EXHIBIT 10.6
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT is made and entered into as of the 9th day of
August 2000, by and between IPG Photonics Corporation USA, a Delaware
corporation having an office at Xxxxxxxxxx Xxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxx (the "Corporation") and Xxxx X. Xxxxxx of Washington, DC
("Employee").
WITNESSETH
WHEREAS, the Corporation desires to employ Employee as President of IPG
Photonics Corporation USA (the "Position") on the terms and conditions
hereinafter set forth; and
WHEREAS, Employee is desirous of accepting said employment;
NOW, THEREFORE, in consideration of the employment of Employee, the mutual
terms and conditions set forth below, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
1. Employment. Subject to the terms and conditions of this Agreement, the
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Corporation agrees to employ Employee in a full-time capacity to serve in the
Position during the Initial Employment Period, as hereinafter defined, and
Employee agrees to serve in the Position. Employee will report to the
Corporation's Chairman and Chief Executive Officer. Employee's primary areas of
responsibility will be as follows:
a. liaison and work with "Wall Street" and financial/banking
community;
b. development of strategic relationships with major corporations
worldwide which are potential customers; assisting in marketing
and closing of sales of the Corporation's products to major
corporations worldwide;
c. if requested by Xx. Xxxxxxxxx, assistance in recruiting
management and executive talent for Dr. Gapontsev's
consideration;
d. performing such other assignments as directed by Xx. Xxxxxxxxx or
the Corporation's Board of Directors; and
e. carrying out such other duties and having such other
responsibilities as would normally be carried out in the
Position.
Employee will also be elected to serve on the Board of Directors of the
Corporation. Employee shall devote Employee's best efforts, energies and
abilities and Employee's full business time, skill and attention to the business
and affairs of the Corporation, and shall act at all times according to the
highest professional standards, for the purpose of advancing the business of the
Corporation. It is currently expected that Employee will be required to perform
some of his services at the Corporation's offices in Sturbridge and later in its
new offices being constructed in Oxford ("Sturbridge/Oxford") for a minimum of
three (3) days per week, but will be required
to spend as much time there as needed to perform services as President of the
Company, or as directed by Xx. Xxxxxxxxx.
2. Term. The term of this Agreement shall commence September 1, 2000 and
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shall continue through and until August 31, 2004 (the "Initial Employment
Period"), provided that the term of this Agreement shall automatically be
renewed for successive one-year periods (each, a "Renewal Period") unless either
party shall give the other notice of non-renewal at least thirty (30) days prior
to the expiration of the then-current Initial Employment Period or Renewal
Period, as the case may be. Nothing in this Section 2 shall alter the parties'
rights to terminate their relationship as set forth in Sections 8 and 9 below.
3. Compensation. The Corporation shall pay Employee on a salary basis at
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an annual rate of not less than Two Hundred and Fifty Thousand Dollars
($250,000)(the "Base Salary"), to be paid in equal installments every two weeks.
The annual salary may, at the sole discretion of the Corporation based upon
Employee's performance and achievement of objective goals and the profitability
of the Corporation, be subject to an annual increase.
4. Benefits. Employee shall be eligible to participate in a manner
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commensurate with other executive and senior management employees of the
Corporation in benefits, such as life insurance at twice his annual salary,
disability insurance, health insurance (including dental care) and participation
in the Corporation's 401(k) plan, or other programs available, but shall in any
event be entitled to four (4) weeks paid vacation leave per year and six (6)
days of sick leave per year. The Company will provide Employee an apartment
reasonably satisfactory to him in the Sturbridge/Oxford area for his sole use at
the Corporation's expense. The Company will pay for all reasonable travel
expenses of Employee between Sturbridge/Oxford and Washington, DC, and for the
reasonable travel expenses of his spouse for an average of six (6) trips per
year between Sturbridge/Oxford and Washington.
5. Performance-Related Compensation. Employee will be eligible to receive
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additional compensation for each calendar year during which he is employed, at
the sole discretion of the Corporation based upon Employee's performance and
achievement of objective goals and the profitability of the Corporation.
6. Stock Option. Pursuant to a form of option agreement to be executed by
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the parties, the Corporation will grant Employee options to acquire 300,000
shares of common stock of the Corporation, subject to anti-dilution provisions
and subject to the conditions set forth herein. Such options shall vest over a
four (4) year period, in increments of one-fourth of the total 300,000 shares on
the execution date of this Agreement, one-fourth on September 1, 2001, one-fifth
on September 1, 2002, one-fifth on September 1, 2003 and one-tenth on August 31,
2004, provided that Employee remains employed by the Corporation on each such
vesting date. All such options shall be exercisable upon vesting at Two Dollars
($2.00) per share, provided that not more than one-fourth of the options for the
300,000 shares may be exercised in any one calendar year during the years 2000,
2001, 2002, 2003 and 2004. In the event of a change in control of the
Corporation, except pursuant to a restructuring of the IPG Group where Xx.
