Exhibit 10.3
February 15, 2002
John Kurtzweil
P.O Box 438
2234 Caballo Ranchero Ct.
Diablo, CA 94528-0438
Dear John:
We are pleased to extend you an offer of employment to join ON Semiconductor.
Employment refers to your employment by ON Semiconductor Corporation ("ON Semi"
or "Company"), or its primary operating company, Semiconductor Components
Industries, LLC ("SCI, LLC").
This letter confirms our offer of employment to you ("Offer Letter") and sets
forth the terms and conditions of that offer. Your offer and this Offer Letter
are contingent upon: (1) successful completion of a urinalysis drug test (i.e.,
negative test result) in accordance with ON's policy on applicant drug testing;
(2) successful background investigation and verification of salary and all other
information you have submitted to us; (3) providing proof of identity and
employment authorization to work in the United States; and (4) approval of ON
Semi's Board of Directors.
POSITION
Subject to approval by our Board of Directors your titles will be Senior Vice
President, Chief Financial Officer and Treasurer of ON Semi and SCI, LLC. You
will report to Steve Hanson, Chief Executive Officer of ON Semiconductor.
BASE SALARY AND VARIABLE PAY BONUS
Your base salary will be $13,846.00 bi-weekly, which equates to $360,000.00
annually.
For 2002 and beyond, you will be eligible for a variable pay bonus based
primarily on the performance of ON Semi under a bonus plan for the Company in
effect at the time ("Bonus"). At your position, your performance Bonus payout is
current "targeted" by SCI, LLC to be 60% of your base salary. This is a target
percentage only. Under the Bonus plan, your Bonus could be zero and your actual
bonus percentage could be lower or higher than the target depending on several
factors. Further, any Bonus would be subject to additional terms and conditions
as set forth in the plan document approved by the Board of Directors of ON Semi
or its designee, which plan is subject to amendment from time to time and
termination at any time. Depending upon whether or not Bonuses are actually paid
under the Bonus plan, for fiscal year 2002 (which began January 1, 2002). SCI,
LLC expects to make semi-annual Bonus awards.
STOCK OPTION
On or around the date of your commencement of employment, we will request
approval by our Board of a stock option grant to you for the purchase of 500,000
shares of ON Semi common stock at an exercise price equal to the "Fair Market
Value" of our stock, as determined under our 2001 Stock Incentive Plan ("Plan").
We expect that this stock will generally vest in 25% increments over a four (4)
year period beginning on the first anniversary of the grant date, subject to
your continued employment by ON Semi. The option grant will be subject to
additional terms
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and conditions under the Company's Plan and as well as in a separate stock
option agreement. Please understand that this offer and its related terms are
conditioned on and subject to (1) Board approval; and (2) your employment with
ON Semi on the date the Board meets to approve your option grant.
CERTAIN OTHER BENEFITS
Within four weeks of your commencement date with ON Semi, you will receive a
hiring bonus of $180,000.00 ("Hiring Bonus"). In addition to the foregoing
payment, SCI, LLC will pay you an additional payment ("Gross-Up Payment") in an
amount sufficient to pay your federal, state and local income taxes in respect
of the Hiring Bonus, plus the federal, state and local income taxes to be
incurred by you in calendar year 2002 as a result of such payment, determined
based on your highest marginal federal, state and local income tax rates. You
agree to cooperate with reasonable requests for information and documentation in
order for SCI, LLC to determine the Gross-Up Payment in respect of the Hiring
Bonus. Should you voluntarily terminate your employment or be terminated for
cause within 12 months of your commencement date, you shall repay to SCI, LLC
both the Hiring Bonus and Gross-Up Payment within 30 days of your termination
date.
Your offer of employment includes relocation benefits in accordance with SCI,
LLC's relocation policy. Additionally, you authorize ON Semi to deduct the
appropriate outstanding amount from any final paycheck you may receive. If you
have any questions or concerns regarding the details of the plan please do not
hesitate to call Dan Lucisano with Cendant Mobility. Dan can be reached at (949)
367-2739.
