<PAGE>
SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-12
DUPONT PHOTOMASKS, INC
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
-------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
DuPont Photomasks, Inc.
131 Old Settlers Boulevard
Round Rock, Texas 78664
512-310-6500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 2000
To our Stockholders
Notice is hereby given that our 2000 Annual Meeting of Stockholders will be
held at the Driskill Hotel, 604 Brazos Street, Austin, Texas 78701, on Tuesday,
October 24, 2000 at 10:00 a.m. local time and any adjournment thereof, for the
following purposes:
(1) To elect to our Board of Directors Class I directors to serve until
our 2003 annual meeting of Stockholders, or until their successors are
elected and qualify, subject to their prior death, resignation or removal.
(2) To ratify the appointment of PricewaterhouseCoopers LLP, as
independent public accountants for our company for the year ending June 30,
2001.
(3) To transact such other business as may properly come before the
meeting and any adjournments thereof.
Our Board of Directors recommends an affirmative vote on the items described
above. E. I. du Pont de Nemours and Company beneficially owned 6,068,272 shares
(approximately 35.2%) of our common stock on the record date.
Only stockholders of record at the close of business on September 1, 2000
are entitled to notice of and to vote at the annual meeting. All stockholders
are cordially invited and urged to attend the meeting. Regardless of whether
you expect to attend the meeting, you are requested to sign, date and return
the accompanying proxy card in the enclosed self-addressed postage-paid
envelope. You may still attend and vote in person at the annual meeting if you
wish, even though you may have submitted your proxy prior to the meeting. If
you attend the meeting and vote in person, your proxy will automatically be
revoked and only your vote at the meeting will be counted. Our Bylaws require
that the holders of a majority of the outstanding shares of our common stock
entitled to vote be represented in person or by proxy at the meeting in order
to constitute a quorum for the transaction of business. It is important that
your shares be represented at the meeting in person or by proxy.
Your support for us is greatly appreciated.
By order of our Board of Directors
/s/ Peter S. Kirlin
PETER S. KIRLIN
Chairman of our Board and Chief
Executive Officer
September 15, 2000
<PAGE>
DUPONT PHOTOMASKS, INC.
131 Old Settlers Boulevard
Round Rock, Texas 78664
PROXY STATEMENT
2000 Annual Meeting of Stockholders
SOLICITATION, EXERCISE AND REVOCATION OF PROXIES
The accompanying proxy is solicited on behalf of our Board of Directors to
be voted at our 2000 Annual Meeting of Stockholders. Our annual meeting will be
held at the Driskill Hotel, 604 Brazos Street, Austin, Texas 78701, on Tuesday,
October 24, 2000 at 10:00 a.m. local time. In addition to the original
solicitation by mail, certain of our regular employees may solicit proxies by
telephone or in person. No specially engaged employees or solicitors will be
retained for proxy solicitation purposes. All expenses of this solicitation,
including the costs of preparing and mailing this proxy statement and the
reimbursement of brokerage firms and other nominees for their reasonable
expenses in forwarding proxy materials to beneficial owners of shares, will be
borne by us. You may vote in person at our annual meeting, if you wish, even
though you have previously mailed in your proxy. This proxy statement and the
accompanying proxy are being mailed to stockholders beginning on or about
September 25, 2000. Unless otherwise indicated, "we," "us" and "our" mean
DuPont Photomasks, Inc. and "DuPont" means E. I. du Pont de Nemours and Company
or one of its wholly owned subsidiaries.
All duly executed proxies will be voted in accordance with the instructions
thereon. Stockholders who execute proxies, however, retain the right to revoke
them at any time before they are voted. The revocation of a proxy will not be
effective until written notice thereof has been given to our Secretary unless
the stockholder granting such proxy votes in person at our annual meeting.
VOTING OF SECURITIES
The record date for the determination of stockholders entitled to vote at
our annual meeting is September 1, 2000. As of such date, we had outstanding
17,247,942 shares of our common stock, $.01 par value per share. Our common
stock is the only class of our stock outstanding and entitled to vote at our
annual meeting. Each stockholder is entitled to one vote for each share of our
common stock held. All votes on the proposals set forth below will be taken by
ballot. For purposes of the votes on all proposals set forth below, the holders
of a majority of the shares entitled to vote, represented in person or by
proxy, will constitute a quorum at our annual meeting. The stockholders present
at our annual meeting may continue to transact business until adjournment,
notwithstanding the subsequent withdrawal of enough stockholders to leave less
than a quorum or the refusal of any stockholder present in person or by proxy
to vote or participate in our annual meeting. Abstentions and broker non-votes
(i.e.,the submission of a proxy by a broker or nominee specifically indicating
the lack of discretionary authority to vote on the matter) will be counted as
present for purposes of determining the presence or absence of a quorum for the
transaction of business.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE REQUESTED TO SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE,
WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON.
1
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
General Information
Three directors are proposed to be elected at our annual meeting, all of
whom are currently our directors. Our Bylaws provide for a board of not less
than one nor more than fifteen directors, with the current number set at nine.
Vacancies on our board may be filled by the majority vote of directors then in
office or by the sole remaining director.
Our board is divided into three classes as nearly equal in size as is
practicable, designated Class I, Class II and Class III. The term of office of
the Class I directors is expiring at this annual meeting, the term of office of
the Class II directors will expire at the 2001 annual meeting and the term of
office of the Class III directors will expire at the 2002 annual meeting, and
directors in each class shall hold office until such annual meeting of
stockholders or until his or her successor is elected and has qualified. When
these initial terms expire, persons nominated to serve as each class of
director shall be elected to hold office for three years.
The persons named in the accompanying proxy may act with discretionary
authority to vote for a new management nominee should any nominee named in this
proxy statement become unavailable for election, although management is unaware
of any circumstances likely to render any nominee unavailable for election.
Unless the stockholder has specified otherwise, the persons named in the
accompanying proxy will vote such stockholder's shares of our common stock in
favor of the nominees listed below. Proxies cannot be voted for a greater
number of persons than the number of nominees listed below.
Stockholder Approval
The three nominees receiving the greatest number of votes at our annual
meeting at which a quorum is present shall be elected, even if they receive
less than a majority of the votes. Our Charter does not permit cumulative
voting. Abstentions will not be counted towards the tabulation of votes cast
for the election of any director.
Board Recommendation
Our board believes that the election of the persons listed below as our
directors is in the best interest of our company and our stockholders. Our
board, therefore, recommends that you vote FOR the nominees and it is intended
that the proxies not marked to the contrary will be so voted.
