EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as of
May 26, 2000, by and between DuPont Photomasks, Inc., a Delaware corporation
(the "Company"), and Xxxx Xxxxxxxx, an individual ("Executive").
RECITALS
WHEREAS, the Company desires to hire Executive and Executive desires to
become employed by the Company; and
WHEREAS, the Company and Executive have determined that it is in their
respective best interest to enter into this Agreement on the terms and
conditions as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
AGREEMENT
1. EMPLOYMENT TERMS AND DUTIES
1.1 EMPLOYMENT. The Company hereby employs Executive, and Executive hereby
accepts employment by the Company, upon the terms and conditions set forth in
this Agreement.
1.2 DUTIES. Executive shall serve as Executive Vice President and Chief
Financial Officer of the Company and shall report solely to the Chief Executive
Officer of the Company (CEO). Executive shall have the authority, and perform
the duties customarily associated with his titles together with such additional
duties of a senior executive nature and commensurate with his titles as may from
time to time be assigned by the Company. Executive shall devote his full
working time and efforts to the performance of his duties and the furtherance of
the legitimate business interests of the Company and shall not be otherwise
employed. Executive may also serve as a director or trustee of other
organizations, or engage in charitable, civic and/or governmental activities
provided that such service and activities do not prevent Executive from
performing the duties required of Executive under this Agreement and further
provided that Executive obtains written consent for all such activities from the
Company, which consent will not be unreasonably withheld. Executive will agree
to serve on the Company's Board of Directors if asked to do so by the Company
and the Board.
1.3 TERM. Subject to the provisions of Section 1.6 below, the term of
employment of Executive under this Agreement shall commence on June 1, 2000,
(the "Hire Date") and shall continue for a period of three (3) years (the
"Initial Term"). This Agreement, and Executive's
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employment hereunder, may be terminated if the Company provides Executive, or
Executive provides the Company, with written notice of termination at least
three (3) months prior to the end of the Initial Term. If neither party elects
to terminate prior to completion of the Initial Term, this Agreement shall
automatically renew (the "Renewal Term" and together with the Initial Term, the
"Employment Term") and may only be terminated under Section 1.6.
1.4 COMPENSATION AND BENEFITS.
1.4.1 BASE SALARY. In consideration of the services rendered to the
Company hereunder by Executive and Executive's covenants hereunder and in the
Company's Confidentiality, Proprietary Information and Inventions Agreement (the
"Confidentiality Agreement", attached hereto as Annex A), the Company shall,
during the Employment Term, pay Executive a salary at the annual rate of Two
Hundred Twenty-five Thousand Dollars ($225,000.00) (the "Base Salary"), less
statutory deductions and withholdings, payable in equal installments in
accordance with the Company's regular payroll practices, but no less frequently
than monthly. The initial annual base salary may be increased from time to time
in the sole discretion of the Company.
1.4.2 THE INCENTIVE COMPENSATION. Pursuant to the Company's standard
bonus plan, Executive will be entitled to an annual target bonus opportunity of
up to forty-five percent (45%) of Base Salary ("the Incentive Compensation"),
with the actual Incentive Compensation payable to be based upon Executive's
performance and the size of the bonus pool as determined by the Board of
Directors. (This forty-five percent target could go as high as ninety percent
(90%) or as low as zero percent (0%) depending upon Company performance and the
bonus formula.) In addition, the Executive's Incentive Compensation can be
raised as high as 1.25 times the target bonus or lowered to zero based solely on
individual performance. The Incentive Compensation will be paid each year after
the close of the fiscal year, per the normal Company schedule. No Incentive
Compensation will be payable for fiscal year 2000, which ends on June 30, 2000.
1.4.3 BENEFITS PACKAGE. In addition to the Base Salary, during the
Employment Term, Executive shall receive such employee benefits and holidays as
may be in effect from time to time as are afforded to other senior executives of
the Company.
1.4.4 VACATION. Executive shall be entitled to four (4) weeks' paid
vacation each year of the Employment Term.
1.4.5 EXPENSES. The Company shall, upon receipt from Executive of
supporting receipts to the extent required by applicable income tax regulations
and the Company's reimbursement policies, reimburse Executive for all out-of-
pocket business expenses reasonably incurred by Executive in connection with his
employment hereunder, as approved by the Company.
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1.4.6 RELOCATION EXPENSES. The Company shall pay Executive a total of
$37,500 to help Executive with his relocation to the Austin area. This payment
is in lieu of services and payments under the Company's Relocation Policy. The
Company will reimburse Executive for temporary living expenses over a four-month
period up to a maximum of $25,000.
