an executive of the
Company (as his duties are more particularly described in paragraph 1(b) hereof)
for the period commencing on May 17, 1999 and terminating on May 16, 2003,
unless Executive's employment is terminated earlier pursuant to Article 4 of
this Agreement (the "Employment Period").
(b) During the Employment Period, (i) the Executive shall serve as the
Company's President and Chief Executive Officer, reporting directly and solely
to the Board of Directors of the Company (the "Board"); (ii) the Executive shall
devote substantially all of his time and efforts to the Company's business,
provided, however, that the Executive may serve on a reasonable number of boards
of directors, trade associations and public service organizations, committees
and commissions; (iii) the Board shall nominate the Executive for election to
the Board; and (iv) the Executive shall stand for election as a Director of the
Company at the annual meetings of shareholders held throughout the term of his
service under this Agreement.
(c) The Executive accepts such employment, and agrees to perform such
services as may from time to time be assigned to him by, or pursuant to the
authorization of, the Board, consistent with his position as President and Chief
Executive Officer. The Executive agrees that during the Employment Period he
will not, directly or indirectly, engage or participate in, or become employed
by, or render advisory or other services to, any business entity which competes
directly with the Company's current business, i.e., the development,
manufacture, marketing and servicing of infrared non-contact temperature
measurement devices, temperature sensors, calibration sources and thermal
imaging systems, except in the performance of his duties for the Company.
2. Compensation
(a) Annual Base Salary. The Company shall pay to the Executive, and the
Executive shall accept from the Company, for the Executive's services during the
Employment Period, a salary at the rate of $200,000 per annum. The compensation
to be paid to the Executive as provided for in this paragraph 2(a) shall be
payable in accordance with the Company's customary employee payroll policy as in
effect from time to time during the Employment Period. On or
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before November 30 of each year during the Employment Period the Board or a duly
appointed Compensation Committee of the Board (the "Committee") shall review the
Executive's employment performance during the one year (or shorter) period (the
"Review Period") which shall have ended on the immediately preceding October 31
to determine the amount of any merit increase in the Executive's salary. Any
such increase shall be effective for the one year period commencing on November
1 of the year immediately following the Review Period. The Executive's salary
shall not be decreased without his prior consent thereto in writing.
(b) Benefits. The Executive shall be afforded the opportunity to
participate in all benefit plans established by the Company through which the
Company's employees have been, or shall be, afforded the opportunity to
purchase, or otherwise receive, any life insurance, health insurance,
hospitalization, disability, stock option and/or other fringe benefits.
(c) Stock Options. The Company shall establish an incentive stock option
plan for the executives, employees and directors of the Company (the "Plan").
The participants in the Plan shall be entitled to purchase, pursuant to the
options to be granted thereunder (which may be "incentive stock options" within
the meaning of Section 422(b) of the Internal Revenue Code, or non-incentive
stock options) an aggregate number of shares of the Company's common stock,
one-third cent par value (the "Common Stock"), as shall be equal to
approximately 20% of the total number of shares of Common Stock which shall be
issued and outstanding upon consummation of the stock purchase agreement dated
of as May 3, 1999 between the Company and the Executive (the "post-agreement
issued and outstanding shares"). As soon as practically possible after the Plan
has been authorized by the Company's shareholders, the Company shall register
the Common Stock to be issued upon exercise of the options to be granted
thereunder for sale by the Company, and for resale by holders thereof, pursuant
to the Securities Act of 1933, as amended.
The Executive, together with the Company's new Vice President -
Sales and Marketing, Mr. Dennis Stoneman, and such other executives as shall be
hired by the Company during the term of this Agreement upon the advice of the
Executive, shall be entitled to purchase, pursuant to the options to be granted
under the Plan an aggregate number of shares of Common Stock as shall be equal
to 10% of the total number of post-agreement issued and outstanding shares. The
exercise price for each of such options shall be $1.00 per share. The vesting of
such options shall occur at the rate of 25% per annum at the end of each Review
Period during the Employment Period, and the exercise of all vested options
shall be conditioned upon the achievement of a set of pre-determined earnings,
revenue and other performance targets to be formulated mutually by the Executive
and the Board or the committee administering the Plan (the "Performance
Targets"). The term of such options shall be the 51 month period commencing on
the date of commencement of the Employment Period. The Plan and such options
shall provide that, upon the death, disability or termination of employment of
the Executive other than "for cause," all options which shall then have vested,
or which would have vested if such event had occurred on the last day of the
then current Review Period, shall be exercisable by the Executive, or by the
person or persons to whom such options shall pass by will or by the laws of
descent and distribution, as the case may be, during the six month period
following the date of occurrence of such event, provided, that, all applicable
conditions to the exercise of such options shall have been satisfied on or
before the date of exercise thereof. Each
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option granted pursuant to the Plan shall also contain such other terms,
limitations and conditions as the Board or the committee administering the Plan
shall deem appropriate pursuant to the provisions of the Plan.
In the event that the Company's shareholders fail to authorize the
Plan, the options to be granted hereunder shall be issued as non-Plan options in
accordance with, and subject to all of the foregoing terms and conditions.
(d) Expense Reimbursements. The Company shall reimburse the Executive for
all out of pocket travel, lodging, meal, entertainment and other expenses of a
similar nature that he shall incur while engaged in the Company's business. Such
reimbursements shall be made in accordance with the Company's customary policies
pertaining thereto as in effect from time to time during the Employment Period.
3. Confidentiality
(a) Definitions. For purposes of this Agreement, the following definitions
shall apply:
(i) "Inventions" shall mean all infrared non-contact temperature
measurement devices, temperature sensors, calibration sources and thermal
imaging systems, and any and all components thereof or Software incorporated
therein (collectively, the "Devices") invented, conceived or otherwise made or
developed by the Executive, in whole or in part, within the scope of his duties
during his employment by the Company, and all modifications, and enhancements
thereof, whether or not patentable or copyrightable.
(ii) "Work Product" shall mean all Devices and any and all
components thereof in the process of being created or modified, and all other
documentation, creative works, know-how, and information pertaining to such
Devices or components thereof created or developed, in whole or in part, by the
Executive within the scope of his duties during his employment by the Company,
whether or not copyrightable, patentable or otherwise protectable, excluding
Inventions.
(iii) "Trade Secrets" shall mean all Devices and any and all
components thereof, documentation, know-how, and information relating to the
past, present, or future business of the Company or any plans therefor, or
relating to the past, present, or future business of a third party or plans
therefor which are disclosed to the Company, which the Company does not disclose
to third parties without restrictions on use or further disclosure; provided,
however, Trade Secrets shall not include the general knowledge and experience
obtained by the Executive during his employment by the Company.
(iv) "Proprietary Information" shall mean all Inventions, Work
Product, Trade Secrets, and any and all processes, methods, techniques,
projects, developments, plans, research data, financial data, personnel data,
customer lists and supplier lists created by or for the Company which is
maintained in confidentiality and disclosed only to other executives or
employees of the Company on a need to know basis.
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(v) "Software" shall mean each of one or more standard computer
programs (which each may consist of one or more modules or sub-programs),
together with the media upon which it resides, and all accompanying standard
documentation pertaining thereto, as well as all "derivative works" thereof,
i.e., any source code, object code, software instruction or set of software
instructions, or documentation, in human readable or machine readable form,
developed directly or indirectly by the Executive or on his behalf which is in
whole or in part based upon, or derived from, Software.