Nominees for Director
The following table sets forth the name, age (as of September 1, 2000) and
current position of each person who is a nominee for election as one of our
directors:
<TABLE>
<CAPTION>
Name Age Current Postion Class of Director
---- --- --------------- -----------------
<S> <C> <C> <C>
John L. Doyle............................. 68 Director Class I
John W. Himes............................. 55 Director Class I
John C. Hodgson........................... 56 Director Class I
</TABLE>
John L. Doyle is a private consultant, having retired from the Hewlett-
Packard Company in 1991. At the time of his retirement, he was Executive Vice
President, Business Development with responsibility for Hewlett-Packard's
integrated circuit facilities as well as acquisitions, mergers, planning,
corporate purchasing, manufacturing and engineering. He was also a member of
the Executive Committee. He is currently a director of Xilinx, Inc. and Analog
Devices, Inc. He has been one of our directors since April 1996.
2
<PAGE>
John W. Himes is Senior Vice President, Corporate Strategy for DuPont. He
joined DuPont in 1966 and has served in a variety of business management
positions, including leadership of Dacron Polyester, Advanced Composites and
Industrial Polymers. Mr. Himes was responsible for Human Resources and later
Business Development in Asia for DuPont. He has been one of our directors since
January 1998.
John C. Hodgson is Group Vice President and General Manager of DuPont
iTechnologies with additional responsibility for Advanced Fiber Systems,
Nonwovens and Corian(R), a position he assumed in February 2000. He has been
with DuPont for over 30 years and has served in a variety of management
positions in the X-Ray, Electronics and Diagnostic businesses in the United
States and in Geneva, Switzerland. From 1996 until assuming his current
position, Mr. Hodgson served as Vice President and General Manager of the
Photopolymer and Electronic Materials business unit. He has been one of our
directors since April 1996.
Other Directors
<TABLE>
<CAPTION>
Name Age Current Position Class of Director
---- --- ------------------------------------------------- -----------------
<S> <C> <C> <C>
Peter S. Kirlin......... 39 Chairman of the Board and Chief Executive Officer Class III
Preston M. Adcox........ 57 Director, President and Chief Operating Officer Class II
Gary W. Pankonien....... 49 Director Class II
Susan Vladuchick Sam.... 52 Director Class II
John C. Sargent......... 62 Director Class III
Marshall C. Turner...... 58 Director Class III
</TABLE>
Peter S. Kirlin is our Chairman of the Board and Chief Executive Officer.
From 1986 to 1988, he worked at American Cyanamid Corporation as a project
leader and conducted post-graduate research projects at the University of
Munich's Institute of Physical Chemistry. From 1988 until joining us in May
2000, he held various positions with ATMI, Inc., a supplier of materials,
equipment and services used in the manufacture of semiconductors, most recently
as Group Vice President, Technologies and Services. He has been one of our
directors since May 2000.
Preston M. Adcox is our President and Chief Operating Officer. He joined
DuPont in 1967 and has held a number of manufacturing and technology management
positions. He became a Managing Director in DuPont's semiconductor materials
business in 1988 and had global responsibility for DuPont's photomask
operations until 1996. He was a member of the Board of Directors of Etec
Systems from 1990 to early 1995. From 1988 to 1999, he served on the Board of
Directors of Semiconductor Industry Suppliers Association (formerly Semi-
Sematech), an organization representing United States equipment and material
suppliers to the semiconductor manufacturing industry. He has been an officer
since our Initial Public Offering in June of 1996 and one of our directors
since May 2000.
Gary W. Pankonien is the President and Chief Operating Officer and serves on
the board of directors of CALEB Technologies, Corp. He was previously Chairman
and Chief Executive Officer of 1st TECH Molding and a private investor. He
served as a director of Tanisys Technology, a manufacturer of memory modules,
1st TECH Molding and MagRabbit. Mr. Pankonien spent seven years at Compaq
Computer Corporation where he served as the Notebook Computer Design and
Operations Manager for three years. He co-developed and currently holds the
patent for the first notebook computer as well as several other patents. Mr.
Pankonien has over 20 years of management experience in the electronics
industry and has extensive experience in offshore operations. He has been one
of our directors since April 1996.
Susan Vladuchick Sam is a private consultant, having retired from DuPont in
1999. She joined DuPont in 1969 and held a variety of management positions in
research and development, human resources and manufacturing during the course
of her career, including Director of Operations for DuPont Medical Products
from 1993 to 1995, Director of Human Development and Personnel Relations from
1995 to 1997 and Director of Operations--U.S. Region and Vice Chair of the
Operations Network from 1997 to 1999. Ms. Sam currently serves on the College
of Engineering & Science Advisory Board for Clemson University and is a past
Alumni Trustee for Grove City College. She has been one of our directors since
January 1996.
3
<PAGE>
John C. Sargent is a private consultant, having retired from DuPont in
1998. He joined the Treasury Department of Conoco in 1964 and worked in a
number of financial management positions with Conoco both in the United States
and Europe. He became Vice President and Treasurer of Conoco in 1981 and also
in 1981 became Assistant Treasurer and Director of the Treasury Division of
DuPont after Conoco was acquired by DuPont. He assumed the position of Vice
President and Treasurer of DuPont in 1992. He has been one of our directors
since December 1995.
Marshall C. Turner is an independent consultant and an investor in
technology companies. Mr. Turner is a director of the Alliance Technology
Fund, five privately held, early stage companies, and two private investment
companies. He is also the Vice-Chairman of the Board of the Smithsonian's
National Museum of Natural History, and a director of PBS Enterprises, Inc.,
and The George Lucas Educational Foundation. From 1981 through 1998, he was a
founding general partner of Taylor & Turner Associates, Ltd., the general
partner of several venture partnerships. He has been one of our directors
since April 1996. He served on an interim basis from June 1999 to May 2000 as
the Chairman of our Board of Directors and Chief Executive Officer.
Board Committees and Meetings
Our board has appointed from among its members two standing committees and
one special committee:
The Audit Committee is presently composed of John L. Doyle, who serves as
chairperson of the committee, and John C. Sargent. No member of the Audit
Committee may be an employee or officer. The functions of the Audit Committee
include meeting with our independent public accountants to discuss the scope
and results of their examination, to review our internal audit activities and
to discuss the adequacy of our accounting and control systems, to review the
audit schedule and to consider any issues raised by its members, our
independent public accountants and our staff or management. Each year the
Audit Committee will recommend to the full board the name of an accounting
firm to audit our financial statements.
The Compensation Committee is presently composed of Gary W. Pankonien and
Susan Vladuchick Sam, who serves as chairperson of the committee. No member of
the Compensation Committee may be an employee or officer. The principal
functions of the Compensation Committee are to review and approve our
organization structure, review performance of our officers, establish overall
employee compensation policies and recommend to our board major compensation
programs. The Compensation Committee also reviews and approves compensation of
directors and corporate officers, including salary, bonus awards, stock
options and restricted stock grants, and administers our stock plans and bonus
plan.