1.5 STOCK OPTIONS.
1.5.1 INITIAL STOCK OPTION. Effective as of the Hire Date, the Company
shall grant to Executive, in accordance with the terms of the Company's Amended
1997 Stock Option and Restricted Stock Plan (the "Plan") an option to purchase a
total of Fifty Thousand (50,000) shares of the Company's common stock, par value
$0.01 per share (the "Common Stock"), at an exercise price equal to the average
of the high selling price and the low selling price of the Common Stock on the
Hire Date. The option shall vest twenty-five percent (25%) per year on the first
anniversary and each of the next three anniversaries of the Hire Date.
The Initial Options will be designated incentive stock options to the
maximum extent allowed by law and will expire if not exercised within ten (10)
years of the date of grant, and shall be granted pursuant to option agreements
in the form annexed hereto as Annex B.
1.5.2 ANNUAL STOCK OPTION GRANT. Executive shall be eligible for an
annual stock option (the "Annual Stock Option") (including ISO's and NQO's). The
target grant for Executive shall be an option to purchase seventeen thousand
shares (17,000) of Common Stock, granted in accordance with the terms of the
Plan, the actual number of shares in the grant to be determined by the CEO and
the Compensation Committee of the Board of Directors. The first Annual Stock
Option shall be in accordance with the normal Company calendar for officers
following the 2001 fiscal year. Options granted to Executive pursuant to this
section shall be designated incentive stock options to the maximum extent
allowed by law.
1.6 TERMINATION. Executive's employment and this Agreement (except as
otherwise provided hereunder) shall terminate upon the occurrence of any of the
following at the time set forth therefor (the "Termination Date"):
1.6.1 DEATH OR DISABILITY. Immediately upon the death of Executive or
the determination by the CEO that Executive shall have been unable to
substantially perform the essential functions of his duties, with or without
reasonable accommodation, for a period of 100 days out of any period of 360
consecutive days ("Disability"); provided that prior to any termination due to
Disability, the Company shall have given Executive at least 14 days' advance
written notice of its intent to terminate Executive's Employment Term due to
Disability, and Executive shall not have returned to full-time employment by the
14th day after such notice (termination pursuant to this Section 1.6.1 being
referred to herein as termination for "Death or Disability"); or
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1.6.2 VOLUNTARY TERMINATION. Thirty (30) days following the receipt by
the Company of Executive's written notice to the Company of termination of
employment; provided, however, that the Company may waive all or a portion of
the thirty (30) days' notice and accelerate the effective date of such
termination (and the Termination Date) (termination pursuant to this Section
1.6.2 being referred to herein as "Voluntary Termination"); or
1.6.3 TERMINATION FOR CAUSE. Immediately following notice of
termination for "Cause" (as defined below), specifying such Cause, given by the
Company (termination pursuant to this Section 1.6.3 being referred to herein as
termination for "Cause"). As used herein, "Cause" shall mean and be limited to
termination based on: (i) Executive's conviction or plea of "guilty" or "no
contest" to any crime constituting a felony in the jurisdiction in which
committed, any crime involving moral turpitude (whether or not a felony), or any
other violation of criminal law involving dishonesty or willful misconduct that
materially injures the Company (whether or not a felony); (ii) Executive's
substance abuse that in any manner materially interferes with the performance of
his duties; (iii) Executive's failure or refusal to perform his duties or to
follow the lawful and proper directives of the CEO that are within the scope of
his duties; (iv) Executive's material intentional breach of the Confidentiality
Agreement; or (v) Executive's violation of the Company's policies against
xxxxxxx xxxxxxx or Executive's intentional misconduct that materially injures
the Company.
1.6.4 TERMINATION WITHOUT CAUSE. Thirty (30) days following
Executive's receipt of written notice of termination without Cause from the
Board of Directors; provided, however, that during any such thirty (30) day
notice period, the Company may suspend, with no reduction in pay or benefits,
Executive from his duties as set forth herein (including, without limitation,
Executive's position as a representative and agent of the Company) (termination
pursuant to this Section 1.6.4 being referred to herein as termination "Without
Cause").
1.6.5 CONSTRUCTIVE TERMINATION Thirty (30) days following a
Constructive Termination (as defined below); provided, however, that during any
such thirty (30) day period, the Company may suspend, with no reduction in pay
or benefits, Executive from his duties as set forth herein (including, without
limitation, Executive's position as a representative and agent of the Company)
(termination pursuant to this Section 1.6.5 being referred to herein as
"Constructive Termination"). For purposes of this Section, a Constructive
Termination shall occur when:
(a) for a period of twelve (12) months following a Change in Control
(as defined below), Executive is terminated (other than for Cause) or Executive
voluntarily resigns because his (i) duties, responsibilities or level of
management to which Executive reports are materially reduced, (ii) Executive's
Base Salary is reduced by more than 15% or (iii) place of employment is
relocated by more than fifty (50) miles, in each case without Executive's
consent.