(b) The Executive's Obligations Concerning Inventions and Work Product.
(i) The Executive will make full and prompt disclosure to the
Company of all Inventions, improvements thereon, enhancements thereof, Work
Product, discoveries, methods, developments and works of authorship, whether or
not copyrightable or patentable, which are created, made, developed, conceived
or reduced to practice by the Executive or under his direction or jointly with
others during his employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(ii) The Executive agrees to assign and the Executive does hereby
assign to the Company (or any person or entity designated by the Company) all of
his right, title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright applications. However,
this sub-paragraph 3(b)(ii) shall not apply to Developments which do not relate
to the present or planned business or research and development of the Company
and which are made and conceived by the Executive other than 1) during normal
working hours, 2) on the Company's premises; and 3) using the Company's
facilities, devices, equipment or Proprietary Information. The Executive
understands that, to the extent this Agreement shall be construed in accordance
with the laws of any state which precludes a requirement in an employment
agreement to assign certain classes of inventions made by an employee, this
sub-paragraph 3(b)(ii) shall be interpreted not to apply to any Development
which a court rules and/or the Company agrees falls within such classes.
(iii) The Executive agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. The Executive
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignments of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
(c) The Executive's Obligations Concerning Trade Secrets.
(i) During the term of this Agreement and at all times thereafter,
the Executive shall treat Trade Secrets on a confidential basis and not disclose
them to others without the prior written permission of the Company, or use them
for any purpose other than for the performance of services for the Company.
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(ii) Trade Secrets are the Company's sole and exclusive property and
the Executive shall surrender to the Company possession of all Trade Secrets in
his possession upon any suspension or termination of his employment. If after
the suspension or termination of his employment hereunder, the Executive become
aware of any Trade Secrets in his possession, the Executive shall promptly
surrender possession thereof to the Company.
(d) The Executive's Obligations Applicable to All Proprietary Information.
(i) During the term of this Agreement and at all times thereafter,
the Executive shall not disclose any Proprietary Information to others outside
the Company or use the same for any unauthorized purposes without written
approval by the Board of Directors of the Company, unless and until such
Proprietary Information has become public knowledge other than through its
unauthorized dissemination by the Executive.
(ii) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, notebooks, Software program
diagrams, documentation, schematics and printouts in any tangible media
including, but not limited to, paper, photographs, computer disks and tapes and
other forms of human-readable and machine-readable media, containing Proprietary
Information, whether created by the Executive or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Executive only in the performance of his duties for
the Company. All such tangible media or copies thereof and all other tangible
property of the Company in his custody or possession shall be delivered to the
Company, upon the earlier of 1) a request by the Company or 2) termination of
his employment. After such delivery, the Executive shall not retain any such
tangible media or copies thereof or any such other tangible property.
(iii) The Executive agrees that his obligation not to disclose or to
use information, know-how and records of the types set forth in sub-paragraph
3(d)(i) and (ii) above, and his obligation to return tangible media and other
tangible property, set forth in sub-paragraph 3d(ii) above, also extends to such
types of information, know-how, records and tangible property of customers of
the Company or suppliers to the Company or other third parties who may have
disclosed or entrusted the same to the Company or to the Executive in the course
of the Company's business.
(iv) The Executive shall provide the Company with all information,
documentation and assistance that it may request to perfect, enforce, or defend
the proprietary rights in or based on the Inventions, Work Product or Trade
Secrets. The Company, in its sole discretion, shall determine the extent of the
proprietary rights, if any, to be protected. All such information, documentation
and assistance shall be provided at reasonable compensation to the Executive, if
provided after any suspension or termination of his employment.
(e) Other Agreements. The Executive hereby represents that, except as the
Executive has disclosed in writing to the Company, the Executive is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the
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Company or to refrain from competing, directly or indirectly, with the business
of such previous employer or any other party. The Executive further represents
that his performance of all the terms of this Agreement and as an employee of
the Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by the Executive in
confidence or in trust prior to his employment with the Company, and the
Executive will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.
(f) United States Government Obligations. The Executive acknowledges that
the Company from time to time may have agreements with other persons or with the
United States Government, or agencies thereof, which impose obligations or
restrictions on the Company regarding Inventions made during the course of work
under such agreements or regarding the confidential nature of such work. The
Executive agrees to be bound by all such obligations and restrictions which are
made known to the Executive and to take all action necessary to discharge the
obligations of the Company under such agreements.
4. Termination:
(a) Notwithstanding any other provision hereof, each of the Company and
the Executive may terminate the Executive's employment under this Agreement for
cause. The termination shall be evidenced by written notice thereof given by the
terminating party to the other, specifying the cause for termination and the
date of termination. For purposes hereof, the term "cause":
(i) as it relates to the Executive, shall mean the inability of the
Executive, through medical disability including mental or physical illness, to
perform his duties under this Agreement for a period in excess of one hundred
eighty (180) consecutive days during any period of 12 consecutive months; death
of the Executive; material dishonesty relating to the business of the Company;
refusal to perform or neglect of the substantive duties assigned to the
Executive, or breach of any of the material provisions of this Agreement which,
in each case, shall not be cured within 30 days after the Executive's receipt of
written notice identifying the duties in question or the provision(s) of the
Agreement that have been breached, as the case may be, and setting forth the
facts pertaining thereto; the inability of the Company to achieve total
stockholders' equity for either of the fiscal years ended October 31, 2001 or
2002 (as reflected in the Company's audited financial statements for such years)
which shall not be less than its total stockholders' equity for the fiscal year
ended October 31, 1998; the inability of the Company to achieve the Performance
Targets for either of the fiscal years ended October 31, 2001 or 2002; or
conviction of a felony related to the business of the Company; and
(ii) as it relates to the Company, shall mean failure to pay
compensation to the Executive when due, diminution of duties or demotion from
the position of President and Chief Executive Officer, relocation of the
Company's principal offices to a place that is located outside of a circle that
has a radius of more than 50 miles from the current address of the Company's
office or breach of any of the material provisions of this Agreement which shall
not be cured within 30 days after the Company's receipt of written notice
identifying the provision(s) of the Agreement that have been breached, and
setting forth the facts pertaining thereto.
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(b) The medical disability referred to in sub-paragraph 4(a)(i) hereof
shall be confirmed and/or rejected by an independent medical examination
performed by a licensed medical doctor located in New York, New York who shall
be chosen jointly by the Company and the Executive. The Executive agrees to
provide the Company, upon request, with all medical reports with regard to
medical disability obtained by the Executive from the Executive's physicians. In
the event the Company and the Executive can not agree on the choice of a doctor,
or either of them disagrees with the determination of the doctor they have
chosen, then the issue of disability shall be determined by arbitration in the
City of New York by the American Arbitration Association by a panel of three
physicians. The administrative costs of such proceedings shall be borne by the
Company. However, each party shall be solely responsible for payment of the fees
and disbursements of his or its respective counsel and witnesses.
(c) The Company agrees that in the event that the Executive should be
disabled as provided above, he shall be entitled to receive from the Company,
during the periods set forth below, the difference, if any, between any
disability insurance benefits provided pursuant to a policy or policies funded
or paid for by the Company, and 100% of his salary, plus any earned but unpaid
bonus, during the first ninety days of his disability and 80% of said salary and
bonus during the next ninety days of his disability, after which 180 day period
the Executives' compensation under this Agreement shall thereupon cease during
said disability, and the Company may elect to terminate the Executive's
employment pursuant to sub-paragraph 4(a)(i) hereof.