We also established a special committee in 2000, the Pricing Committee,
which was composed of Peter S. Kirlin, Gary W. Pankonien and John C. Sargent.
The Pricing Committee's sole purpose was to determine the terms of our recent
debt and equity financings. Having completed its mandate, the committee has
been disbanded.
During 2000, our board held five meetings in person or by telephone.
Members of our board are provided with information between meetings regarding
our operations and are consulted on an informal basis with respect to pending
business. Such consultation from time to time leads to director action between
meetings by unanimous written consent of the directors, which has occurred
twice during 2000. During 2000, the Compensation Committee has held six
meetings, the Audit Committee has held four meetings and acted by unanimous
written consent once, and the Pricing Committee acted by unanimous consent on
one occasion. Each of the incumbent directors who was a director during the
fiscal 2000 year attended no fewer than 75% of the total number of meetings of
our board and the total number of meetings held by all committees of our board
on which such director served during the year.
4
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(Proposal 2)
General Information
Our Bylaws provide that it shall be the duty of the Audit Committee to
employ, subject to stockholder ratification at each annual meeting, independent
accountants to audit our books of account, accounting procedures and financial
statements for the year and to perform such other duties as prescribed from
time to time by the Audit Committee.
During fiscal 2000, PricewaterhouseCoopers LLP audited our annual
consolidated financial statements, reviewed financial information in filings
with the Securities and Exchange Commission, and provided various other
services.
Subject to ratification by stockholders, the Audit Committee has retained
PricewaterhouseCoopers LLP as independent accountants to perform the
examination of our financial statements for fiscal 2001 and to render other
services required of them. Notwithstanding this selection, the Audit Committee
may, in its discretion, direct the appointment of a different independent
accounting firm at any time if the Audit Committee believes that such change
would be in the our company's and our stockholders' best interest.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
our annual meeting on October 24, 2000, with the opportunity to make a
statement if they desire to do so. Such representatives are also expected to be
available to respond to appropriate questions.
Stockholder Approval
The affirmative vote of a majority of the outstanding shares of our common
stock present or represented and entitled to vote at the annual meeting is
required for the approval of the ratification of the selection of
PricewaterhouseCoopers LLP. Abstentions will be counted towards the tabulation
of votes cast on this proposal and will have the same effect as negative votes.
Board Recommendation
Our board believes that the ratification of PricewaterhouseCoopers LLP as
independent accountants is in the best interest of our company and
stockholders. Our board, therefore, recommends that you vote FOR such
ratification and it is intended that the proxies not marked to the contrary
will be so voted.
OTHER BUSINESS
Our board knows of no business to be brought before the meeting other than
the proposals outlined above. If any other proposals properly come before the
meeting, it is intended that the shares represented by proxies shall be voted
in accordance with the judgment of the person or persons exercising the
authority conferred by the proxies.
STOCKHOLDER PROPOSALS
Under the present rules of the Securities and Exchange Commission and our
present Bylaws, the deadline for stockholders to submit proposals to be
considered for inclusion in our proxy statement for the 2001 annual meeting of
stockholders is expected to be 120 days prior to September 18, 2001. Such
proposals may be considered for inclusion in next year's proxy statement if
they comply with certain rules and regulations promulgated by the Securities
and Exchange Commission and the procedures set forth in our Bylaws, as amended.
5
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
As of September 15, 2000, DuPont beneficially owned 6,068,272 shares
(approximately 35.2%) of our common stock. As a result, DuPont has significant
influence over our direction and policies including any merger, consolidation
or sale of all or substantially all of our assets and the election of members
of our board. DuPont has indicated its intention to vote in favor of the
proposals described above.
The following table sets forth, as of the close of business on September 15,
2000, certain information regarding beneficial ownership of shares of our
common stock by:
. Each person who is known by us to be a beneficial owner of 5% or more of
our common stock;
. Each current director, including those directors who are nominees for
director;
. Each executive officer named in the summary compensation table included
herein; and
. All our current directors and executive officers as a group.
Our common stock is the only class of voting securities outstanding. Unless
otherwise indicated, each person or entity set forth in the table has sole
investment and voting power with respect to all shares shown as beneficially
owned. Shares are owned beneficially and of record, unless otherwise specified.
<TABLE>
<CAPTION>
Shares Beneficially
Owned
------------------------
Name and Address of Beneficial Owner(1) Number(2) Percent
--------------------------------------- ------------ --------
<S> <C> <C>
E. I. du Pont de Nemours and Company................ 6,068,272(3) 35.2%
1007 Market Street
Wilmington, Delaware 19898
Massachusetts Financial Services Company............ 1,845,824 10.7
500 Boylston Street
Boston, Massachusetts, 02116
Peter S. Kirlin..................................... -- *
Marshall C. Turner.................................. 67,350 *
John L. Doyle....................................... 22,000 *
John W. Himes....................................... 6,068,272(4) 35.2%
John C. Hodgson..................................... 6,068,772(4) 35.2%
Gary W. Pankonien................................... 34,000 *
Susan Vladuchick Sam................................ 2,500 *
John C. Sargent..................................... 7,800 *
Preston M. Adcox.................................... 142,425 *
Gerard Cognie....................................... 81,194(5) *
John M. Lynn........................................ 22,250 *
Kenneth A. Rygler................................... 36,696 *
All executive officers and directors as a group (14
persons)........................................... 6,513,374(4) 37.7%
</TABLE>
--------
* Less than 1%.
(1) The address for all officers and directors is 131 Old Settlers Boulevard,
Round Rock, Texas 78664.
6
<PAGE>
(2) Does not include shares purchasable more than 60 days after September 15,
2000 pursuant to options granted as of year end to directors and named
executive officers under our stock plans, as follows:
<TABLE>
<CAPTION>
Option
Executive Officer or Director Shares
----------------------------- -------
<S> <C>
Peter S. Kirlin................................................... 190,000
Marshall C. Turner................................................ 3,250
John L. Doyle..................................................... 7,000
Gary W. Pankonien................................................. 7,000
John C. Sargent................................................... 3,750
Preston M. Adcox.................................................. 149,338
Gerard Cognie..................................................... 68,400
John M. Lynn...................................................... 56,750
Kenneth A. Rygler................................................. 30,900
</TABLE>
(3) All shares are held by DuPont's wholly owned subsidiary, DuPont Chemical
and Energy Operations, Inc.
