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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
The following sets out the agreement between Xxxxx X. von Horde and MEMC
Electronic Materials, Inc. ("MEMC") regarding the employment of Mr. von Horde
with MEMC:
1. EMPLOYMENT TERM. Mr. von Horde will be employed by MEMC as President and
Chief Executive Officer for the period commencing February 17, 1999 and ending
March 31, 2003.
2. REPORTING RESPONSIBILITY. Mr. von Horde will report directly to the
Chairman of the Board of Directors. During the employment period, Mr. von Horde
will devote his full business time to his duties as President and Chief
Executive Officer of MEMC.
3. BASE SALARY. Mr. von Horde's base salary will be $520,000 per annum,
which may be increased, but not decreased, at the discretion of the Compensation
Committee of the Board of Directors of MEMC (the "Compensation Committee") based
upon performance and upon the Compensation Committee's review of the appropriate
base salary for the positions and responsibilities assigned to Mr. von Horde
from time to time. The Compensation Committee will review Mr. von Horde's base
salary annually. Compensation of the Chief Executive Officer is primarily a
function of company performance and individual performance and could, in any
given year, be higher or lower than that of other chief executive officers in
comparable positions. But it is the intent that MEMC's compensation opportunity
be structured to afford comparable pay given comparable performance.
4. ANNUAL BONUS. Mr. von Horde will be eligible to receive an annual bonus
with a target at no less than 50% of his annual base salary as of December 31st
of the year for which the bonus is paid. The bonus will be payable to Mr. von
Horde only upon achievement of
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performance objectives set by the Compensation Committee, and the payment of any
bonus will be at the Compensation Committee's sole discretion. The bonus will be
paid under the Annual Incentive Plan under the same performance objectives and
terms applicable to other executive employees.
5. STOCK OPTIONS. In accordance with the MEMC Equity Incentive Plan, Mr.
von Horde will be awarded stock options annually. In January, 2000, 2001, and
2002, each year's grant will be comprised of options to purchase a number of
shares with a face value of no less than 200% of Mr. von Horde's salary (as of
December 31st of the year prior to the grant), which options will have an
exercise price per share equal to 100% of market value on the date of the grant.
The maximum number of shares in any one year will be 100,000. The options will
vest at the rate of 25% per year starting one year after the grant such that
100% vesting will occur on the fourth anniversary of the grant; provided,
however, that all options will vest upon Mr. von Horde's retirement on or
following March 31, 2003, or earlier, with the consent of the Compensation
Committee. The options shall in other respects be subject to the same terms
applicable to options granted to other senior executives.
6. BENEFITS. Mr. von Horde will participate in all welfare and fringe
benefit plans maintained by MEMC for its senior executives in accordance with
their terms.
7. PENSION. Mr. von Horde will participate in the MEMC Pension Plan as well
as the MEMC Supplemental Executive Pension Plan (SEPP) in accordance with their
terms, based on an employment date with MEMC of December 1, 1997.
8. TERMINATION OF EMPLOYMENT. Either party may terminate Mr. von Horde's
employment under this Agreement upon twelve (12) months' prior notice, delivered
in writing. In the event Mr. von Horde is involuntary terminated (other than
"Termination for Cause," death,
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total and permanent disability, or retirement at the end of the agreement term)
or if Mr. von Horde resigns for "Good Reason" during the term of this agreement:
(a) Mr. von Horde will continue to receive full salary, benefits and
pension credit through the notice period, the end of which will be the date
of termination of employment;
(b) MEMC will pay Mr. von Horde a pro rata bonus for the year of
termination based on the number of days in such year before the date of
termination of employment (to be paid at the same time and to the same
extent, i.e., based on MEMC's performance for the full year, that bonuses
are paid generally to executives with respect to each year);
(c) Mr. von Horde will be reimbursed for all reasonable relocation
expenses incurred by him in returning to Germany with his family within a
year of his termination date; and
(d) All stock options granted to Mr. von Horde will vest and remain
outstanding and exercisable for three (3) years following his termination
date, unless the options are exercised or expire sooner by their terms.
No payment will be made to Mr. von Horde at his termination for unused
vacation.