(i) A "Change in Control" shall be deemed to occur in the
event of change in ownership or control of the Company effected
through any of the following transactions:
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the acquisition, directly or indirectly, by any person or
related group of persons (other than the Company or a person that
directly or indirectly controls, or is controlled by, or is under
common control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities
pursuant to a tender or exchange offer made directly to the Company's
stockholders; or
the sale, transfer or other disposition of all or
substantially all of the Company's assets; or
the consummation of a merger or consolidation of the
Company with or into another entity or any other corporate
reorganization, if more than fifty percent (50%) of the combined
voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization.
A transaction shall not constitute a Change in Control if its sole purpose
is to change the state of the Company's incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company's securities immediately before such transaction.
(b) Executive provides written notice to the Company of termination
for Good Reason, which, as used herein, shall mean (A) a reduction in
Executive's titles, authority, duties or responsibilities, or the assignment of
duties inconsistent with Executive's position; (B) a change in reporting
contrary to the provisions of this Agreement; or (C) a failure to grant any
equity participation as provided in this Agreement, or (D) a reduction in
Executive's Base Salary not consistent with other DPI executives, in each case
without Executive's consent and continuing more than thirty (30) days following
the Company's receipt of written notice from Executive identifying the basis of
the alleged termination for Good Reason.
1.6.6 OTHER REMEDIES. Termination pursuant to this section shall be in
addition to and without prejudice to any other right or remedy to which the
Company or Executive may be entitled at law, in equity, or under this Agreement.
1.7 SEVERANCE
1.7.1 VOLUNTARY TERMINATION, TERMINATION FOR CAUSE OR TERMINATION FOR
DEATH OR DISABILITY. In the case of termination of Executive's employment
hereunder for Death or Disability in accordance with Section 1.6.1 above, or
Executive's Voluntary termination of employment hereunder in accordance with
Section 1.6.2 above, or a termination of Executive's employment hereunder for
Cause in accordance with Section 1.6.3 above, (i) Executive shall not be
entitled to receive payment of, and the Company shall have no obligation to pay,
any severance or similar compensation attributable to such termination, other
than Base Salary earned but unpaid, accrued but unused vacation to the extent
allowed by the Company's policies, vested
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benefits under any employee benefit plan, and any unreimbursed expenses pursuant
to Section 1.4.4 hereof incurred by Executive as of the Termination Date; and
(ii) the Company's other obligations under this Agreement shall immediately
cease.
1.7.2 TERMINATION WITHOUT CAUSE. (a) In the case of a termination of
Executive's employment hereunder Without Cause in accordance with Section 1.6.4,
the Company shall pay Executive, without discount, or any obligation on the part
of Executive to mitigate the amount of such payment (by seeking alternate
employment or otherwise), (hereinafter the "Severance Payment") (i) all accrued
compensation and benefits; provided that, there will be no partial payment of
the Incentive Compensation and (ii) an amount equal to nine (9) months' salary,
in a lump-sum payment subject to the tax withholding specified in Section 1.4.1
above. Executive shall have twelve (12) months from the Termination Date to
exercise his vested shares.
(b) During the twelve months after the Hire Date should Executive be
terminated Without Cause, the stock options scheduled to vest at the end of that
one-year period shall be accelerated and shall vest immediately (there is no
acceleration of any unvested options after Executive's first year with the
Company). The acceleration under this subsection 1.7.2(b) does not fall within
the definition of a "Severance Payment".
The above amounts represent the entire compensation Executive is entitled
to receive upon termination Without Cause.
1.7.3 CONSTRUCTIVE TERMINATION DUE TO CHANGE OF CONTROL. In the case
of the Constructive Termination Due to Change of Control of Executive's
employment in accordance with Section 1.6.5(a), the Company shall pay Executive
the Severance Payment and also Executive's outstanding stock options (to the
extent then unexercisable) will all automatically accelerate consistent with the
Plan and become exercisable in full. The above amounts represent the entire
compensation Executive is entitled to receive upon a Constructive Termination.
Executive shall have twelve (12) months from the Termination Date to exercise
his vested shares.
1.7.4 CONSTRUCTIVE TERMINATION FOR GOOD REASON. Constructive
Termination for Good Reason under Section 1.6.5(b), during the twelve (12)
months following the Hire Date, shall entitle Executive to the Severance Payout
set forth in Section 1.7.2. In addition, should Constructive Termination for
Good Reason occur during the twelve (12) months following the Hire Date, the
Executive's stock options scheduled to vest at the end of that one-year period
shall be accelerated and shall vest immediately. Executive shall have twelve
(12) months from the Termination Date to exercise his vested shares.
2. PROTECTION OF COMPANY'S CONFIDENTIAL, PROPRIETARY INFORMATION AND
INVENTIONS.
This Agreement, and Executive's employment hereunder, is contingent upon
Executive's execution of the Confidentiality, Proprietary Information and
Inventions Agreement, before the Hire Date.