(d) In the event the Executive is terminated by the Company for cause in
accordance with this Article 4, the obligations of the Company under this
Agreement shall cease, except for any sums owed to the Executive, pursuant to
paragraphs 2(a) and (b) hereof for services rendered prior to such termination.
(e) The Executive and the Company or its successor in interest shall have
the right to terminate this Agreement with thirty (30) days notice upon any
change in control of the Company (whether by merger, stock transfer or
otherwise) provided that the Company or its successor in interest shall notify
the Executive of its intention to terminate no later than ninety (90) days after
the date on which such change in control takes effect. For purposes of the
preceding sentence, a "change in control" shall be deemed to occur if: (i) any
"person" (as such term is defined in the Securities Exchange Act of 1934, as
amended) acting singly or in concert with one or more other persons, acquires
securities representing 50% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any one year period,
individuals who at the beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least a majority 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 a majority thereof; (iii) the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than 1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent, in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of
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the Company, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or 2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or (iv) the shareholders 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 its assets.
(f) In the event that this Agreement shall be terminated pursuant to the
provisions of paragraph 4(e) hereof, (i) the Company shall pay to the Executive
a lump sum severance payment equal to one year's salary calculated on the basis
of the salary in effect for the year in which termination occurs, plus any bonus
that he would be entitled to receive but for the occurrence of such termination;
and (ii) notwithstanding any provision to the contrary contained elsewhere
herein or on any option instrument evidencing the Executive's ownership of, and
rights and entitlements regarding, the options to be granted to him pursuant to
paragraph 2(c) hereof, all vesting and performance conditions, requirements and
restrictions regarding such options shall thereupon be deemed to have been
satisfied, met or waived, as the case may be, and all of such options shall be
exercisable for a period of not less than 180 days after the date of termination
of this Agreement.
5. Non-Competition:
(a) The Executive agrees that he shall not, during the Employment Period
and for six (6) months thereafter, (i) solicit for himself, or any other person
or entity, the business of providing or servicing infrared non-contact
temperature measurement devices, temperature sensors, calibration sources and
thermal imaging systems to any customer who did business with the Company or its
affiliates within one year prior to the termination of this Agreement, or cause
any such customer to cease contracting with the Company; (ii) hire, or otherwise
seek to engage the services of, or cause the cessation of employment or
engagement by the Company of, any employee, agent, consultant, wholesaler,
independent contractor, sales or other representative who has performed services
for the Company or any of its affiliates within one year prior to the end of the
Employment Period.
(b) The obligations in this Article 5 shall survive the termination of
this Agreement for six months. The necessity of protection of the Company
against the competition of the Executive, and the nature and scope of such
protection, has been carefully considered by the parties hereto. The parties
agree and acknowledge that the duration, scope and restrictions applicable to
the covenant not to compete described in this Article V are fair, reasonable and
necessary, that adequate compensation has been received by the Executive for
such obligations, and that these obligations do not prevent the Executive from
earning a livelihood.
(c) The Executive agrees that if he shall violate any of the provisions of
this Article 5, the Company shall be entitled to an accounting and, if
appropriate to the violation, repayment of all profits, compensation,
commissions or other remuneration that the Executive, directly or indirectly,
may realize arising from or related to any such violation. These remedies shall
be in
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addition to, and not in limitation of, any injunctive relief or other rights to
which the Company may be entitled.
6. Miscellaneous
(a) Notices: All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be delivered by
hand, by facsimile transmission or by guaranteed next day overnight courier:
(i) If to the Executive, to:
Gerald D. Posner
8 Victorian Hill
Manalapan, New Jersey 07726
Fax No. (732) 462-2575
(ii) If to the Company, to:
Mikron Instrument Company, Inc.
16 Thornton Road
Oakland, New Jersey 07436
Attention: Steven N. Bronson, Chairman
Fax No. (201) 405-0090
or at such other address as either party may specify by written notice to the
other party, and each such notice, request, consent and other communication
shall for all purposes of the Agreement be treated as being effective or having
been given when delivered.
(b) Entire Agreement: This Agreement constitutes the entire and exclusive
understanding between the parties with respect to the matters referred to
herein, and no waiver of or modification to the terms hereof shall be valid
unless in writing signed by the party to be charged and only in that specific
instance and to the extent therein set forth. All prior and contemporaneous
agreements, understandings, and representations with respect to the subject
matter of this Agreement are hereby terminated and superseded by this Agreement.
(c) Severability: If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
(d) Non-Assignability: This Agreement is for personal services and may not
be assigned by the Executive in any manner, by operation of law or otherwise,
without the written consent of the Company. This Agreement shall be binding on
all successors and assigns of the Company.
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(e) Governing Law: This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey applicable to
contracts made and to be performed solely within said state.
(f) Article Headings: The Article headings herein have been inserted for
convenience of reference only and shall in no way modify, restrict or affect any
of the terms or provisions hereof.
(g) Benefit. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators
successors and assigns.
(h) Delays; Omissions; Waivers. No delay or omission by the Company in
exercising any right under this Agreement will operate as a waiver of that or
any other right. A waiver or consent given by the Company on any one occasion is
effective only in that instance and will not be construed as a bar to or waiver
of any right on any other occasion.
(i) Specific Performance; Indemnification. The Executive acknowledges and
agrees that, because of the unique and extraordinary nature of his services, any
breach or threatened breach of the provisions of Article 3 and this Article 5
hereof will cause irreparable injury and incalculable harm to the Company and
that it shall, accordingly, be entitled to injunctive or other equitable relief.
The foregoing, however, shall not be deemed to waive or to limit in any respect
any other right or remedy which the Company may have with respect to such
breach.
(j) Form 3 Filing. The Company covenants and agrees that it shall prepare,
and shall timely file with the Securities and Exchange Commission (the
"Commission") an initial statement of beneficial ownership of the Company's
securities by the Executive on Form 3 promulgated by the Commission. The
Executive shall cooperate with the Company in connection with the preparation
and execution of such statement.
(k) Dispute Resolution. All disputes arising between the parties with
regard to any of the provisions of this Agreement and/or the Executive's
employment by the Company shall be resolved by arbitration proceedings conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of commencement of such proceedings. Such
arbitration shall be held in New York, New York before a sole arbitrator who
shall be an attorney possessing not less than ten years' experience as a
specialist in matters pertaining to executive employment. If only one party
shall be the prevailing party in any such arbitration proceeding, the arbitrator
shall include in the award to such party an amount calculated to reimburse the
prevailing party for the reasonable fees of his or its counsel (including such
counsel's disbursements) paid or payable by such prevailing party with respect
to the legal services rendered by such counsel in such proceeding.
[The balance of this page has been left blank intentionally]
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(l) Directors' and Officers' Liability Insurance Coverage. During the term
of this Agreement the Company shall purchase and maintain one or more directors'
and officers' liability insurance policies providing the Executive with such
coverages subject to such limits as the Board may deem appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
Mikron Instrument Company, Inc.