(4) Includes the 6,068,272 shares beneficially owned by DuPont, which Directors
Himes and Hodgson share the right to vote.
(5) Includes 48,000 shares held by Mr. Cognie's spouse as to which Mr. Cognie
has disclaimed beneficial ownership.
7
<PAGE>
TRANSACTIONS AND RELATIONSHIP BETWEEN US AND DUPONT
We have entered into a number of agreements with DuPont for the purpose of
defining various past, present and prospective arrangements and transactions.
These agreements were negotiated in the context of a parent-subsidiary
relationship and, therefore, are not the result of negotiations between
independent parties. It is our intention and the intention of DuPont that such
agreements and the transactions provided for therein, taken as a whole, should
accommodate the parties' interests in a manner that is fair to both parties,
while continuing various mutually beneficial joint arrangements. However,
because of the complexity of the various relationships between us and DuPont,
we cannot assure you that all of these agreements, or the transactions provided
for therein, were effected on terms at least as favorable to us as could have
been obtained from unaffiliated third parties. We are only entitled to the
ongoing assistance of DuPont for a limited time.
We and DuPont may enter into additional or modified arrangements and
transactions in the future. Any such future arrangements and transactions will
be determined through negotiation between DuPont and us. We have adopted a
policy that all future agreements between us and DuPont will be on terms that
we believe are no less favorable to us than the terms we believe would be
available from unaffiliated parties. In that regard, we intend to follow the
procedures provided by the Delaware General Corporation Law, which includes a
vote to affirm any such future agreements by a majority of our directors who
are not employees of DuPont, even though such directors may be less than a
quorum.
The following is a summary of various past, present and prospective
arrangements and transactions between DuPont and us:
Administrative Service Agreements
We and DuPont have entered into several transitional administrative service
agreements, pursuant to which DuPont will continue to provide various services
to us, including tax consulting, information systems support and workers'
compensation administration.
Each service under the administrative service agreements is provided for a
specified time period, ranging from one to two years. Since DuPont now owns
less than a majority of our outstanding shares, either party may terminate
these agreements subject to certain notice provisions. We are obligated to take
all steps necessary to obtain our own administrative and support services prior
to the termination of the administrative service agreements.
We will be obligated to pay fees established in the administrative service
agreements based upon the type and amount of services rendered. In addition, we
will reimburse DuPont for any out-of-pocket expenses it incurs in connection
with providing the services. We paid DuPont $2.5 million for services provided
under the administrative service agreements in fiscal 2000. With the exception
of the administrative service agreement entered into by the respective
subsidiaries of DuPont and our company in Korea, in the absence of gross
negligence or willful or reckless misconduct, DuPont's liability for damages to
us for any breach of DuPont's obligations under the administrative service
agreements is limited to payments made to DuPont thereunder. With respect to
the administrative service agreement covering our operations in Korea, DuPont's
subsidiary is not required to provide any guarantee or warranty of any nature
and cannot be held liable for any claims, damages or liabilities of any kind
resulting from the furnishing of the services thereunder.
Research, Development and Consulting Agreements
We have entered into a research, development and consulting agreement with
DuPont whereby DuPont will provide to us supplemental technical assistance and
consulting with respect to analytical support and consulting on an as-needed
basis and research projects addressing our specific needs. In exchange for the
analytical support, we will pay DuPont $100,000 per calendar year. In the event
the costs of these services are estimated to exceed $100,000, we can either
agree to pay additional projected costs or elect not to have DuPont
8
<PAGE>
provide these additional services. Compensation for research project support
will be determined at the time each specific project relating thereto is
undertaken. The initial term of the research, development and consulting
agreement expires on January 1, 2001 and automatically renews for successive
one-year terms until terminated by either DuPont or us pursuant to certain
procedures set forth in the research, development and consulting agreement.
On May 1, 2000, we entered into a second research agreement with DuPont,
subject to the terms and conditions of the research, development and consulting
agreement described above. In the new agreement, DuPont has agreed to undertake
a research project involving research and materials development in the area of
advanced photomask technology. DuPont granted us a royalty-bearing, exclusive
license to the technology developed under the research agreement for 157
nanometer pellicles. We will provide DuPont with a right of first refusal to
supply us with materials produced using the technology, and we will pay DuPont
a royalty on the sale of 157 nanometer pellicles manufactured using those
materials. In consideration for DuPont's prior work in the field of pellicles,
we paid DuPont $250,000 at the commencement of the research agreement , and we
will pay DuPont a total of approximately $2.5 million for the services provided
by DuPont, payable in equal quarterly installments over the term of the
research agreement. In addition, we will pay approximately $138,000 to DuPont
for equipment leasing and approximately $175,000 for materials synthesis. The
new research agreement terminates on December 31, 2001.
Tax Indemnification Agreement
We have entered into a tax indemnification agreement with DuPont pursuant to
which we will pay DuPont, or DuPont will pay us, as appropriate, amounts in
respect of taxes shown as due attributable to our operations for the period
ending on the date on which we cease to be a member of the DuPont consolidated
group. DuPont will indemnify us and our subsidiaries from liability for certain
matters, net of corresponding tax benefits, including any federal, state or
local taxes attributable to any affiliated or combined group of which we were a
member at any time prior to June 13, 1996 and any federal, state or local
income or other tax for any period up to and including June 13, 1996. We will
indemnify DuPont and its subsidiaries from liability for certain matters,
including any federal, state or local income or other taxes attributable to our
operations following June 13, 1996. In connection with the sale of our 31%
equity interest in DuPont Korea, Ltd. to DuPont, to the extent there is a loss,
any tax benefit attributable to such loss will be for DuPont's benefit at such
time as DuPont beneficially owns 50% or less of our outstanding common stock
and we have received the benefit from the Internal Revenue Service.
The tax indemnification agreement will require payments of claims to be made
within 30 days of the date a written demand for the claim is delivered.
Interest accrues on payments that are not made within 10 days of the final due
date at the rate applicable to the underpayments of the applicable tax. Any
disputes concerning the calculation or basis of determination of any payment
provided under the tax indemnification agreement will be resolved by a law firm
or an accounting firm selected jointly by the parties.
Environmental Indemnification Agreement
We have entered into an environmental indemnification agreement with DuPont
pursuant to which DuPont will generally indemnify us against substantially all
liabilities relating to any environmental contamination present on our
manufacturing sites and those of our subsidiaries as of June 13, 1996 or
present on any other site as a result of our manufacturing operations and those
of our subsidiaries prior to June 13, 1996.