9. SUPPLEMENTAL TERMINATION BENEFITS. If Mr. von Horde receives termination
benefits (a) through (d) in paragraph 8 above, then he also will receive the
following supplemental termination benefits effective as of his termination
date:
(a) A lump sum cash payment equal to six (6) months' salary;
(b) Continued coverage in the medical and dental benefit plan for six
(6) months (but not beyond March 31, 2003 or his return to Germany);
(c) Pension service credit through the end of the agreement term for
benefit accrual purposes; and
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(d) Accelerated pension vesting and waiver of early retirement
reduction factors such that a full unreduced normal retirement pension
amount (including SEPP) is available six (6) months after his termination
date (or March 31, 2003, if sooner), based on five (5) years of service.
In exchange for these supplemental termination benefits, Mr. von Horde
agrees to release MEMC from liability and resign from the Board of Directors as
of the termination date, or sooner if requested by the Chairman.
10. SUPPLEMENTAL PENSION AND MEDICAL BENEFITS. In the event Mr. von Horde
voluntarily retires on or after March 31, 2003, his pension shall be fully
vested and the early retirement reduction factors shall be waived, such that a
full unreduced normal retirement pension amount (including SEPP) is available on
his retirement date; and he shall be entitled to continued coverage in the
medical and dental benefit plan for twelve (12) months (but not beyond his
return to Germany).
11. METHOD OF PROVIDING BENEFITS. The portion of any pension benefit
provided pursuant to this agreement that cannot be provided by the MEMC Pension
Plan (a qualified plan subject to the requirements of Section 401 of the
Internal Revenue Code) in accordance with its terms shall be provided through
the SEPP regardless of any provision in the SEPP document. In the event
providing the continued medical and dental coverage prescribed above would, in
the opinion of tax counsel to MEMC, jeopardize the favorable federal income tax
treatment of the medical or dental benefits provided to other employees of MEMC,
MEMC shall pay Mr. von Horde an amount in cash equal to the cost to Mr. von
Horde of paying for COBRA continuation coverage during the period to which he is
entitled to coverage pursuant to this agreement (the "COBRA premium
reimbursement"), plus an amount in cash (the "tax gross-up amount") so that
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the net amount after payment of the federal and state income tax imposed on the
COBRA premium reimbursement and the tax gross-up amount shall equal the COBRA
premium reimbursement.
12. DEFINITIONS. For purposes of this Agreement, the following terms will
have the following meanings:
(a) Termination for Cause. The involuntary termination of employment
of Mr. von Horde by MEMC because of:
(i) dishonesty of Mr. von Horde that results in a material
detriment to MEMC;
(ii) the intentional subversion of MEMC's best interests; or
(iii) insubordination of Mr. von Horde with respect to a
resolution or resolutions of the Board of Directors of MEMC.
(b) Resignation for "Good Reason". Written notice by Mr. von Horde
that he is resigning based upon:
(i) Reduction in position, title, reporting relationship or
major responsibilities without his consent;
(ii) Violation by MEMC of the terms of this Agreement; or
(iii) Failure of any successor to MEMC to honor this Agreement.
Upon receipt of such written notice, MEMC will have thirty (30) days
to respond in writing and correct the deficiency. If resignation for Good
Reason is effective, the notice required by paragraph 8 herein starts with
Mr. von Horde's first written notice.
13. ARBITRATION. Any disputes between the parties to this Agreement shall
be settled by arbitration in St. Louis, Missouri under the auspices of the
American Arbitration Association in
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accordance with the National Rules for the Resolution of Employment Disputes
promulgated by the Association. The decision in such arbitration shall be final
and conclusive on the parties and judgment upon such decision may be entered in
any court having jurisdiction thereof.
14. CONFIDENTIALITY AGREEMENT. MEMC's Confidentiality Agreement is
incorporated by reference in this Agreement and has been executed and
acknowledged by Mr. von Horde.
15. MISCELLANEOUS. This Agreement shall be construed in accordance with and
be governed by the laws of the State of Missouri applicable to contracts
executed and to be performed within such state. It also represents the entire
agreement of the parties regarding its subject matter and supersedes any prior
or contemporaneous agreements or understandings, whether written or oral.
MEMC ELECTRONIC MATERIALS, INC.
By:/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx, Chairman of the Board
Date: March 11, 1999
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/s/ Xxxxx X. von Horde
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Xxxxx X. von Horde
Date: 3/11/99
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