By:
-----------------------------
--------------------------------
Gerald D. Posner
11
Exhibit 10.14
EMPLOYMENT AGREEMENT made and entered into as of May 3, 1999, between
MIKRON INSTRUMENT COMPANY, INC., a New Jersey corporation (the "Company") and
DENNIS STONEMAN (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, upon the terms and conditions hereinafter
provided,
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Employment
(a) The Company hereby employs the Executive as an executive of the
Company (as his duties are more particularly described in paragraph 1(b) hereof)
for the period commencing on May 17, 1999 and terminating on May 16, 2003,
unless Executive's employment is terminated earlier pursuant to Article 4 of
this Agreement (the "Employment Period").
(b) During the Employment Period, (i) the Executive shall serve as a Vice
President, reporting directly to the President, and when directed to do so, to
the Board of Directors of the Company (the "Board"); (ii) the Executive shall
devote substantially all of his time and efforts to the Company's business for a
period of not less than two five day business weeks during each calendar month;
(iii) the Board shall nominate the Executive for election to the Board; and (iv)
the Executive shall stand for election as a Director of the Company at the
annual meetings of shareholders held throughout the term of his service under
this Agreement.
(c) The Executive accepts such employment, and agrees to perform such
services as may from time to time be assigned to him by, or pursuant to the
authorization of, President or the Board, consistent with his position as Vice
President. The Executive agrees that during the Employment Period he will not,
directly or indirectly, engage or participate in, or become employed by, or
render advisory or other services to, any business entity which competes
directly with the Company's current business, i.e., the development,
manufacture, marketing and servicing of infrared non-contact temperature
measurement devices, temperature sensors, calibration sources and thermal
imaging systems, except in the performance of his duties for the Company.
2. Compensation
(a) Annual Base Salary. The Company shall pay to the Executive, and the
Executive shall accept from the Company, for the Executive's services during the
Employment Period, a salary at the rate of $100,000 per annum. The compensation
to be paid to the Executive as provided for in this paragraph 2(a) shall be
payable in accordance with the Company's customary employee payroll policy as in
effect from time to time during the Employment Period. On or before November 30
of each year during the Employment Period the Board or a duly appointed
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Compensation Committee of the Board (the "Committee") shall review the
Executive's employment performance during the one year (or shorter) period (the
"Review Period") which shall have ended on the immediately preceding October 31
to determine the amount of any merit increase in the Executive's salary. Any
such increase shall be effective for the one year period commencing on November
1 of the year immediately following the Review Period. The Executive's salary
shall not be decreased without his prior consent thereto in writing.
(b) Stock Options. The Company shall establish an incentive stock option
plan for the executives, employees and directors of the Company (the "Plan").
The participants in the Plan shall be entitled to purchase, pursuant to the
options to be granted thereunder (which may be "incentive stock options" within
the meaning of Section 422(b) of the Internal Revenue Code, or non-incentive
stock options) an aggregate number of shares of the Company's common stock,
one-third cent par value (the "Common Stock"), as shall be equal to
approximately 20% of the total number of shares of Common Stock which shall be
issued and outstanding upon consummation of the stock purchase agreement dated
of as May 3, 1999 between the Company and the Executive (the "post-agreement
issued and outstanding shares"). As soon as practically possible after the Plan
has been authorized by the Company's shareholders, the Company shall register
the Common Stock to be issued upon exercise of the options to be granted
thereunder for sale by the Company, and for resale by holders thereof, pursuant
to the Securities Act of 1933, as amended.
The Executive, together with the Company's new President, Gerald D.
Posner, and such other executives as shall be hired by the Company during the
term of this Agreement upon the advice of Mr. Posner, shall be entitled to
purchase, pursuant to the options to be granted under the Plan an aggregate
number of shares of Common Stock as shall be equal to 10% of the total number of
post-agreement issued and outstanding shares. The exercise price for each of
such options shall be $1.00 per share or the fair market value of the Common
Stock on the date of grant thereof, whichever shall be greater. The vesting of
such options shall occur at the rate of 25% per annum at the end of each Review
Period during the Employment Period, and the exercise of all vested options
shall be conditioned upon the achievement of a set of pre-determined earnings,
revenue and other performance targets to be formulated by the Board or the
committee administering the Plan. The term of such options shall be the 51 month
period commencing on the date of commencement of the Employment Period. The Plan
and such options shall provide that, upon the death, disability or termination
of employment of the Executive other than "for cause," all options which shall
then have vested, or which would have vested if such event had occurred on the
last day of the then current Review Period, shall be exercisable by the
Executive, or by the person or persons to whom such options shall pass by will
or by the laws of descent and distribution, as the case may be, during the six
month period following the date of occurrence of such event, provided, that, all
applicable conditions to the exercise of such options shall have been satisfied
on or before the date of exercise thereof. Each option granted pursuant to the
Plan shall also contain such other terms, limitations and conditions as the
Board or the committee administering the Plan shall deem appropriate pursuant to
the provisions of the Plan.
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(c) Expense Reimbursements. The Company shall reimburse the Executive for
all out of pocket travel, lodging, meal, entertainment and other expenses of a
similar nature that he shall incur while engaged in the Company's business. Such
reimbursements shall be made in accordance with the Company's customary policies
pertaining thereto as in effect from time to time during the Employment Period.
3. Confidentiality
(a) Definitions. For purposes of this Agreement, the following definitions
shall apply:
(i) "Inventions" shall mean all infrared non-contact temperature
measurement devices, temperature sensors, calibration sources and thermal
imaging systems, and any and all components thereof or Software incorporated
therein (collectively, the "Devices") invented, conceived or otherwise made or
developed by the Executive, in whole or in part, within the scope of his duties
during his employment by the Company, and all modifications, and enhancements
thereof, whether or not patentable or copyrightable.
(ii) "Work Product" shall mean all Devices and any and all
components thereof in the process of being created or modified, and all other
documentation, creative works, know-how, and information pertaining to such
Devices or components thereof created or developed, in whole or in part, by the
Executive within the scope of his duties during his employment by the Company,
whether or not copyrightable, patentable or otherwise protectable, excluding
Inventions.
(iii) "Trade Secrets" shall mean all Devices and any and all
components thereof, documentation, know-how, and information relating to the
past, present, or future business of the Company or any plans therefor, or
relating to the past, present, or future business of a third party or plans
therefor which are disclosed to the Company, which the Company does not disclose
to third parties without restrictions on use or further disclosure; provided,
however, Trade Secrets shall not include the general knowledge and experience
obtained by the Executive during his employment by the Company.
(iv) "Proprietary Information" shall mean all Inventions, Work
Product, Trade Secrets, and any and all processes, methods, techniques,
projects, developments, plans, research data, financial data, personnel data,
customer lists and supplier lists created by or for the Company which is
maintained in confidentiality and disclosed only to other executives or
employees of the Company on a need to know basis.
(v) "Software" shall mean each of one or more standard computer
programs (which each may consist of one or more modules or sub-programs),
together with the media upon which it resides, and all accompanying standard
documentation pertaining thereto, as well as all "derivative works" thereof,
i.e., any source code, object code, software instruction or set of software
instructions, or documentation, in human readable or machine readable form,
developed directly or indirectly by the Executive or on his behalf which is in
whole or in part based upon, or derived from, Software.
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(b) The Executive's Obligations Concerning Inventions and Work Product.
