PHOTON DYNAMIC, INC.
KEY EMPLOYEE AGREEMENT
FOR
XXXXXXX XXXXXXX
Photon Dynamics, Inc., a California corporation (the "Company")
agrees with you as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 The Company will employ you and you shall serve in a capacity
as President of CR Technology, a wholly owned subsidiary of the Company, and
perform the duties customarily associated with such capacity from time to
time and at such place or places as the Company shall reasonably designate or
as shall be reasonably appropriate and necessary in connection with such
employment.
1.2 Subject to Section 4 below, you will, to the best of your
ability, devote your time and best efforts to the performance of your duties
hereunder and the business and affairs of the Company. You will report to the
Chief Executive Officer of the Company.
1.3 You will duly, punctually and faithfully perform and observe
any and all rules and regulations which the Company may now or shall
hereafter establish governing the conduct of its business, except to the
extent that such rules and regulations may be inconsistent with your
executive position.
2. TERM OF EMPLOYMENT; TERMINATION.
2.1 The effective date of this Agreement shall be the Closing
Date as defined in Paragraph 1.3 of the Agreement and Plan of Merger and
Reorganization between Photon Dynamics, Inc. and CR Technology, Inc.
2.2 You understand and acknowledge that this Agreement is not
for any definite period of employment and that the Company has the right to
terminate your employment at any time, with or without cause.
2.3 You may be terminated for cause if, in the reasonable
determination of the Company, you are convicted of any felony or of any crime
involving moral turpitude, or participate in any fraud against the Company,
or willfully breach your duties to the Company, or wrongfully disclose any
trade secrets or other confidential information of the Company, or materially
breach Section 4 of this Agreement or any material provision of the Employee
Proprietary Information Agreement, between you and the Company (the
"Proprietary Information Agreement") or certain violations of policies
included in the Company's employee handbook. Any resignation by you for Good
Reason (as defined in Appendix I) shall be deemed to be a termination by the
Company without cause.
3. COMPENSATION AND BENEFITS:
3.1 The Company shall pay to you for the services to be rendered
hereunder a base salary at an annual rate of $180,000 payable in accordance
with the Company's usual payroll procedures. As an additional incentive, the
Company's management will recommend to the Company's Board of Directors that
you be given an option to buy 80,000 shares of Photon Dynamics common stock.
The options would vest monthly over a 50 month period and are subject to the
approval by the Company's Board of Directors.
3.2 If you are terminated without cause pursuant to Section 2.2,
the Company shall continue to pay your salary as provided in 3.1 above for a
period of one year following any such termination and shall maintain for your
benefit during such period all benefits, including, without limitation, all
insurance and medical benefits at levels no lower than those in effect
immediately prior to such termination.
3.3 In addition, you shall be entitled to an incentive bonus
under the Company's incentive bonus program of between 12.5% to 37.5% of your
base salary (target incentive bonus is 25% of your base salary) depending on
your performance against plan objectives. For the first year of combined
operations, 20% of the incentive bonus will be based on performance against
plan objectives for the Company and 80% of the incentive bonus will be based
on performance against plan objectives for CR Technology.
3.4 Upon your furnishing to the Company customary and reasonable
documentary support (such as receipts or paid bills) evidencing costs and
expenses incurred by you in the performance of your services and duties
hereunder and containing sufficient information to establish the amount, date,
place and essential character of the expenditure, you shall be reimbursed for
such costs and expenses in accordance with the Company's reimbursement policy.
3.5 As long as this Agreement is in effect, you shall be
entitled to benefits consistent with the Company's standard practice for its
employees as defined in the Company's employee handbook.
3.6 As long as this Agreement is in effect, you shall be
entitled to a car allowance of $8,000 per year.
4. OTHER ACTIVITIES DURING EMPLOYMENT.
4.1 Except with the prior written consent of the Company's Board
of Directors, you will not during the term of this Agreement undertake or
engage in any other employment, occupation or business enterprise, other than
ones in which you are a passive investor. You may engage in civic and
not-for-profit activities so long as such activities do not materially
interfere with the performance of your duties hereunder.