In the event that the parties cannot determine with reasonable certainty,
following good faith negotiations, whether the contamination was caused by
activities occurring before or after June 13, 1996, the environmental
indemnification agreement provides for a mechanism whereby the liability
associated with any such claim is allocated according to the following: DuPont
bears 100% of the liability associated with claims filed by us with regard to
such contamination prior to June 13, 1996; DuPont's liability for claims filed
following June 13, 1996 declines at the rate of 20% per year; and DuPont has no
liability for such claims filed after June 13, 2001.
9
<PAGE>
The environmental indemnification agreement includes procedures for notice
and payment of indemnification claims and generally provides that the party
bearing the majority of the liability will assume the defense of such claim and
will control any negotiation or remediation activities.
Credit Agreement
At June 30, 2000, we had a credit agreement with DuPont, which was comprised
of two separate facilities for $100 million each.
The first facility expires in 2001 and any advances bear an interest rate at
LIBOR plus 0.25% per annum. At our option, advances under this credit facility
are convertible into term loans with maturities up to seven years. We have
borrowed a maximum of $75 million under this credit facility and, at June 30,
2000, borrowings of $50 million were outstanding under this credit facility. In
July, 2000 this credit facility was amended to increase the interest charged on
outstanding amounts from LIBOR plus 0.25% per annum to LIBOR plus 1.875% per
annum and terminate our ability to convert outstanding amounts into term loans.
The second facility had a term of three years and outstanding amounts bore
interest at 0.25% per annum for the first two years and LIBOR plus 0.25% per
annum for the third year. We borrowed a maximum of $100 million under this
credit facility and, at June 30, 2000, borrowings of $100 million were
outstanding under this credit facility. The amounts loaned under this facility
were unsecured and the agreement contains various representations, covenants
and events of default. For example, it provides that, without DuPont's prior
written consent, we will not incur, create, assume or permit to exist any
indebtedness, including guarantees on indebtedness, in addition to the
indebtedness under the amended credit agreement. At June 30, 2000 we were in
compliance with all of the loan covenants. In July 2000, we repaid all
outstanding balances and then terminated this credit facility.
Corporate Tradename and Trademark Agreement
We have entered into a corporate tradename and trademark agreement with
DuPont whereby DuPont licenses to us the following:
. Use of the tradename "DuPont" as part of our corporate name;
. Use of the tradename "DuPont" as part of the name of our affiliated
companies; and
. Use of the trademark DuPont in Oval as part of our corporate logo.
DuPont may terminate the corporate tradename and trademark agreement upon
two years' prior written notice in the event that DuPont and/or its affiliates
cease to hold 20% of our total outstanding common stock and upon 90 days'
written notice in the event that:
. DuPont ceases to be the largest holder of our common stock;
. We purport to assign or otherwise transfer the corporate tradename and
trademark agreement without DuPont's written consent; or
. We use the tradename "DuPont" other than under the terms of the corporate
tradename and trademark agreement.
In addition, DuPont may terminate the corporate tradename and trademark
agreement upon 90 days' written notice for any reason after January 1, 2008. In
the corporate tradename and trademark agreement, we grant DuPont the right to
inspect and test products manufactured by or for us and intended to be sold
bearing the DuPont in Oval logo to determine uniform quality and compliance
with quality standards of DuPont and agree to hold DuPont harmless from any and
all liabilities arising from the manufacture, sale, transportation, storage or
use of products manufactured by or for us bearing the DuPont in Oval logo. Upon
termination of the corporate tradename and trademark agreement, we will be
obligated to:
. Change our name so that the tradename "DuPont" is omitted;
10
<PAGE>
. Cease to use the tradename "DuPont" or any similar tradename as part of
our corporate name or in any other manner whatsoever; and
. Cease to use the DuPont in Oval logo.
Registration Rights Agreement
Under a registration rights agreement between DuPont and us, DuPont and its
assignees are entitled to various rights with respect to the registration of
shares they hold under the Securities Act of 1933. Subject to limitations,
including a minimum registration of over 1,000,000 shares, DuPont and its
assignees have the right to require us to register the sale of all or part of
the shares they hold under the Securities Act of 1933. DuPont and its assignees
are entitled to request up to an aggregate of three remaining demand
registrations. DuPont and its assignees are also entitled to include the shares
of common stock they hold in a registered offering of securities by us for
their own account, subject to conditions and restrictions. In addition, the
registration rights agreement contains certain indemnification provisions by us
for the benefit of DuPont and its assignees as well as any potential
underwriter and by DuPont and its assignees for the benefit of us and related
persons. DuPont and its assignees may transfer its registration rights under
the registration rights agreement without our prior approval.
Teflon AF Agreement
In June 2000, DuPont entered into an agreement with us to supply us with all
of our requirements for Teflon AF fluoropolymer resins for use in making
pellicles. The agreement has an initial term of three years, and is
automatically renewed for an additional year on each anniversary date of the
agreement unless we or DuPont decline to renew, in which case the agreement
will terminate upon the expiration of the remaining term. The agreement also
provides us with a license to use the patent underlying Teflon AF if DuPont
ceases to make Teflon AF, terminates the agreement or sells its Teflon AF
business.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under Section 16(a) of the Securities Exchange Act of 1934, directors,
certain officers and beneficial owners of 10% or more of our common stock are
required from time to time to file with the Securities and Exchange Commission
reports on Forms 3, 4 or 5, relating principally to transactions in our
securities by such persons. Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to us during fiscal year 2000 and thereafter,
Forms 5 and amendments thereto furnished to us with respect to fiscal year
2000, and any written representations received by us from a director, officer
or beneficial owner of more than 10% of our common stock that no Form 5 is
required, we believe that all reporting persons filed on a timely basis the
reports required by Section 16(a) of the Securities Exchange Act of 1934 during
fiscal 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Gary W. Pankonien and Susan
Vladuchick Sam, who serves as the chairperson of the Committee. Neither of
these individuals was an officer or employee of the Company at any time during
fiscal 2000 or at any other time. None of our current executive officers has
ever served as a member of the board of directors or compensation committee of
any other entity that has or has had one or more executive officers serving as
a member of our board or the Compensation Committee.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for reviewing and approving our
organization structure, reviewing performance of our officers, establishing
overall employee compensation policies and recommending to our board major
compensation programs. The Compensation Committee also reviews and approves
compensation for our directors and corporate officers, including salary, bonus
awards and stock option and restricted stock grants, and administers our stock
plans and bonus plan.
11
<PAGE>
The Compensation Committee has designed a compensation program intended to
attract and motivate our employees. The Compensation Committee believes that
compensation should be tied to our long-term performance and benefit to our
stockholders. As such, a significant portion of our management's compensation
is tied to the performance of our long-term total stockholder return. The
Compensation Committee periodically reviews our compensation programs in
comparison with similarly situated companies and amends our programs
accordingly to assure that our compensation programs are competitive within the
industry and carry out our objectives.