(i) The Executive will make full and prompt disclosure to the
Company of all Inventions, improvements thereon, enhancements thereof, Work
Product, discoveries, methods, developments and works of authorship, whether or
not copyrightable or patentable, which are created, made, developed, conceived
or reduced to practice by the Executive or under his direction or jointly with
others during his employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(ii) The Executive agrees to assign and the Executive does hereby
assign to the Company (or any person or entity designated by the Company) all of
his right, title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright applications. However,
this sub-paragraph 3(b)(ii) shall not apply to Developments which do not relate
to the present or planned business or research and development of the Company
and which are made and conceived by the Executive other than 1) during normal
working hours, 2) on the Company's premises; and 3) using the Company's
facilities, devices, equipment or Proprietary Information. The Executive
understands that, to the extent this Agreement shall be construed in accordance
with the laws of any state which precludes a requirement in an employment
agreement to assign certain classes of inventions made by an employee, this
sub-paragraph 3(b)(ii) shall be interpreted not to apply to any Development
which a court rules and/or the Company agrees falls within such classes.
(iii) The Executive agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. The Executive
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignments of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
(c) The Executive's Obligations Concerning Trade Secrets.
(i) During the term of this Agreement and at all times thereafter,
the Executive shall treat Trade Secrets on a confidential basis and not disclose
them to others without the prior written permission of the Company, or use them
for any purpose other than for the performance of services for the Company.
(ii) Trade Secrets are the Company's sole and exclusive property and
the Executive shall surrender to the Company possession of all Trade Secrets in
his possession upon any suspension or termination of his employment. If after
the suspension or termination of his employment hereunder, the Executive become
aware of any Trade Secrets in his possession, the Executive shall promptly
surrender possession thereof to the Company.
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(d) The Executive's Obligations Applicable to All Proprietary Information.
(i) During the term of this Agreement and at all times thereafter,
the Executive shall not disclose any Proprietary Information to others outside
the Company or use the same for any unauthorized purposes without written
approval by the Board of Directors of the Company, unless and until such
Proprietary Information has become public knowledge other than through its
unauthorized dissemination by the Executive.
(ii) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, notebooks, Software program
diagrams, documentation, schematics and printouts in any tangible media
including, but not limited to, paper, photographs, computer disks and tapes and
other forms of human-readable and machine-readable media, containing Proprietary
Information, whether created by the Executive or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Executive only in the performance of his duties for
the Company. All such tangible media or copies thereof and all other tangible
property of the Company in his custody or possession shall be delivered to the
Company, upon the earlier of 1) a request by the Company or 2) termination of
his employment. After such delivery, the Executive shall not retain any such
tangible media or copies thereof or any such other tangible property.
(iii) The Executive agrees that his obligation not to disclose or to
use information, know-how and records of the types set forth in sub-paragraph
3(d)(i) and (ii) above, and his obligation to return tangible media and other
tangible property, set forth in sub-paragraph 3d(ii) above, also extends to such
types of information, know-how, records and tangible property of customers of
the Company or suppliers to the Company or other third parties who may have
disclosed or entrusted the same to the Company or to the Executive in the course
of the Company's business.
(iv) The Executive shall provide the Company with all information,
documentation and assistance that it may request to perfect, enforce, or defend
the proprietary rights in or based on the Inventions, Work Product or Trade
Secrets. The Company, in its sole discretion, shall determine the extent of the
proprietary rights, if any, to be protected. All such information, documentation
and assistance shall be provided at reasonable compensation to the Executive, if
provided after any suspension or termination of his employment.
(e) Other Agreements. The Executive hereby represents that, except as the
Executive has disclosed in writing to the Company, the Executive is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. The Executive further represents that his performance of all
the terms of this Agreement and as an employee of the Company does not and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by the Executive in confidence or in trust prior to
his employment with the Company, and the Executive will not disclose to the
Company or induce the Company to use any confidential or proprietary information
or material belonging to any previous employer or others.
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(f) United States Government Obligations. The Executive acknowledges that
the Company from time to time may have agreements with other persons or with the
United States Government, or agencies thereof, which impose obligations or
restrictions on the Company regarding Inventions made during the course of work
under such agreements or regarding the confidential nature of such work. The
Executive agrees to be bound by all such obligations and restrictions which are
made known to the Executive and to take all action necessary to discharge the
obligations of the Company under such agreements.
4. Termination:
(a) Notwithstanding any other provision hereof, each of the Company and
the Executive may terminate the Executive's employment under this Agreement for
cause. The termination shall be evidenced by written notice thereof given by the
terminating party to the other, specifying the cause for termination and the
date of termination. For purposes hereof, the term "cause":
(i) as it relates to the Executive, shall mean the inability of the
Executive, through medical disability including mental or physical illness, to
perform his duties under this Agreement for a period in excess of one hundred
eighty (180) consecutive days during any period of 12 consecutive months; death
of the Executive; material dishonesty relating to the business of the Company;
refusal to perform or neglect of the substantive duties assigned to the
Executive, or breach of any of the material provisions of this Agreement which,
in each case, shall not be cured within 30 days after the Executive's receipt of
written notice identifying the duties in question or the provision(s) of the
Agreement that have been breached, as the case may be, and setting forth the
facts pertaining thereto; the inability of the Company to achieve total
stockholders' equity for either of the fiscal years ended October 31, 2001 or
2002 (as reflected in the Company's audited financial statements for such years)
which shall not be less than its total stockholders' equity for the fiscal year
ended October 31, 1998; the inability of the Company to achieve the Performance
Targets for either of the fiscal years ended October 31, 2001 or 2002; or
conviction of a felony related to the business of the Company; and
(ii) as it relates to the Company, shall mean failure to pay
compensation to the Executive when due, diminution of duties or demotion from
the position of President and Chief Executive Officer, relocation of the
Company's principal offices to a place that is located outside of a circle that
has a radius of more than 50 miles from the current address of the Company's
office or breach of any of the material provisions of this Agreement which shall
not be cured within 30 days after the Company's receipt of written notice
identifying the provision(s) of the Agreement that have been breached, and
setting forth the facts pertaining thereto.
(b) The medical disability referred to in sub-paragraph 4(a)(i) hereof
shall be confirmed and/or rejected by an independent medical examination
performed by a licensed medical doctor located in New York, New York who shall
be chosen jointly by the Company and the Executive. The Executive agrees to
provide the Company, upon request, with all medical reports with regard to
medical disability obtained by the Executive from the Executive's physicians. In
the event the Company and the Executive can not agree on the choice of a doctor,
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or either of them disagrees with the determination of the doctor they have
chosen, then the issue of disability shall be determined by arbitration in the
City of New York by the American Arbitration Association by a panel of three
physicians. The administrative costs of such proceedings shall be borne by the
Company. However, each party shall be solely responsible for payment of the fees
and disbursements of his or its respective counsel and witnesses.
(c) The Company agrees that in the event that the Executive should be
disabled as provided above, he shall be entitled to receive from the Company,
during the periods set forth below, the difference, if any, between any
disability insurance benefits provided pursuant to a policy or policies funded
or paid for by the Company, and 100% of his salary, plus any earned but unpaid
bonus, during the first ninety days of his disability and 80% of said salary and
bonus during the next ninety days of his disability, after which 180 day period
the Executives' compensation under this Agreement shall thereupon cease during
said disability, and the Company may elect to terminate the Executive's
employment pursuant to sub-paragraph 4(a)(i) hereof.
