EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("AGREEMENT") dated as of November 15, 2002 by and
among Ultra Clean Technology Systems and Service, Inc., a California corporation
(together with its successors, the "COMPANY"), Ultra Clean Holdings, Inc., a
Delaware corporation ("PARENT"), and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("EXECUTIVE"), to be
effective as of the Effective Time (as defined in the Merger Agreement).
WHEREAS, Executive is currently employed by the Company and has entered
into an Employment Agreement with the Company dated as of May 26, 2002 (the
"EXISTING EMPLOYMENT AGREEMENT"), and a Change of Control Agreement with the
Company dated as of June 1, 2002 (the "CHANGE OF CONTROL AGREEMENT");
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of October
30, 2002 (the "MERGER AGREEMENT"), among the Company, Mitsubishi Corporation
("MITSUBISHI"), Mitsubishi International Corporation, Parent, and Clean Merger
Company, the Company will become a subsidiary of Parent;
WHEREAS, the Company and Parent consider it in their best interests to
▇▇▇▇▇▇ the continued employment of Executive with the Company or one of its
affiliates from and after the Effective Time;
WHEREAS, Executive is willing to continue his employment on and after the
Effective Time on the terms hereinafter set forth in this Agreement;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
Position; Term Of Agreement
Section 1.01. Position. (a) As of and following the Effective Time,
Executive shall serve as President and Chief Executive Officer of the Company
and shall report to the Board of Directors of the Company (the "BOARD").
Executive shall have such duties and authority, consistent with such position,
as shall be determined from time to time by the Board.
(b) During the Employment Term (as defined below), Executive will devote
substantially all of his business time to the performance of his duties under
this Agreement and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict with the rendition
of such services either directly or indirectly, without the prior written
consent of the Board.
Section 1.02. Term. Executive shall be employed by the Company for a
period (the "EMPLOYMENT TERM") commencing on the Effective Time and, subject to
earlier termination or extension as provided herein, ending on the second
anniversary of the Effective Time.
ARTICLE 2
Compensation And Benefits
Section 2.01. Base Salary. Commencing on the Effective Time, the Company
shall pay Executive an annual base salary (the "BASE SALARY") at the annual rate
of $240,000, payable in accordance with the payroll and personnel practices of
the Company from time to time. Executive's compensation package shall be subject
to periodic review by the Board or a committee of the Board.
Section 2.02. Signing Bonus. The provisions set forth in Schedule I are
incorporated herein.
Section 2.03. Bonus. Executive shall be eligible to participate in an
executive bonus plan in accordance with the terms and conditions of such plan.
Section 2.04. Employee Benefits. (a) During the Employment Term, Executive
shall be eligible for employee benefits (including fringe benefits, vacation and
health, accident and disability insurance, and retirement plan participation)
substantially similar to those benefits made available generally to senior
executives of the Company, and Executive shall be entitled to participate in a
deferred compensation plan and/or 401(k) plan to the extent the Company
maintains such plans.
(b) During the Employment Term, the Company will provide Executive with
the use of a company-leased vehicle and will cover all related insurance and
maintenance costs, consistent with Executive's existing arrangements as of the
Effective Time.
Section 2.05. Business And Travel Expenses. Reasonable travel,
entertainment and other business expenses incurred by Executive in the
performance of Executive's duties hereunder shall be reimbursed by the Company
in accordance with the Company's policies as in effect from time to time.
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ARTICLE 3
Certain Termination Benefits
Section 3.01. Certain Events. (a) A "QUALIFYING EVENT" means (i) the
termination of Executive's employment by the Company without Cause (other than
by reason of Executive's death or disability) or (ii) the termination of
Executive's employment within six months after a Change of Control by Executive
with Good Reason.
(b) Executive shall give the Company 30 days prior written notice of
Executive's intent to terminate Executive's employment with the Company for any
reason. The Company shall give Executive written notice of the Company's
termination of Executive's Employment with the Company.
(c) "CAUSE" means the occurrence of any one or more of the following:
(i) the failure, refusal or willful neglect of Executive to perform
the services required of Executive hereunder;
(ii) the Company forming a good faith belief that Executive has
engaged in fraudulent conduct in connection with the business of the
Company or that Executive has committed a felony;
(iii) Executive's breach of any of the covenants contained in
Section 4.01 or of the Confidentiality Agreement (as defined below); or
(iv) the Company forming a good faith belief that Executive has
committed an act of misconduct, violated the Company's anti-discrimination
policies prohibiting discrimination or harassment on the grounds of race,
sex, age or any other legally prohibited basis, or otherwise has caused
material harm to the Company's reputation or goodwill.