Base Salaries
Base salaries for our employees are targeted to be competitive with
similarly situated companies. Base salaries are determined by evaluating levels
of responsibility, prior experience and breadth of knowledge, as well as
internal equity issues and external pay practices. Increases to base salaries
are driven primarily by individual employee performance.
At September 1, 2000, the annualized base salaries for Messrs. Kirlin,
Adcox, Cognie, Lynn, Stoecker and Rygler were $350,004, $320,000, 1,224,942
French Francs (approximately $168,159 using a September 1, 2000 conversion),
$194,568, $225,000 and $200,000, respectively.
Employment Agreements
We have entered into employment agreements with Messrs. Kirlin and Stoecker
providing base annual salaries for each in the amount of $350,000 and $225,000,
respectively, and each for a three year term. Under the terms of each of these
agreements, including options as described under the section of this proxy
statement entitled Executive Compensation and Other Information and other
benefits more fully described in the agreements, Messrs. Kirlin and Stoecker
are entitled to receive severance benefits if their employment is terminated,
either actually or constructively (as defined in the agreements) within 12
months after a change-in-control of the company (as defined in the agreements).
With regard to Mr. Kirlin, these benefits include a lump-sum severance payment
equal to 12 months' salary and the immediate accelerated vesting of any of the
outstanding 190,000 options originally granted to Mr. Kirlin upon commencement
of employment as follows: (a) 25% acceleration if the termination occurs within
one year from the hire date, (b) 50% acceleration if the termination occurs
within two years from the hire date, and (c) 100% acceleration if the
termination occurs within three years from the hire date. With regard to Mr.
Stoecker, these benefits include a lump-sum severance payment equal to nine
months' salary and the immediate vesting of any of Mr. Stoecker's outstanding
stock options. Messrs. Kirlin and Stoecker will also receive, among other
benefits, the lump-sum severance payments outlined above in the event either is
terminated without cause or for good reason (as each such term is defined in
the agreements), except that in the event of a termination for good reason, Mr.
Stoecker will only be eligible for this payment if such termination occurs
within 12 months from the hire date.
We have also entered into an employment agreement with Mr. Adcox providing
for a fiscal year 2001 salary of $320,000, a grant of options as described
under the section of this proxy statement entitled Executive Compensation and
Other Information, and other benefits more fully described in the agreement.
Mr. Adcox's employment agreement also provides Mr. Adcox the ability to move
into a part-time position with the company for two years after he leaves full
time employment with the Company. The terms of Mr. Adcox's options are governed
by the 1997 Stock Option and Restricted Stock Plan which contains accelerated
vesting provisions upon a change of control (as defined in the 1997 Stock
Option and Restricted Stock Plan).
Bonus Plan
We maintain an annual incentive or bonus plan for our employees. Employees
are selected by the Compensation Committee to participate in the bonus plan
based upon the recommendation of our Chief Executive Officer. The bonus plan
provides for target bonus grants to be established based on the position of the
employee and to be computed as a percentage of the employee's base salary. The
bonus plan provides that a
12
<PAGE>
performance goal based primarily on our earnings will be set by our board, and
the amount of bonus will be calculated based on the employee's target bonus
grant, our performance compared with the performance goal and individual
contributions by the employee.
The Compensation Committee authorized, at the recommendation of our Chief
Executive Officer, bonuses to be awarded to selected employees, including
executive officers, aggregating $4.5 million for 2000.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of their executive officers. The limitation applies
only to compensation that is not considered to be performance-based
compensation. Compensation that qualifies as performance-based compensation
will not have to be taken into account for purposes of this limitation. The
1997 Stock Option and Restricted Stock Plan contains certain provisions which
are intended to assure that any compensation deemed paid in connection with the
exercise of stock options granted under that plan with an exercise price equal
to the market price of the option shares on the grant date will qualify as
performance-based compensation. The non-performance based compensation to be
paid to our executive officers for 2000 did not exceed the $1 million limit per
officer, nor is it expected that the non-performance based compensation to be
paid to individual executive officers for 2001 will exceed that limit. Because
it is very unlikely that the compensation payable to any of our employees in
the foreseeable future will approach the $1 million limit, the Compensation
Committee has decided not to take any other action to limit or restructure the
elements of cash compensation. The Compensation Committee will reconsider this
decision should the individual compensation of any employee ever approach the
$1 million level.
Compensation of Chief Executive Officer
In setting compensation payable to the Chairman of our Board and Chief
Executive Officer, the Compensation Committee has taken into consideration Mr.
Kirlin's education, prior accomplishments and strategic leadership in our
industry and has sought to be competitive with companies of similar size and
characteristics within the industry. Given that consideration, Mr. Kirlin's
base salary is tied to both company and personal performance. We have entered
into a three-year employment agreement with Mr. Kirlin providing for an annual
salary of at least $350,000 and a cash bonus. Mr. Kirlin's target bonus
opportunity is 75% of his base salary, but his actual bonus could range from 0%
to 150% of his base salary, depending on Mr. Kirlin's performance and the
overall size of our bonus pool. We have also granted Mr. Kirlin 190,000
options, all of which are time vesting with varying schedules, the maximum of
which is six years. However, 40,000 of those options will accelerate and vest
immediately should the price of our common stock trade at a price per share
equal to three times the exercise price for 30 days consecutively within the
first five years of the date of grant, or if the Company is sold for a per-
share price exceeding that amount. Mr. Kirlin's employment agreement also
contains severance payments that are more fully discussed in the section of
this report entitled Employment Agreements.
Respectfully submitted by The Compensation Committee,
Gary W. Pankonien
Susan Vladuchick Sam, Chairperson
13
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth, for the years ended June 30, the
compensation paid to our named officers, a group consisting of our chief
executive officers and our four other most highly compensated executive
officers for the year ended June 30, 2000.