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3. REPRESENTATIONS AND WARRANTIES
Each party hereto represents and warrants that (i) this Agreement is valid and
binding upon and enforceable against such party in accordance with the terms of
this Agreement, (ii) such party is not bound by or subject to any contractual or
other obligation that would be violated by such party's execution or performance
of this Agreement, including, but not limited to, any non-competition agreement
presently in effect, and (iii) such party is not subject to any pending or, to
such party's knowledge, threatened, claim, action, judgment, order, or
investigation that could adversely affect such party's ability to perform its
obligations under this Agreement in a material respect.
4. MISCELLANEOUS
4.1 INDEMNIFICATION. The Company shall indemnify Executive from any
liability arising out of his performance of his duties hereunder to the full
extent permitted by law, and shall provide Executive all benefits under any
directors and officers, errors and omissions, or similar insurance policy from
time to time in effect.
4.2 NOTICES. All notices, requests, and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission with answer back
confirmation or mailed (postage prepaid by certified or registered mail, return
receipt requested) or by overnight courier to the parties at the following
addresses or facsimile numbers:
If to the Executive, to:
Xxxx Xxxxxxxx
XxXxxx Photomasks, Inc.
000 Xxx Xxxxxxxx Xxxx.
Xxxxx Xxxx, Xxxxx 00000
(000) 000-0000
If to the Company, to:
Xxxx X. Xxxx
XxXxxx Photomasks, Inc.
000 Xxx Xxxxxxxx Xxxx.
Xxxxx Xxxx, Xxxxx 00000
(000) 000-0000
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All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 4.2, be deemed given upon
delivery, and (ii) if delivered by mail in the manner described above to the
address as provided in this Section 4.1, be deemed given upon receipt (in each
case regardless of whether such notice, request, or other communication is
received by any other Person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section).
Any party from time to time may change its address or other information for the
purpose of notices to that party by giving written notice specifying such change
to the other party hereto.
4.3 AUTHORIZATION TO BE EMPLOYED. This Agreement, and Executive's
employment hereunder, is subject to Executive providing the Company with legally
required proof of Executive's authorization to be employed in the United States
of America.
4.4 ENTIRE AGREEMENT. This Agreement, which includes the Exhibits hereto,
supersedes all prior discussions and agreements, among the parties with respect
to the subject matter hereof and contains the sole and entire agreement between
the parties hereto with respect thereto. In the event of conflict between the
terms of the text of this Agreement (excluding for this purpose the Exhibits
hereto), on the one hand, and the terms of the Confidentiality Agreement, the
Plan, the Bonus Plan, the Relocation Plan, or the form of Option Agreement, on
the other hand, the terms of this Agreement (excluding for this purpose the
Exhibits hereto) shall control. Any provision of this agreement which by its
terms obliges the Company to make payments subsequent to termination of
Executive's Employment Term shall survive any such termination.
4.5 WAIVER. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party
hereto of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
4.6 AMENDMENT. This Agreement may be amended, supplemented, or modified
only by a written instrument duly executed by or on behalf of each party hereto.
4.7 NO THIRD PARTY BENEFICIARY. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and the Company's
successors or assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
4.8 NO ASSIGNMENT; BINDING EFFECT. This Agreement and the obligations
undertaken herein shall be binding upon and shall inure to the benefit of any
successors or assigns of the Company. Executive shall not be entitled to assign
his obligations under this Agreement.
4.9 HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
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4.10 SEVERABILITY. The Company and Executive intend all provisions of this
Agreement to be enforced to the fullest extent permitted by law. Accordingly,
if a court of competent jurisdiction determines that the scope and/or operation
of any provision of this Agreement is too broad to be enforced as written, the
Company and Executive intend that the court should reform such provision to such
narrower scope and/or operation as it determines to be enforceable. If,
however, any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future law, and not subject to reformation, then
(i) such provision shall be fully severable, (ii) this Agreement shall be
construed and enforced as if such provision was never a part of this Agreement,
and (iii) the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by illegal, invalid, or unenforceable
provisions or by their severance.
4.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable to contracts executed
and performed in such State without giving effect to conflicts of laws
principles.
4.12 JURISDICTION. With respect to any suit, action, or other proceeding
arising from (or relating to) this Agreement, the Company and Executive hereby
irrevocably agree to the nonexclusive personal jurisdiction and venue of the
United Status District Court for the Western District of Texas (and any Texas
State Court within Xxxxxx County, Texas).
4.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by facsimile, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first written above.
DuPont Photomasks, Inc., as the Company
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx
Title: Chairman and CEO
Date: 6/5/00
Xxxx Xxxxxxxx, as Executive
/s/ Xxxx Xxxxxxxx
------------------------------
Signature
DATE: 5/26/00
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