(d) In the event the Executive is terminated by the Company for cause in
accordance with this Article 4, the obligations of the Company under this
Agreement shall cease, except for any sums owed to the Executive, pursuant to
paragraphs 2(a) and (b) hereof for services rendered prior to such termination.
(e) The Executive and the Company or its successor in interest shall have
the right to terminate this Agreement with thirty (30) days notice upon any
change in control of the Company (whether by merger, stock transfer or
otherwise) provided that the Company or its successor in interest shall notify
the Executive of its intention to terminate no later than ninety (90) days after
the date on which such change in control takes effect. For purposes of the
preceding sentence, a "change in control" shall be deemed to occur if: (i) any
"person" (as such term is defined in the Securities Exchange Act of 1934, as
amended) acting singly or in concert with one or more other persons, acquires
securities representing 50% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any one year period,
individuals who at the beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least a majority 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 a majority thereof; (iii) the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than 1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent, in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or 2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or (iv) the shareholders 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 its assets.
7
<PAGE>
(f) In the event that this Agreement shall be terminated pursuant to the
provisions of paragraph 4(e) hereof, (i) the Company shall pay to the Executive
a lump sum severance payment equal to one year's salary calculated on the basis
of the salary in effect for the year in which termination occurs, plus any bonus
that he would be entitled to receive but for the occurrence of such termination;
and (ii) notwithstanding any provision to the contrary contained elsewhere
herein or on any option instrument evidencing the Executive's ownership of, and
rights and entitlements regarding, the options to be granted to him pursuant to
paragraph 2(c) hereof, all vesting and performance conditions, requirements and
restrictions regarding such options shall thereupon be deemed to have been
satisfied, met or waived, as the case may be, and all of such options shall be
exercisable for a period of not less than 180 days after the date of termination
of this Agreement.
5. Non-Competition:
(a) The Executive agrees that he shall not, during the Employment Period
and for six (6) months thereafter, (i) solicit for himself, or any other person
or entity, the business of providing or servicing infrared non-contact
temperature measurement devices, temperature sensors, calibration sources and
thermal imaging systems to any customer who did business with the Company or its
affiliates within one year prior to the termination of this Agreement, or cause
any such customer to cease contracting with the Company; (ii) hire, or otherwise
seek to engage the services of, or cause the cessation of employment or
engagement by the Company of, any employee, agent, consultant, wholesaler,
independent contractor, sales or other representative who has performed services
for the Company or any of its affiliates within one year prior to the end of the
Employment Period.
(b) The obligations in this Article 5 shall survive the termination of
this Agreement for six months. The necessity of protection of the Company
against the competition of the Executive, and the nature and scope of such
protection, has been carefully considered by the parties hereto. The parties
agree and acknowledge that the duration, scope and restrictions applicable to
the covenant not to compete described in this Article V are fair, reasonable and
necessary, that adequate compensation has been received by the Executive for
such obligations, and that these obligations do not prevent the Executive from
earning a livelihood.
(c) The Executive agrees that if he shall violate any of the provisions of
this Article 5, the Company shall be entitled to an accounting and, if
appropriate to the violation, repayment of all profits, compensation,
commissions or other remuneration that the Executive, directly or indirectly,
may realize arising from or related to any such violation. These remedies shall
be in addition to, and not in limitation of, any injunctive relief or other
rights to which the Company may be entitled.
6. Miscellaneous
(a) Notices: All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be delivered by
hand, by facsimile transmission or by guaranteed next day overnight courier:
8
<PAGE>
(i) If to the Executive, to:
Dennis Stoneman
1562 Doe Trail Lane
Yardley, Pennsylvania 19067
Fax No. (215) 493-8290
(ii) If to the Company, to:
Mikron Instrument Company, Inc.
16 Thornton Road
Oakland, New Jersey 07436
Attention: Steven N. Bronson, Chairman
Fax No. (201) 405-0090
or at such other address as either party may specify by written notice to the
other party, and each such notice, request, consent and other communication
shall for all purposes of the Agreement be treated as being effective or having
been given when delivered.
(b) Entire Agreement: This Agreement constitutes the entire and exclusive
understanding between the parties with respect to the matters referred to
herein, and no waiver of or modification to the terms hereof shall be valid
unless in writing signed by the party to be charged and only in that specific
instance and to the extent therein set forth. All prior and contemporaneous
agreements, understandings, and representations with respect to the subject
matter of this Agreement are hereby terminated and superseded by this Agreement.
(c) Severability: If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
(d) Non-Assignability: This Agreement is for personal services and may not
be assigned by the Executive in any manner, by operation of law or otherwise,
without the written consent of the Company. This Agreement shall be binding on
all successors and assigns of the Company.
(e) Governing Law: This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey applicable to
contracts made and to be performed solely within said state.
(f) Article Headings: The Article headings herein have been inserted for
convenience of reference only and shall in no way modify, restrict or affect any
of the terms or provisions hereof.
9
<PAGE>
(g) Benefit. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators
successors and assigns.
(h) Delays; Omissions; Waivers. No delay or omission by the Company in
exercising any right under this Agreement will operate as a waiver of that or
any other right. A waiver or consent given by the Company on any one occasion is
effective only in that instance and will not be construed as a bar to or waiver
of any right on any other occasion.
(i) Specific Performance; Indemnification. The Executive acknowledges and
agrees that, because of the unique and extraordinary nature of his services, any
breach or threatened breach of the provisions of Article 3 and this Article 5
hereof will cause irreparable injury and incalculable harm to the Company and
that it shall, accordingly, be entitled to injunctive or other equitable relief.
The foregoing, however, shall not be deemed to waive or to limit in any respect
any other right or remedy which the Company may have with respect to such
breach.
(j) Form 3 Filing. The Company covenants and agrees that it shall prepare,
and shall timely file with the Securities and Exchange Commission (the
"Commission") an initial statement of beneficial ownership of the Company's
securities by the Executive on Form 3 promulgated by the Commission. The
Executive shall cooperate with the Company in connection with the preparation
and execution of such statement.
(k) Dispute Resolution. All disputes arising between the parties with
regard to any of the provisions of this Agreement and/or the Executive's
employment by the Company shall be resolved by arbitration proceedings conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of commencement of such proceedings. Such
arbitration shall be held in New York, New York before a sole arbitrator who
shall be an attorney possessing not less than ten years' experience as a
specialist in matters pertaining to executive employment. If only one party
shall be the prevailing party in any such arbitration proceeding, the arbitrator
shall include in the award to such party an amount calculated to reimburse the
prevailing party for the reasonable fees of his or its counsel (including such
counsel's disbursements) paid or payable by such prevailing party with respect
to the legal services rendered by such counsel in such proceeding.
[The balance of this page has been left blank intentionally]
10
<PAGE>
(l) Directors' and Officers' Liability Insurance Coverage. During the term
of this Agreement the Company shall purchase and maintain one or more directors'
and officers' liability insurance policies providing the Executive with such
coverages subject to such limits as the Board may deem appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
Mikron Instrument Company, Inc.
By:
-------------------------------
----------------------------------
Dennis Stoneman
11
Exhibit 10.15
INDEMNITY AGREEMENT
AGREEMENT, dated and effective as of the date set forth at the foot
hereof, by and between MIKRON INSTRUMENT COMPANY, INC. (the "Company") and the
undersigned, a director and/or officer of the Company (the "Indemnitee").