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation Awards
--------------------- -------------------
Securities
Name and Principal Underlying All Other
Position Year Salary Bonus Options(#) Compensation(3)
------------------ ---- ------- -------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Peter S. Kirlin (1)...... 2000 $72,916 -- 190,000 --
Chairman and Chief
Executive Officer
Marshall C. Turner (2)... 2000 259,854 -- 20,100 $9,072
Former Chairman and
Chief Executive 1999 52,780 -- 34,500 --
Officer 1998 20,000 -- 3,000 --
Preston M. Adcox......... 2000 275,967 $195,000 122,600 7,319
President and Chief
Operating Officer 1999 246,100 116,000 35,100 8,754
1998 261,038 -- 36,750 7,296
Gerard Cognie (4)........ 2000 167,975 105,000 28,600 --
Executive Vice
President-European 1999 163,082 75,000 39,900(5) --
Operations 1998 176,629 -- 22,100 --
John M. Lynn............. 2000 178,313 83,000 43,100 7,097
Executive Vice
President-General 1999 150,739 64,000 34,000(5) 5,259
Counsel and Secretary 1998 146,704 -- 5,000 4,370
Kenneth A. Rygler........ 2000 189,271 82,000 22,100 7,535
Executive Vice
President-Worldwide 1999 167,702 61,000 23,800(5) 5,549
Marketing and Strategic
Planning 1998 173,034 -- 10,800 4,700
</TABLE>
--------
(1) Mr. Kirlin joined us as our Chief Executive Officer and Chairman of our
Board in May 2000. Mr. Kirlin's salary represented here is compensation
paid to him since he joined us in May.
(2) Mr. Turner joined us as an employee in June 1999 and stepped down as our
Chief Executive Officer and Chairman of our Board in May 2000. Mr. Turner's
compensation package was calculated on the basis that he devoted
approximately 80% of his time to his position.
(3) Matching contributions made by us pursuant to our defined contribution
retirement plan.
(4) Mr. Cognie is paid in French Francs. The figures shown were calculated
using an exchange rate for fiscal 2000 of 6.6 Francs to the dollar, for
fiscal 1999 of 6.3 Francs to the dollar and for fiscal 1998 of 6.0 Francs
to the dollar.
(5) Includes re-priced options of 22,100, 16,000 and 10,800 for Cognie, Lynn
and Rygler, respectively, that were re-granted in connection with our re-
pricing program effected in September 1998.
14
<PAGE>
Option Grants in Last Year
The following table sets forth information regarding options to purchase
shares of our common stock granted to our named officers in fiscal 2000. We
have not granted any stock appreciation rights.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
% of Total Annual Rates of Stock
Options Price Appreciation for
Options Granted to Exercise Option term
Granted Company Price Grant Expiration ----------------------
Name (#)(1)(2)** Employees ($/Share) Date Date 5% 10%
---- ----------- ---------- --------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Peter S. Kirlin......... 190,000(3) 14.6% $58.53 5/03/2000 5/03/2010 $7,195,199 $18,983,496
Marshall C. Turner...... 20,000 1.5% 48.06 4/18/2000 4/18/2003 183,409 400,830
Marshall C. Turner...... 100(4) * 53.62 4/19/2000 4/19/2010 3,469 9,153
Preston M. Adcox........ 35,000 2.7% 48.06 8/2/1999 8/2/2009 1,088,335 2,871,414
Preston M. Adcox........ 40,000(5) 3.1% 48.06 4/18/2000 4/18/2010 1,243,811 3,281,617
Preston M. Adcox........ 47,500(5) 3.6% 48.06 4/18/2000 4/18/2007 954,314 2,300,931
Preston M. Adcox........ 100(4) * 53.62 4/19/2000 4/19/2010 3,469 9,153
Gerard Cognie........... 18,500(6) 1.4% 48.06 8/2/1999 8/2/2009 575,263 1,517,748
Gerard Cognie........... 10,000(6) * 48.06 4/18/2000 4/18/2010 310,953 820,404
Gerard Cognie........... 100(6) * 53.62 4/19/2000 4/19/2010 3,469 9,153
Kenneth A. Rygler....... 12,000 * 48.06 8/02/1999 8/02/2009 373,143 984,485
Kenneth A. Rygler....... 10,000 * 48.06 4/18/2000 4/18/2010 310,952 820,404
Kenneth A. Rygler....... 100(4) * 53.62 4/19/2000 4/19/2010 3,469 9,153
John M. Lynn............ 13,000 1.0% 48.06 8/02/1999 8/02/2009 404,239 1,066,525
John M. Lynn............ 30,000 2.3% 48.06 4/18/2000 4/18/2010 932,858 2,461,212
John M. Lynn............ 100(4) * 53.62 4/19/2000 4/19/2010 3,469 9,153
</TABLE>
--------
* Less than 1%.
** Options granted can be exercised through cash, cashless and stock swap
methods.
(1) Options granted to Messrs. Adcox, Lynn and Rygler are non-qualified stock
options that become exercisable over a four-year period at the rate of 25%
per year. Options granted to Mr. Turner are non-qualified stock options
that become exercisable six months from the date of grant.
(2) The options will automatically accelerate in full in the event we are
acquired by merger or asset sale or otherwise undergo a change in control
(whether effected through the successful completion of a tender offer for
more than 25% of our outstanding voting stock or a change in the majority
of the board effected through one or more contested elections for Board
membership). The options may be exercised by tendering shares of stock
valued at the fair market value on the exercise date and held for at least
6 months or upon confirmation of ownership of such share. The options may
also be exercised via a same-day-sale program through a designated broker.
(3) Options granted to Mr. Kirlin become exercisable under three different
tranches. 8,540 of these options are qualified and 181,460 are non-
qualified. A 100,000 tranche of options become exercisable ratably over
five years on the anniversary date. A 40,000 tranche of options become
exercisable after six years and is accelerated if the price of the Common
Stock trades at a price per share of Common Stock equal to three times the
exercise price for thirty (30) days consecutively, within the first five
(5) years of the date of grant or if the Company is sold for a per-share
price exceeding that amount. A 50,000 tranche becomes exercisable ratably
over four years on each anniversary date in the following sequence 8%, 14%,
31% and 47% respectively.
(4) These options were granted as part of a Company wide grant to all employees
and become exercisable over a one-year period of time from date of grant.
(5) Options granted Mr. Adcox become exercisable 1/3 on May 1, 2001, 2002 and
2003.
(6) Options granted to Mr. Cognie are non-qualified stock options that become
exercisable on the fifth anniversary from the grant date.
15
<PAGE>
Aggregated Option Exercises in Last Year
and Year-End Option Values
The following table sets forth information regarding the exercisable and
unexercisable options to acquire our common stock granted to our named
officers.
<TABLE>
<CAPTION>
Value of In-The-Money
Number of Unexercised Options Unexercised Options
Shares at Year-End at Year-End(1)
Acquired on Value ------------------------------- -------------------------------
Name Exercise(#) Realized($) Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
---- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Peter S. Kirlin......... -- -- -- 190,000 $ -- $1,894,300
Marshall C. Turner...... -- -- 44,500 26,100 1,292,598 604,366
Preston M. Adcox........ -- -- 93,579 167,363 3,971,165 3,580,036
Gerard Cognie........... -- -- 29,664 68,400 1,527,696 2,388,015
Kenneth A. Rygler....... 11,733 $347,747 25,764 39,850 1,292,171 1,257,392
John M. Lynn............ -- -- 8,500 68,500 384,625 2,032,795
</TABLE>
--------
(1) The closing price per share of our common stock on June 30, 2000 was
$68.50.