Xxxxxxxxx remains the controlling stockholder in the Group, all unvested stock
options shall vest on the date of such change in control.
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7. Other Activities. The employment of Employee shall be on a full -time
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basis, but Employee may be an investor or otherwise have an equity interest in
other businesses, partnerships and entities so long as the other activities of
Employee do not materially interfere with the performance of his duties
hereunder, and so long as such other activities do not cause Employee to violate
the restrictive covenants set forth in Section 12 of this Agreement, and so long
as Employee discloses all such activities to the Chairman and Chief Executive
Officer of the Corporation. Employee serves on several corporate boards (see
Exhibit A hereto) and it is agreed that Employee will continue to do so, so long
as such other activities do not cause Employee to violate the restrictive
covenants set forth in Section 12 of this Agreement. His attendance at board and
committee meetings will be limited to four (4) board or committee meetings per
year with each corporation, but will not exceed, in the aggregate, twenty six
(26) meeting days per year, and will not materially interfere with the
performance of his duties hereunder. In the event that the Corporation
determines that Employee's interest(s) in other activities or his service on
corporate boards is materially interfering with his performance, the Corporation
shall so notify Employee in writing and Employee shall take action within thirty
(30) days of such notice to eliminate such interference, including if necessary,
divesting all or a portion of such interest(s) or ceasing any active role in all
or some of such interest(s) or resigning from one or more such corporate
board(s).
8. Termination (by the Corporation). In addition to the non-renewal
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rights set forth in Section 2 hereof and notwithstanding the notice period set
forth therein, the Corporation may terminate this Agreement on or after
September 1, 2001 (and, consequently, Employee's employment under this
Agreement) for any reason other than for "Cause", as that term is defined in
this Section 8, by giving Employee thirty (30) days' prior written notice and
the equivalent of twelve (12) months salary payable on the Corporation's regular
payroll schedule, benefits continuation from the date of the notice and vesting
of that portion of Employee's stock options scheduled to vest on the next
anniversary date following the notice of termination; all vested options must be
exercised within ninety (90) days of termination. The Corporation may terminate
this Agreement (and, consequently, Employee's employment under this Agreement)
at any time, with or without notice, for Cause. "Cause" as used herein means the
occurrence of any of the following events:
a. the willful failure of Employee to perform or gross negligence of
Employee in performing Employee's duties or failure of Employee
to comply with reasonable directions of the Corporation that
continues for thirty (30) days after the Corporation has given
written notice to Employee specifying in reasonable detail the
manner in which Employee has failed to perform such duties or
comply with such directions and Employee has failed to cure such
breach;
b. the determination by the Corporation in the exercise of its
reasonable judgment that Employee has committed an act or acts
constituting (i) dishonesty or disloyalty with respect to the
Corporation, or (ii) fraud;
c. conviction of (i) a felony or (ii) any crime involving moral
turpitude;
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d. a material breach by Employee of any of the Restrictive Covenants
contained in Section 12; or
e. a material breach by Employee of any of the terms of conditions
of this Agreement (other than the Restrictive Covenants) that
continues for thirty (30) days after the Corporation has given
written notice to Employee specifying in reasonable detail the
manner in which Employee has breached the Agreement and Employee
has failed to cure such breach.
9. Termination (by Employee). In addition to the non-renewal rights set
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forth in Section 2 hereof and notwithstanding the notice period set forth
therein, Employee may terminate this Agreement (and, consequently, Employee's
employment under this Agreement) for any reason by giving the Corporation thirty
(30) days' prior written notice.
10. Automatic Termination. This Agreement and Employee's employment shall
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automatically terminate upon Employee's death or Disability. Employee shall be
deemed to have a "Disability" for purposes of this Agreement if Employee is
unable to perform, by reason of physical or mental incapacity, Employee's duties
or obligations under this Agreement, with or without reasonable accommodation as
defined in the Americans with Disabilities Act, 42 U.S.C. Section 12110(9) and
the regulations promulgated thereunder, for a total period of ninety (90) days
in any 360-day period. The Corporation shall determine, according to the facts
then available, whether and when the Disability of Employee has occurred. Such
determination shall be made by the Corporation in the exercise of reasonable
discretion.
11. Effect of Termination for Cause, Death or Disability or of Termination
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by Employee. In the event Employee's employment is terminated by the Corporation
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for Cause as defined in Section 8, or pursuant to Section 10, or by Employee
pursuant to Section 9, the Corporation shall pay to the Employee the
compensation and benefits or otherwise payable to Employee under Sections 3 and
4 through the last day of his actual employment by the Corporation, and all
unvested options shall expire on the date of termination.