In view of the substantial increase in directors' and officers' litigation
costs and risks, and the periodic limitations on the availability and coverage
of liability insurance, and in view of the desire of the Company that the
Indemnitee render or continue to render valuable services to the Company, this
Agreement is intended to provide assurance that the Company will indemnify the
Indemnitee to the full extent permitted by the laws of New Jersey.
NOW, THEREFORE, in consideration of the Indemnitee's agreeing to serve or
continuing to serve as an officer and/or director of the Company, the parties
hereto agree as follows:
1. Indemnification. To the fullest extent permitted by the provisions of
the laws of New Jersey from time to time in effect, the Company shall indemnify
the Indemnitee and any persons referred to in the second sentence of Section 9
hereof against any expenses (including attorneys' fees), liabilities, judgments,
fines and amounts paid in settlement incurred in connection with any actual,
threatened or completed action, suit or proceeding, whether civil, criminal,
administrative or arbitrative, to which the Indemnitee or such person is made or
threatened to be made a party or is otherwise involved, by reason of the fact
that the Indemnitee then is or was a director or officer of the Company, or then
serves or has served any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, in any capacity, at the request of
the Company. To the full extent so permitted, the foregoing shall apply to
actions by or in the right of the Company and shall require the Company to pay
expenses in advance of final disposition.
2. Notice to Company. Not later than sixty (60) days after receipt by
Indemnitee of notice of the commencement of any action, suit or proceeding to
which the Indemnitee is or may be named a party, or is otherwise involved,
Indemnitee shall, if a claim in respect thereof is to be made by the Indemnitee
against the Company under this Agreement, notify the Company of the commencement
thereof; but the omission so to notify the Company will not relieve it from any
liability which it may have to Indemnitee under this Agreement or otherwise.
With respect to any such action, suit or proceeding as to which Indemnitee
notifies the Company of the commencement thereof, the Company shall be entitled
to participate therein at its own expense; except as otherwise provided below,
the Company shall have the right but not the obligation, at its option and
jointly with any other indemnifying party similarly notified, to elect to assume
the defense thereof, with counsel reasonably satisfactory to Indemnitee. After
notice from the Company to Indemnitee of its election to assume the defense
thereof, the Company will not be liable under this Agreement, New Jersey law,
the Company's Certificate of Incorporation or
1
<PAGE>
otherwise for any legal fees or other expenses subsequently incurred by
Indemnitee in connection with the defense thereof. Indemnitee shall have the
right to employ separate counsel in such action, suit or proceeding, but the
fees and expenses of such counsel, incurred after notice from the Company of its
assumption of the defense thereof, shall be at the expense of Indemnitee unless
(i) Indemnitee is a non-employee director of the Company, (ii) the employment of
counsel by Indemnitee has been authorized by the Company, (iii) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of the defense of such action, or (iv) the
Company shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expense of Indemnitee's separate
counsel shall be at the expense of the Company. If more than one non-employee
director shall be made a party to an action, the fees and expenses of only one
separate counsel to be employed on behalf of all such non-employee directors, as
a group, shall be borne by the Company unless one or more of such non-employee
directors shall have reasonably concluded that there may be a conflict of
interest among the non-employee directors, in which case, a sufficient number of
separate counsel may be employed, at the cost of the Company, to avoid such
conflict. The single separate counsel employed to represent the non-employee
directors, as a group, shall be satisfactory to all such directors but their
approval shall not be unreasonably withheld or delayed. The Company shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of the Company.
The Company shall not be liable to indemnify Indemnitee under this
Agreement, the Company's Certificate of Incorporation or otherwise, for any
amounts paid in settlement of any action or claim effected without the Company's
prior written consent which, in a case where Indemnitee is represented by
separate counsel, shall not be unreasonably withheld or delayed. The Company
shall not settle any action or claim in any manner which would impose any
damages, fines, penalties, limitations or restrictions on, or which would
otherwise adversely affect, Indemnitee without Indemnitee's written consent,
which consent shall not be unreasonably withheld or delayed.
3. Enforcement Procedure. Any right to indemnification or advances granted
by this Agreement to Indemnitee shall be enforceable by or on behalf of
Indemnitee in the forum in which the proceeding is or was pending or, if such
forum is not convenient or available, in any court of competent jurisdiction if
(i) the claim for indemnification or advances is denied by the Company, in whole
or in part, or (ii) no disposition of such claim is made within thirty (30) days
of request therefor. Indemnitee, in such enforcement action, shall be entitled
to be paid also the expense of prosecuting his or her claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in connection with any proceeding in advance of its final
disposition when the required undertaking has been tendered to the Company) that
Indemnitee is not entitled to indemnification because of the limitations set
forth in Section 5 hereof, but the burden of proving such defense shall be on
the Company. Neither the failure of the Company (including its Board of
Directors or its shareholders) to have made a determination prior to the
commencement of such enforcement action that indemnification of Indemnitee is
proper in the circumstances, nor an actual determination by the Company
(including its Board of Directors or its shareholders) that such indemnification
is improper shall be a defense to the action or create a presumption that
Indemnitee is not entitled to indemnification under this Agreement or otherwise.
For purposes of this Agreement, the
2
<PAGE>
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court or governmental agency has determined that
indemnification is not permitted by applicable law.
4. Change in Control. Following a Change in Control (as hereinafter
defined), any finding of whether indemnification is permitted by the laws of New
Jersey shall, if the Indemnitee so elects, be based upon the written opinion of
special independent counsel selected by the Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld or delayed).
A. Such counsel shall render an opinion to the Board of Directors
and the Indemnitee as to whether indemnification is permitted by the laws of New
Jersey. The Company shall pay the reasonable fees of such counsel.
B. A "Change in Control" shall be deemed to have occurred on: (i)
the date on which more than one half of the members of the Board of Directors
shall consist of persons other than Current Directors (for these purposes, a
"Current Director" shall mean any member of the Board of Directors as of the
date set forth at the foot hereof, and any successor of a Current Director who
has been approved by a majority of the Current Directors then on the Board); or
(ii) the date of approval by the shareholders of the Company of an agreement
providing for (1) the merger or consolidation of the Company with another
corporation where the shareholders of the Company immediately prior to the
merger or consolidation would not beneficially own, immediately after the merger
or consolidation, shares entitling such shareholders to 50% or more of all votes
(without consideration of the rights of any class of stock to elect directors by
a separate class vote) to which all shareholders of the corporation issuing cash
or securities in the merger or consolidation would be entitled in the election
of directors or where the members of the Board of Directors of the Company
immediately prior to the merger or consolidation, would not, constitute more
than one half of the Board of Directors of the Company immediately after the
merger or consolidation, or (2) the sale or other disposition of all or
substantially all the assets of the Company.
5. Limitations on Indemnity. No indemnity pursuant to Sections 1 or 6
hereof, New Jersey law, the Company's Certificate of Incorporation or otherwise
shall be paid by the Company:
A. in respect of any suit in which judgment is rendered against
Indemnitee for an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
B. in respect of Indemnitee's conduct which is finally adjudged to
have been not in good faith or to have been undertaken in knowing violation of
law;
3
<PAGE>
C. in respect of Indemnitee's conduct which is finally adjudged to
have constituted a breach of Indemnitee's duty of loyalty to the Company or
resulted in the receipt by Indemnitee of an improper personal benefit;
D. for which payment is actually made to Indemnitee under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, by-law or agreement, except in respect of any excess beyond payment
under such insurance, clause by-law or agreement;
E. if a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful; (and, in this respect,
both the Company and Indemnitee acknowledge their understanding to the effect
that the Securities and Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws is against public policy
and is, therefore, unenforceable and that claims for indemnification should be
submitted to appropriate courts for adjudication, which belief shall have no
effect on Indemnitee's rights to receive indemnification hereunder); or
F. in connection with any proceeding (or part thereof) initiated by
Indemnitee or any proceeding by Indemnitee against the Company or its directors,
officers, employees or other agents, prior to a Change of Control unless (i)
such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the Company, or (iii)
such indemnification is available from the Company under New Jersey law.