DIRECTOR COMPENSATION
Directors who are one of our officers receive no additional compensation for
serving on our board. All other directors who are not employed by DuPont
receive an annual fee of $20,000. Mr. Doyle is party to an arrangement with us
whereby he provides consulting services in the area of human resource
management and principles at a fee of $3,500 per day, not to exceed five days
per year. There were no payments to Mr. Doyle in 2000 under this agreement.
Second Amended and Restated Non-Employee Directors' Stock Option Plan
The purpose of the Second Amended and Restated Non-Employee Directors' Stock
Option Plan is to allow us to recruit and retain qualified outside directors to
serve on our board. Under this plan, each director who was not an employee, and
who is not precluded by his or her employer from receiving such grant, receives
a one-time grant of options to purchase 12,000 shares of our common stock upon
first joining our board. Thereafter, each non-employee director receives,
during his or her tenure as a director, an annual grant of options covering
5,000 shares as of the first day of the month following our annual meeting of
stockholders. Directors who are first elected to our board within the 60-day
period immediately preceding our annual meeting of stockholders and who at the
time of their election received the one-time grant of options to purchase
12,000 shares described above, will not, under the terms of this plan, receive
an additional grant of 5,000 shares as of the first of the month following such
annual meeting. Upon exercise of an option, payments of the purchase price for
the stock subject to the exercise will be made in cash. Under the terms of this
plan, no more than 25% of the total number of shares of stock granted under an
option may become exercisable in any given year following the grant. Currently,
250,000 shares have been reserved for issuance under this plan. Under this
plan, prior to its amendment, Directors Doyle, Pankonien and Turner were
granted options to purchase 3,000 shares of our common stock, at $35.56 per
share, on November 1, 1996 and 3,000 shares of our common stock, at $44.81 per
share, on November 1, 1997. Further, Directors Doyle, Pankonien, Sargent and
Turner were granted options to purchase 5,000 shares of our common stock, at
$32.81 per share, on November 2, 1998. Options granted under this plan were not
subject to our September 21, 1998 option re-pricing. Further, Directors Doyle,
Pankonien, Sargent and Sam were granted options to purchase 5,000 shares of our
common stock, at $48.00 per share, on November 1, 1999.
16
<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total return as of the end
of the company's most recent fiscal year on $100 invested in our common stock,
the Nasdaq Composite Index, Philadelphia Semiconductor Index, and an industry
peer group on June 14, 1996, the first trading date, assuming the reinvestment
of all dividends. The industry peer group used includes the following issuers:
Align-Rite International, Inc. (Nasdaq--MASK); Electroglas, Inc. (Nasdaq--
EGLS); Etec Systems (Nasdaq--ETEC); KLA-Tencor Corporation (Nasdaq--KLAC);
Novellus Systems, Inc. (Nasdaq--NVLS); Photronics, Inc. (Nasdaq--PLAB) and
Ultratech Stepper, Inc. (Nasdaq--UTEK). The stock performance set forth below
is not necessarily indicative of future price performance.
[PERFORMANCE GRAPH]
6/14/96 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
------- ------- ------- ------- ------- -------
DPMI $100.00 $120.00 $317.65 $202.94 $281.94 $402.94
Nasdaq Composite $100.00 $97.88 $118.87 $156.18 $221.41 $326.92
Industry Peer Group $100.00 $88.73 $155.91 $122.17 $167.45 $326.70
Philadelphia Semiconductor Index $100.00 $91.32 $159.83 $128.54 $253.21 $596.14
17
<PAGE>
DUPONT PHOTOMASKS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS OCTOBER 24, 2000
PROXY
The undersigned hereby appoints Gerd Stoecker and John M. Lynn, or any one
or more of them, with full power of substitution, the attorneys and proxies for
the undersigned to vote the shares of common stock of DuPont Photomasks, Inc., a
Delaware corporation, held of record by the undersigned at the close of business
on September 1, 2000, at the annual meeting of stockholders of the company to be
held at the Driskill Hotel, 604 Brazos Street, Austin, Texas 78701, on Tuesday,
October 24, 2000 at 10:00 a.m. local time, and at any adjournment or
postponements thereof, as follows:
--------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK
COMMENT/ADDRESS CHANGE ON REVERSE SIDE.
(Continued and to be signed on other side)
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
PLEASE BE ADVISED THAT OUR TRANSFER AGENTS IS:
FIRST CHICAGO TRUST COMPANY, A DIVISION OF EQUISERVE
P.O. BOX 2500
JERSEY CITY, N.J. 07303-2506
1-800-446-2617
--------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
THE PERSONS SET FORTH HEREIN AS DIRECTORS AND THE OTHER PROPOSALS.
FOR WITHOLD AUTHORITY
1. Nominees: John L. Doyle, John W. Himes / / / /
and John C. Hodgson
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line.)____________________________________
FOR AGAINST ABSTAIN
2. Ratification of PricewaterhouseCoopers / / / / / /
LLP as independent accountants
3. As such proxies may in their discretion / / / / / /
determine upon such other matters as may
properly come before the meeting.
<PAGE>
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN, AND IN THE
ABSENCE OF SUCH INSTRUCTIONS, THE PROXIES SHALL VOTE FOR THE ELECTION OF THE
NOMINEES NAMED ABOVE, ALL OF THE PROPOSALS SET FORTH ABOVE AND SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
-----------------------------------------------------------
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SIGNATURE(S) DATE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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PLEASE NOTE
THIS PROXY IS TO BE VOTED AS DIRECTED. IN THE ABSENCE OF SPECIFIC
DIRECTION, IT IS INTENDED TO VOTE THE SHARES REPRESENTED BY THIS PROXY FOR THE
ELECTION OF JOHN W. HIMES, JOHN L. DOYLE AND JOHN C. HODGSON AS DIRECTORS AND
FOR THE OTHER PROPOSALS.
You are urged to sign and return your proxy without delay in the return
envelope provided for that purpose, which requires no postage if mailed in the
United States or Canada.
When signing this proxy, please date it and take care to have the signature
conform to the stockholder's name as it appears on this side of the proxy. If
shares are registered in the names of two or more persons, each person should
sign. Executors, administrators, trustees and guardians should so indicate when
signing.
PLEASE SEND IN YOUR PROXY
In order that there may be proper representation at the
annual meeting, each stockholder, whether he or she
owns one or more shares, is requested to sign this
proxy and return it promptly in the enclosed envelope.
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