Employment Agreement [Assumption and Amendment] - Micron Electronics Inc. and Kenneth Gavranovic
EMPLOYMENT AGREEMENT
ASSUMPTION AND AMENDMENT
THIS ASSUMPTION AND AMENDMENT (this "Agreement") is made and entered
into as of the 22nd day of March, 2001, by and between MICRON ELECTRONICS, INC.,
a Minnesota corporation ("MEI"), and KENNETH GAVRANOVIC ("Executive").
R E C I T A L S:
A. The Executive has heretofore entered into an Employment Agreement
dated as of December 2, 1999 (the "Employment Agreement"), with Interland, Inc.,
a Georgia corporation ("Interland").
B. MEI, and/or its wholly owned subsidiary, HostPro, Inc., a
Delaware corporation ("HostPro"), and Interland are entering into a business
combination pursuant to which, inter alia, Interland's business is being
acquired by MEI, HostPro or another subsidiary of MEI (the "Acquisition"). The
entity which acquires Interland in the Acquisition, whether MEI, HostPro or
another subsidiary of MEI, is referred to in this Agreement as the "Successor
Corporation."
C. As part of the Acquisition, and conditioned on the closing
thereof, the parties desire to enter into this Agreement pursuant to which the
Successor Corporation will assume the Employment Agreement. In addition, the
parties desire to provide for certain amendments to the Employment Agreement as
hereinafter set forth.
D. Capitalized terms used in this Agreement but not defined herein
shall have the meanings given such terms in the Employment Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing Recitals, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. ASSUMPTION. This Agreement shall become effective, and shall be
conditioned on, the closing of the Acquisition (the date of such closing and the
effectiveness hereof shall be referred to herein as the "Effective Date"). On
and after the Effective Date, (i) MEI shall assume, or shall cause such other
Successor Corporation to assume, the Employment Agreement and (ii) MEI covenants
and agrees to, or covenants and agrees to cause such other Successor Corporation
to, perform and observe all of the covenants, conditions and obligations of
Interland under the Employment Agreement in the same manner and to the same
extent that Interland would be required to perform the Employment Agreement
absent the Acquisition. From and after the Effective Date, references to the
"Company" in the Employment Agreement shall be deemed, for all purposes,
references to the Successor Corporation. The parties specifically acknowledge
and agree that the foregoing assumption explicitly satisfies the provisions of
Section 15(a) of the Employment Agreement. In the event the Acquisition does not
close for any reason, this Agreement shall be of no force and effect.
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2. AMENDMENT. The parties agree that the Employment Agreement shall
be amended, as of the Effective Date, as follows:
(a) BASE SALARY. Section 2 of the Employment Agreement is
hereby amended to provide that the Executive's Base Salary shall be $300,000 per
year, subject to withholding of all applicable taxes, and shall be payable in
accordance with the Successor Corporation's regular payroll practices in effect
from time to time for executive management of the Successor Corporation. The
Executive's Base Salary shall be reviewed for adjustments at such time as the
Board of Directors of the Successor Corporation conducts salary reviews for its
executive management generally; provided, however, that the provisions of
Section 2(a) of the Employment Agreement requiring annual reviews and an annual
increase in Executive's Base Salary of not less than 10% per year are hereby
eliminated and deleted from the Employment Agreement.
(b) TITLE. Section 1 of the Employment Agreement is hereby
amended to provide that Executive shall be employed as Vice Chairman and Chief
Technical Officer of the Successor Corporation, and Executive shall have such
responsibilities, duties and authority as may from time to time be assigned to
Executive by the Board of Directors of the Successor Corporation. The parties
acknowledge and agree that this change in the title and responsibilities of
Executive shall not be deemed a termination for Good Reason under the provisions
of Section 12(h) of the Employment Agreement.
(c) NOTICES. Notices to the Company under the Agreement should
be sent to Micron Electronics, Inc., 900 East Karcher Road, Nampa, Idaho 83687,
Attention: Chief Executive Officer; with a copy to Steve Arnold, General
Counsel, Micron Electronics, Inc., 900 East Karcher Road, Nampa, Idaho 83687.
3. EFFECTIVENESS OF EMPLOYMENT AGREEMENT. The remainder of the
Employment Agreement, as hereby amended, shall remain in full force and effect.
4. ASSIGNMENT. MEI may assign this Agreement to the Successor
Corporation in the Acquisition, without the consent of the Executive. This
Agreement may not be assigned or transferred by Executive, in whole or in part,
without the prior written consent of MEI. This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties.
5. AMENDMENTS AND MODIFICATIONS. This Agreement may be amended or
modified only by a writing signed by both parties hereto.
6. ENTIRE AGREEMENT. This Agreement, and the Employment Agreement,
contain the entire agreement between the parties with respect to the subject
matter hereof and Executive's employment with the Successor Corporation as
successor in interest to the Company.
7. GOVERNING LAW. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia, without regard to conflicts of laws principles.
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8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
9. SETOFF RIGHTS. Pursuant to Section 5.16(b) of the Agreement and
Plan of Reorganization with respect to the Acquisition, Interland has agreed to
issue a guarantee of the obligations of Executive to Bear Stearns Co., Inc. to
repay a $3,400,000 loan, and (ii) simultaneously with such guarantee, Interland
will enter into an agreement with Executive pursuant to which he will agree to
promptly repay to Interland (and after the effective time, MEI) any amounts that
Company or Parent may pay pursuant to such guarantee, which obligation will be
secured by a lien in all the shares of Interland owned by Executive that is
junior only to the lien of Bear Stearns, and Executive will agree that Interland
(and after the effective time, MEI) will be entitled to offset any such amounts
Executive may owe to Interland (and after the Effective Time, to MEI or
Interland) against any amounts (whether salary, severance pay, or otherwise)
payable at any time by Interland (and after the effective Time, by MEI or
Interland) to Executive under this Agreement or the Employment Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first set forth above.
MEI: MICRON ELECTRONICS, INC.
By: Joel J. Kocher
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Its: Chairman and Chief Executive Officer
EXECUTIVE: /s/ Ken Gavranovic
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Kenneth Gavranovic
[SIGNATURE PAGE TO KENNETH GAVRANOVIC'S EMPLOYMENT AGREEMENT]
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