12. Restrictive Covenants.
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a. Confidential Information. Employee recognizes and acknowledges
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that Employee has had and will have access to certain highly
sensitive, special, unique information of the Corporation that is
confidential or proprietary. Employee hereby covenants and agrees
not to use or disclose any Confidential Information (as
hereinafter defined) except to authorized representatives of the
Corporation or except as required by any governmental or judicial
authority.
i. Confidential Information. For the purposes of this
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Agreement, "Confidential Information" means any data or
information with respect to the business conducted by the
Corporation that is material to the Corporation and not
generally known by the public. To the extent consistent with
the foregoing definition, Confidential Information includes
without limitation: (A) reports, pricing, sales
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manuals and training manuals, selling and pricing
procedures, and financing methods of the Corporation,
together with any techniques utilized by the Corporation in
designing, developing, manufacturing, testing or marketing
its products or in performing services for clients,
customers and accounts of the Corporation; and (B) the
business plans and financial statements, reports and
projections of the Corporation.
ii. Return of Property. Employee acknowledges that all
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Confidential Information is and shall remain the sole,
exclusive and valuable property of the Corporation and that
Employee has and shall acquire no right, title or interest
therein. Any and all printed, typed, written or other
material which Employee may have or obtain (including,
without limitation, all copyrights therein) shall be and
remain the exclusive property of the Corporation, and any
and all material (including any copies) shall, upon request
of the Corporation, be promptly delivered by Employee to the
Corporation.
a. Non-Competition. During Employee's employment and extending for
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a period of two (2) years after the termination of Employee's
employment, regardless of the reason for such termination,
Employee shall not enter into or in any business activity that is
competitive with any business activity in which the Corporation
is engaged.
b. No Interference with Employees. Employee agrees that for a
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period of two (2) years after the termination of Employee's
employment, regardless of the reason for such termination,
Employee will not, directly or indirectly, request or induce any
other employee of the Corporation to (i) terminate employment
with the Corporation, or (ii) accept employment with another
business entity, or (iii) become engaged in a business activity
that is competitive with any business activity in which the
Corporation is engaged.
c. Validity of Covenants. Employee agrees that the restrictive
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covenants contained in this Agreement are reasonably necessary to
protect the legitimate business and other interests of the
Corporation, are reasonable with respect to time and territory,
and do not interfere with the interests of the public.
d. Specific Performance. Employee agrees that a breach or violation
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of any of the covenants under this Agreement will result in
immediate and irreparable harm to the Corporation in an amount
which will be impossible to ascertain at the time of the breach
or violation and that the award of monetary damages will not be
adequate relief to the Corporation. Therefore, the failure on the
part of Employee to perform all of the covenants established by
this Agreement shall give rise to a right of the
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Corporation to obtain enforcement of this Agreement in a court of
equity by a decree of specific performance or other injunctive
relief. This, however, shall be cumulative and in addition to any
other remedy the Corporation might have.
13. Notices. Any and all notices, designations, consents, offers,
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acceptances or any other communications provided for herein shall be given in
writing and shall be deemed to be given three (3) days after the date postmarked
if sent by first class, United States mail or by registered or certified mail,
return receipt requested; or on the date actually received if sent by express
mail or similar overnight delivery or if hand delivered, which shall be
addressed to the Corporation at its principal office and to Employee at
Employee's last address as shown on the records of the Corporation.
14. Governing Law. This Agreement shall be governed by, construed and
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enforced in accordance with the substantive laws of The Commonwealth of
Massachusetts, without regard to its principles of conflicts of laws.
15. Severability. In the event that any provision of this Agreement shall
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be determined to be invalid, illegal or otherwise unenforceable by any court of
competent jurisdiction, the validity, legality or enforceability of the other
provisions in this Agreement shall not affected thereby.
16. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the Corporation and Employee and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
17. Entire Agreement. This Agreement constitutes the entire Agreement
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between the parties with respect to the subject matter hereof and supercedes any
and all other agreements, either oral or in writing, among the parties hereto
with respect to the subject matter hereof.
18. Modification. This Agreement may not be changed orally, but may be
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amended, revoked, changed or modified at any time by a written agreement
executed by Employee and the Corporation.
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year set forth above.
/s/ Xxxxxxxx Xxxxxxxxx /s/ Xxxx X. Xxxxxx
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Xxxxxxxx Xxxxxxxxx Xxxx X. Xxxxxx
Chairman and Chief Executive Officer
IPG PHOTONICS CORPORATION USA
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