(d) "CHANGE OF CONTROL" means the occurrence of any one or more of the
following:
(i) the consummation of a merger or consolidation of the Company
with or into any other entity (other than with any entity or group in
which Executive has not less than a 5% beneficial interest) pursuant to
which the holders of outstanding equity of the Company immediately prior
to such merger or consolidation hold directly or indirectly 50% or less of
the voting power of the equity securities of the surviving entity;
(ii) the sale or other disposition of all or substantially all of
the Company's assets (other than to any entity or group in which Executive
has not less than a 5% beneficial interest); or
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(iii) any acquisition by any person or persons (other than the
direct and indirect holders of outstanding equity of the Company
immediately after the Effective Time and other than any entity or group in
which Executive has not less than a 5% beneficial interest) of the
beneficial ownership of more than 50% of the voting power of the Company's
equity securities in a single transaction or series of related
transactions; provided, however, that an underwritten public offering of
the Company's securities shall not be considered a Change in Control;
provided, however, that 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 directly or indirectly held the Company's
securities immediately before such transaction.
(e) "GOOD REASON" means the occurrence of any of the following without
Executive's written consent:
(i) A significant reduction in the duties, position and
responsibilities held by the Executive immediately prior to the Change of
Control;
(ii) A material reduction by the Company of Executive's base salary
(other than in connection with an action affecting a majority of the
executive officers of the Company); or
(iii) Any relocation of Executive's office to a location more than
60 miles from its location immediately prior to the Change of Control;
provided, however, that no act or failure to act by the Company shall give rise
to Good Reason unless (A) Executive notifies the Company in writing of the
circumstances he believes constitute Good Reason hereunder within 30 days after
he acquires knowledge of such circumstances and (B) the Company has failed to
cure or remedy such circumstances within 30 days of written notice by Executive
to the Company.
Section 3.02. Right To Certain Benefits. In the event of any termination
of employment during the Employment Term, Executive shall be entitled to receive
from the Company either the relevant Severance Benefits to the extent and as
described in Section 3.03 or the relevant Separation Benefits to the extent and
as described in Section 3.04, as the case may be, contingent upon Executive
signing a release of claims in a form reasonably acceptable to the Company.
Section 3.03. Benefits Upon A Qualifying Event. In the event of any
termination of employment during the Employment Term upon a Qualifying
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Event, Executive shall be entitled to the following benefits (the "SEVERANCE
BENEFITS"):
(a) The Company shall pay Executive as soon as practicable a lump sum, in
cash, equal to Executive's earned but unpaid Base Salary and other vested but
unpaid cash entitlements for the period through and including the date of
termination of Executive's employment, including unused earned vacation pay and
unreimbursed documented business expenses (collectively, "ACCRUED
COMPENSATION"). In addition, Executive shall be entitled to any other vested
benefits earned by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "ACCRUED
BENEFITS").
(b) The Company shall (i) continue to pay Executive's base salary for 12
months following the date of termination and (ii) pay Executive as soon as
practicable a lump sum, in cash, equal to Executive's earned but unpaid bonus as
of the date of termination; provided that if Executive obtains full-time
employment prior to the first anniversary of the date of termination, any income
earned by Executive during such 12 months shall be offset against the Company's
payment obligations under this Agreement.
(c) Continuation of medical and dental benefits for Executive and his
dependents substantially similar to, and at the same cost to Executive of, those
provided immediately prior to the date of termination until the earlier to occur
of (i) the end of the 12-month period after the date of termination and (ii)
such time as Executive is covered by comparable programs of a subsequent
employer.
(d) The portion of any options to purchase stock in the Company held by
Executive under the Company's employee stock option plan which would have become
vested and exercisable within the 12-month period following the date of
termination shall become fully vested and exercisable on the date of such
termination.
(e) Except as set forth in this Section 3.03, Executive will be entitled
to no other payments or benefits from the Company.