4.2 Except as permitted by the Noncompetition Agreement dated as
of the date hereof to which you are a party, you will not acquire, assume or
participate in, directly or
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indirectly, any position, investment or interest known by you to be a
conflict of interest with the Company, its business or prospects, financial
or otherwise.
5. FORMER EMPLOYMENT.
5.1 You represent and warrant that your employment by the
Company will not conflict with and will not be constrained by any prior
employment or consulting agreement or relationship. You represent and warrant
that you do not possess confidential information arising out of prior
employment which, in your best judgment, would be utilized in connection with
your employment by the Company, except in accordance with agreements between
your former employer and the Company.
5.2 Should you find that confidential information belonging to
any former employer might be usable in connection with the Company's
business, you will not intentionally disclose to the Company or use on behalf
of the Company any confidential information belonging to any of your former
employers (except in accordance with agreements between the Company and any
such former employer); but during your employment by the Company you will use
in the performance of your duties all information which is generally known
and used by persons with training and experience comparable to your own and
all information which is common knowledge in the industry or otherwise
legally in the public domain.
6. PROPRIETARY INFORMATION AND INVENTIONS. You agree to be bound by
the provisions of the Proprietary Information Agreement. You acknowledge that
a remedy at law for any breach or threatened breach by you of the provisions
of the Proprietary Information Agreement would be inadequate and you
therefore agree that the Company shall be entitled to injunctive relief in
case of any such breach or threatened breach.
7. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Company or by you.
8. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively
broad as to duration, geographical scope, activity or subject, it shall be
construed by limiting and reducing it, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear.
9. NOTICES. Any notice which the Company is required or may desire
to give you shall be given by personal delivery or registered or certified
mail, return receipt requested, addressed to you at the address of record
with the Company, or at such other place as you may from time to time
designate in writing. Any notice which you are required or may desire to give
to the Company hereunder shall be given by personal delivery or by registered
or certified mail, return receipt requested, addressed to the Company at its
principal office, or at such other office
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as the Company may from time to time designate in writing. The date of
personal delivery or the date of mailing any such notice shall be deemed to
be the date of delivery thereof.
10. WAIVER. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
11. COMPLETE AGREEMENT; AMENDMENTS. The foregoing, together with the
Proprietary Information Agreement, is the entire agreement of the parties
with respect to the subject matter hereof and thereof and may not be amended,
supplemented, canceled or discharged except by written instrument executed
by both parties hereto.
12. HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
13. ATTORNEY FEES. If either party hereto brings any action to enforce
its rights hereunder, the prevailing party in any such action shall be
entitled to recover his or its reasonable attorneys' fees and costs incurred
in connection with such action.
14. You will be entitled to the same indemnity provision as other
officers.
Photon Dynamics, Inc.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Date: November 30, 1999
----------------------------
Accepted and agreed this
30th day of November, 1999.
/s/ Xxxxxxx Xxxxxxx
---------------------------------
Xxxxxxx Xxxxxxx
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APPENDIX I
ADDITIONAL DEFINITIONS
For purposes of this Agreement, the following additional capitalized
terms shall have the respective definitions set forth below:
GOOD REASON. The term "GOOD REASON" as used in this Agreement shall
mean any of the following:
(a) the assignment to you of duties substantially inconsistent
with your position, duties, responsibilities or status with the
Company; a substantial change in your titles or offices; any removal of
you from or any failure to reelect you to any of your positions as an
officer, except in connection with the termination of your employment
for disability; retirement; death; or by you other than for Good Reason;
(b) a reduction by the Company in your base salary as in effect
on the date hereof or as it may be increased from time to time during
the term of this Agreement;
(c) any failure by the Company to provide benefits in
accordance with the Company's employee handbook;
(d) any action by the Company which would require you to be
relocated more than 5 miles from Laguna Niguel, California;
(e) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company;
PROVIDED, HOWEVER, that any of the foregoing actions shall not be
considered to be Good Reason if such action is undertaken by the
Company as a termination for cause.
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