EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is made and entered into as of December 27, 2001, by and between DuPont Photomasks, Inc., a Delaware corporation (the "Company"), and Xxxxx Xxxxxxx, 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 of Worldwide Sales 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. 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 or before January 27, 2002, (the "Hire Date") and shall continue for a period of 3 years (the "Initial Term"). This Agreement, and Executive's employment hereunder, may be terminated if the Company provides Executive, or Executive provides the Company, with written notice of termination at least 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 $220,000 (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 forty-five percent (45%) of Base Salary (the "Incentive Compensation"). However, the actual Incentive Compensation payable to Executive will be based upon Executive's performance and the size of the bonus pool as determined by the Board of Directors. These factors may change the range of the Incentive Compensation amount by increasing it to over hundred percent (100%) of Base Salary or decreasing it to zero percent (0%). The Incentive Compensation will be paid each year after the close of the fiscal year, per the normal Company schedule.
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.
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 25,000 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.
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
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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
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 a change in ownership or control of the Company effected through any of the following transactions:
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
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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 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 12 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
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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.
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
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registered mail, return receipt requested) or by overnight courier to the parties at the following addresses or facsimile numbers:
If to the Executive, to:
Xxxxx
Xxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
If to the Company, to:
Xxxx
X. Xxxx
XxXxxx Photomasks, Inc.
000 Xxx Xxxxxxxx Xxxx.
Xxxxx Xxxx, Xxxxx 00000
(000) 000-0000
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.
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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.
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.
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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 |
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| Name: | Xxxxx X. Xxxxxx |
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| Title: | Chief Executive Officer |
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| Date: | December 27, 2001 |
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Xxxxx Xxxxxxx, as Executive |
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/s/ XXXXX XXXXXXX Signature |
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| Annex A | Confidentiality Agreement | (per §1.4.1) |
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EMPLOYMENT AGREEMENT