Section 3.04. Separation Benefits. In the event of any termination of
employment during the Employment Term other than upon a Qualifying Event,
Executive (or his estate, as the case may be) shall be entitled to the benefits
set forth below (the "SEPARATION BENEFITS"):
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
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ARTICLE 4
Covenants and Representations
Section 4.01. Nondisparagement, Nonsoliciation And Nondisclosure. (a) In
connection with the termination of Executive's employment hereunder, Executive
shall cooperate with the Company and any subsidiary or affiliate of the Company
to ensure an orderly transition, in such a manner and at such times as the
Company shall reasonably request.
(b) While employed by the Company and for 24 months after the termination
of Executive's employment, Executive shall not, directly or indirectly:
(i) induce or attempt to induce any employee of the Company (or any
affiliate of the Company) to be employed or perform services elsewhere;
(ii) solicit or attempt to solicit the trade of any individual or
entity which, at the time of such solicitation, is a customer of the
Company (or any subsidiary of the Company) or which the Company (or any
subsidiary of the Company) is undertaking reasonable steps to procure as a
customer at the time of or immediately preceding termination of
employment.
(c) Except as required by law, neither party will at any time (whether
during or after termination of Executive's employment with the Company)
knowingly make any statement, written or oral, or take any other action that
would disparage or otherwise harm the other party, its business or reputation
or, in the case of the Company, the reputation of any of its affiliates or the
officers and directors of any of them.
(d) Executive agrees to execute the Company's standard form of
Confidentiality and Non-Disclosure Agreement, substantially in the form attached
hereto as Exhibit A (the "CONFIDENTIALITY AGREEMENT"), and agrees to be bound by
the terms of Exhibit A as of the Effective Time.
Section 4.02. Material Inducement; Specific Performance. (a) If any
provision of Section 4.01 is determined by a court of competent jurisdiction not
to be enforceable in the manner set forth in this Agreement, the Company and
Executive agree that it is the intention of the parties that such provision
should be enforceable to the maximum extent possible under applicable law and
that such court shall reform such provision to make it enforceable in accordance
with the intent of the parties.
(b) Executive acknowledges that a material part of the inducement for the
Company to provide the compensation provided herein is Executive's covenants set
forth in Section 4.01 and that the covenants and obligations of
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Executive with respect to nondisclosure and nonsolicitation relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause the Company irreparable injury for
which adequate remedies are not available at law. Therefore, Executive agrees
that, if Executive shall materially breach any of those covenants during or
following termination of employment, the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post a bond) restraining Executive from committing any violation
of the covenants and obligations contained in Section 4.01 and the Company shall
have no further obligation to pay Executive any benefits otherwise payable
hereunder. The remedies in the preceding sentence are cumulative and are in
addition to any other rights and remedies the Company may have at law or in
equity as an arbitrator (or court) shall reasonably determine.
Section 4.03. Employee Representation. Executive expressly represents and
warrants to the Company that Executive is not a party to any contract or
agreement and is not otherwise obligated in any way, and is not subject to any
rules or regulations, whether governmentally imposed or otherwise, which will or
may restrict in any way Executive's ability to fully perform Executive's duties
and responsibilities under this Agreement.
ARTICLE 5
Successors And Assignments
Section 5.01. Assignments. Except for an assignment in the event of a
change in control or an assignment to an affiliate of the Company, this
Agreement shall not be assignable by the Company without the written consent of
Executive. This Agreement shall not be assignable by Executive.
Section 5.02. Successors; Binding Agreement. This Agreement shall inure to
the benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
ARTICLE 6
Miscellaneous
Section 6.01. Notices. Any notice required to be delivered hereunder shall
be in writing and shall be addressed:
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(i) if to the Company or Parent, to:
▇▇▇▇▇▇▇▇ ▇▇▇
Francisco Partners
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to Executive, to Executive's last known address as reflected on
the books and records of the Company;
or, in each case, to such other address as such party may hereafter specify for
the purpose by written notice to the other party hereto. Any such notice shall
be deemed received on the date of receipt by the recipient thereof if received
prior to 5:00 p.m. in the place of receipt and such day is a business day in the
place of receipt. Otherwise, any such notice shall be deemed not to have been
received until the next succeeding business day in the place of receipt.
Section 6.02. Dispute Resolution. (a) Except as provided in Section 4.02,
each of Executive and the Company shall have the right and option to elect (in
lieu of litigation) to have any dispute or controversy arising under or in
connection with this Agreement settled by arbitration, conducted before a panel
of three arbitrators sitting in Santa ▇▇▇▇▇ County, California, in accordance
with the rules of the American Arbitration Association then in effect.