6. Partial Indemnification. Indemnitee shall be entitled under this
Agreement to indemnification by the Company for a portion of the expenses
(including attorney's fees), witness fees, damages, judgment, fines and amounts
paid in settlement and any other amounts that Indemnitee becomes legally
obligated to pay in connection with any action, suit or proceeding referred to
in Section 1 hereof, even if not entitled hereunder to indemnification for the
total amount thereof, and the Company shall indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled.
7. Litigation Expenses - Payment in Advance. In the event the Indemnitee
becomes involved in any action, suit or proceeding regarding any matter with
respect to which Indemnitee believes that he is entitled to indemnification
under Sections 1 or 6 hereunder, including actions brought by or in the right of
the Company to procure a judgment in its favor (each of which shall hereinafter
be referred to as a "Covered Proceeding"), the Indemnitee shall have the right
to have his expenses, including, but not limited to all of his legal fees in
prosecuting or defending such proceeding, paid by the Company as such expenses
are incurred during the course of such Covered Proceeding, provided, however,
that Indemnitee shall be obligated to repay all such expenses to the Company in
the event that it shall be finally determined by a court or arbitrator of
competent jurisdiction that Indemnitee shall not have been entitled to
indemnification hereunder in such Covered Proceeding. This right shall be in
addition to any other rights of indemnification the Indemnitee may have under
the Certificate of Incorporation or by-laws of the Company, or pursuant to any
Employment Agreement or to applicable law. Anything contained in this Section 7
to the contrary notwithstanding, the Company shall not be required to make
advance payment of the Indemnitee's expenses in any Covered Proceeding in which
the judge,
4
<PAGE>
arbitrator or other authority having jurisdiction over such proceeding enters an
order on good cause shown, pursuant to a pre-trial or pre-proceeding motion made
on notice to the Indemnitee, denying such right to the Indemnitee. Such "good
cause" shall be shown to exist if such judge, arbitrator or other authority
determines that sufficient facts exist to establish a likelihood that Indemnitee
is not entitled to indemnification with respect to the claims in question by
reason of the application of one or more of the provisions of Section 5 hereof.
The provisions of this Article shall survive the termination of this Agreement.
8. Subrogation. In the event of payment under this Agreement, New Jersey
law, the Company's Certificate of Incorporation or otherwise, the Company shall
be subrogated to the extent of such payment to all of the rights, remedies and
recoveries of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary or desirable to secure such rights, remedies and
recoveries and to enable the Company effectively to bring suit to enforce such
rights.
9. Other Rights; Continuation of Right to Indemnification. The
indemnification and advances provided by this Agreement shall not be deemed
exclusive of any other rights consistent with the laws of New Jersey to which a
director or officer seeking indemnification may be entitled under any law
(common or statutory), provision of the Company's Certificate of Incorporation
or by-laws, resolution of shareholders or directors, other agreement or
otherwise, both as to action in the Indemnitee's official capacity and as to
action in another capacity while holding office or while employed by or acting
as agent for the Company, and shall continue notwithstanding that the Indemnitee
may have ceased to be a director or officer or to act as such employee or agent.
The provisions of this Agreement shall inure to the benefit of the estate,
heirs, executors, administrators and other personal representatives of the
Indemnitee. If the Company grants to any other person indemnification terms more
favorable than those contained in this Agreement, the Indemnitee thereupon will
be entitled to the benefit of the more favorable indemnification terms granted
to such other person.
10. Amendments. This Agreement may not be amended without the agreement in
writing of the Company and the Indemnitee.
11. Savings Clause. If any portion of this Agreement shall be deemed
invalid, illegal or enforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and the Company shall nevertheless indemnity the Indemnitee as
to expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement to the full extent permitted by any portion of this Agreement that
shall not have been invalidated and to the full extent permitted by applicable
law.
12. Survival Clause. The Company acknowledges that, in providing services
to the Company, the Indemnitee is relying on this Agreement. Accordingly, the
Company agrees that regardless of when a claim is made or an action is
threatened or commenced, its obligations hereunder will survive (i) any actual
or purported termination of this Agreement by the Company or its successors or
assigns either by operation of law or otherwise, (ii) any changes in the
Company's Certificate of Incorporation or by-laws, and (iii) termination of the
Indemnitee's
5
<PAGE>
services to the Company (whether such services were terminated by the Company or
the Indemnitee).
13. Successors and Assigns of the Company. This Agreement shall be binding
on the successors and assigns of the Company whether by operation of law or
otherwise.
14. Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of New
Jersey (without giving effect to the provisions thereof relating to conflict of
laws).
15. Notices. Each notice required or permitted under this Agreement shall
be in writing and signed by a duly authorized representative of the party
initiating the same and shall be sent by registered or certified mail, return
receipt requested, postage prepaid or delivered by facsimile, by hand or by
guaranteed overnight courier, to the following addresses unless changed by
written notice given by notice delivered in accordance with this paragraph:
To Indemnitee: at the address and fax. no. indicated on the
signature page hereof
To the Company: 16 Thornton Road
Oakland, New Jersey 07436
Attention: Chief Executive Officer
Fax. No. (201) 405-0090
16. Amendment of Certificate of Incorporation. The Company shall undertake
all actions necessary to obtain authorization to amend its Certificate of
Incorporation to provide for the limitation of the liability of its directors to
the fullest extent permitted by N.J.S.A. 14A:2-7(3), and if the shareholders of
the Corporation grant such authority, the Company shall promptly file a
Certificate of Amendment of the Company's Certificate of Incorporation providing
for such limitation of liability.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
pursuant to Board Resolutions adopted on, and with effect from [ ], 1999.
MIKRON INSTRUMENT COMPANY, INC.
By:
-----------------------------
INDEMNITEE:
---------------------------------
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at April 30, 1999 and the Statement of Operations for the year ended April
30, 1999, as included in this Form 10Q-SB, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<CASH> 540,381
<SECURITIES> 0
<RECEIVABLES> 834,350
<ALLOWANCES> (83,000)
<INVENTORY> 2,193,829
<CURRENT-ASSETS> 3,529,045
<PP&E> 1,048,334
<DEPRECIATION> (790,676)
<TOTAL-ASSETS> 3,831,505
<CURRENT-LIABILITIES> 386,967
<BONDS> 0
0
0
<COMMON> 12,576
<OTHER-SE> 3,431,962
<TOTAL-LIABILITY-AND-EQUITY> 3,831,305
<SALES> 3,171,540
<TOTAL-REVENUES> 3,245,540
<CGS> 1,526,684
<TOTAL-COSTS> 3,549,964
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (295,314)
<INCOME-TAX> 0
<INCOME-CONTINUING> (295,314)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (295,314)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