Executive's election to arbitrate, as herein provided, and the decision of the
arbitrators in that proceeding, shall be binding on the Company and Executive.
Judgment may be entered on the award of the arbitrator in any court having
jurisdiction.
(b) Each party shall pay its own expenses of such arbitration or
litigation and all common expenses of such arbitration or litigation shall be
borne by the Company. Each party to an arbitration or litigation hereunder shall
be responsible for the payment of its own attorneys' fees.
Section 6.03. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
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Section 6.04. Non-exclusivity Of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify; provided, however, that the Severance Benefits
shall be in lieu of any severance benefits under any such plans, programs,
policies or practices. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
Section 6.05. Employment Status. Nothing herein contained shall interfere
with the Company's right to terminate Executive's employment with the Company at
any time, with or without Cause, subject to the Company's obligation to provide
Severance Benefits or Separation Benefits, if any. Executive shall also have the
right to terminate Executive's employment with the Company at any time without
liability, subject only to the provisions hereof and Executive's obligations
hereunder.
Section 6.06. Entire Agreement. This Agreement (together with the
Confidentiality Agreement) represents the entire agreement between Executive and
the Company and its affiliates with respect to the matters referred to herein,
and supersedes all prior discussions, negotiations, and agreements concerning
such matters, including but not limited to each of the Existing Employment
Agreement and the Change of Control Agreement in its entirety; provided,
however, that any amounts payable to Executive hereunder shall be reduced by any
amounts paid to Executive as required by any applicable law in connection with
any termination of Executive's employment.
Section 6.07. Tax Withholding. Notwithstanding anything in this Agreement
to the contrary, the Company shall withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as are legally required to be
withheld.
Section 6.08. Waiver Of Rights. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
Section 6.09. Amendment. This Agreement may not be modified, altered or
changed except upon the express written consent of both parties.
Section 6.10. Severability. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not
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affect the remaining parts of this Agreement, and this Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.
Section 6.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
Section 6.12. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
ULTRA CLEAN TECHNOLOGY
SYSTEMS AND SERVICE, INC.
By:__________________________
Name:
Title:
ULTRA CLEAN HOLDINGS, INC.
By:__________________________
Name:
Title:
EXECUTIVE:
_____________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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SCHEDULE I
(a) Subject to clause (b) below, Parent shall pay the following amounts to
Executive:
(i) Parent shall pay, or cause to be paid, to Executive a lump-sum
payment of $74,074.07 in cash (less applicable withholding tax
obligations), payable within 60 days after the Effective Time.
(ii) Parent shall pay, or cause to be paid, to Executive an
additional amount equal to $88,231.48 in cash (less applicable withholding
tax obligations), payable within 60 days after the Effective Time;
provided, however, that such payment shall only be made after Executive's
purchase of shares of common stock of Parent with an aggregate fair market
value of not less than $47,645.00, pursuant to a purchase agreement in a
form acceptable to Parent, which form (A) will be substantially similar to
agreements required to be signed by other purchasers of Parent's common
stock, (B) will contain provisions including, but not limited to, transfer
restrictions, repurchase rights by Parent at fair market value, and
representations by the purchaser as to financial sophistication and other
matters, and (C) will require the purchaser to sign a securityholders'
agreement with other securityholders of Parent, which shall contain
provisions including, but not limited to, voting agreements by the
purchaser and dragalong rights of Parent.
(iii) Parent shall pay, or cause to be paid, to Executive deferred
compensation in an amount equal to $264,694.44 (the "DEFERRED
COMPENSATION"), which shall be payable on the seventh anniversary of the
Effective Time. Executive shall receive interest on any remaining unpaid
Deferred Compensation at the rate of 2.70% per annum, payable on June 30
and December 31 of each year beginning June 30, 2003. Parent may prepay,
or cause to be prepaid, the Deferred Compensation in the discretion of the
Board.
(b) Executive shall immediately give Parent notice when he becomes aware
of the amount of any bonus or similar payments related to the Merger to be paid,
or that have been paid, to Executive by Mitsubishi or any of its affiliates (the
"MERGER PAYMENTS"). Upon such notice, Parent shall be entitled to receive 40% of
the Merger Payments in the following manner, as available: first, a reduction in
the payments due to Executive under clause (a)(i) above; second, a reduction in
any bonus otherwise payable to Executive under the UCT Management Bonus Plan for
the plan year ending December 31, 2002; and third, a reduction in the Deferred
Compensation.
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