Further, SCI, LLC will provide you with an executive car allowance of $1,200 per
month. In addition to your base salary, SCI, LLC offers a comprehensive benefits
package, which includes medical, dental, vision and life insurance coverage.
Once eligible, you may also participate in the 401(k) Savings Plan that
currently allows you to contribute up to 17% of your eligible earnings on a
pre-tax basis, up to the IRS $11,000 maximum. For 2002, SCI, LLC will match your
employee contribution on the first 3% of base salary to a maximum of 100%, and
may match the next 6% of your employee contribution up to a maximum of 50%
depending on the financial performance of ON Semi.
Additionally, ON Semi has an executive deferred comp plan, which allows you to
defer certain additional compensation tax free. See the attached plan summary.
You will be eligible to enroll in the ON Semi Employee Stock Purchase Plan.
Participation will provide you with an opportunity to share in increases in the
ON Semi stock price, as well as enjoy a discount on the initial purchase price.
Details of the plan will be explained when you commence employment with ON Semi.
TERMINATION TERMS
In the event your employment with us is terminated by ON Semi without Cause (as
defined below), you will receive the payments set forth below; provided, however
that the payments provided herein are subject to and conditioned upon: (1) your
executing a valid and effective general release and waiver (in the form
reasonably acceptable to ON Semi), waiving all claims you may have against the
Company, its successors, assigns, affiliates, executives, officers, employees,
members, partners, shareholders and directors; (2) your execution of a severance
agreement at the time of termination that includes reasonable covenants by you
with regard to
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confidentiality, nondisparagement, and nonsolicitation/interference/noncompete;
and (3) your compliance with the terms and conditions of this Offer Letter. SCI,
LLC shall pay severance payments equal to the sum of (i) one (1) year of your
annual base salary in effect immediately prior to the your date of termination.
Following the effective date of your termination, the severance payments will be
paid to you ratably in equal installments over the one (1) year period
subsequent to your date of termination in accordance with SCI, LLC's regular
payroll practices.
For purposes of this Offer Letter, the term "Cause" shall mean your: (a) breach
of any material provision of this Offer Letter; (b) gross negligence in
connection with the performance of your duties, obligations or responsibilities
to the Company or SCI, LLC, or willful failure to perform your duties,
obligations or responsibilities to the Company or SCI, LLC to the best of your
ability; (c) engaging in misconduct, fraud or dishonesty involving the business
of the Company or SCI, LLC, or any other activity otherwise determined to be
materially detrimental or injurious to the Company's or SCI, LLC's reputation;
or (d) commission of a felony or a crime involving moral turpitude, each as
determined by either the Chief Executive Officer and/or President of the Company
in his or her sole and absolute discretion.
You understand and agree that neither the granting of any benefits set forth in
this Offer Letter, nor this Offer Letter shall constitute or be evidence of any
agreement or understanding, either expressed or implied, on the part of ON Semi
or SCI, LLC to employ you for any definite period of time. You are an "at-will"
employee, which means that you or ON Semi or SCI, LLC may terminate the
employment relationship at any time and for any reason, with or without notice
and with or without Cause.
Notwithstanding your at-will status, if you fail to commence employment,
voluntarily terminate your employment with ON Semi or SCI, LLC for any reason,
or are terminated for cause within 12 months of your commencement date, you will
not be entitled to the benefits set forth above, including, without limitation,
each of the benefits listed under "Certain Other Benefits" of this Offer Letter.
In addition, if you are voluntarily terminated or are terminated for cause
within the 12 months of your commencement date, you agree to repay ON within 30
days of your termination date, the Hiring Bonus and Gross-Up Payment set forth
above in the "Certain Other Benefits" section. SCI, LLC is under no obligation
to authorize, pay, or reimburse you for any expenses associated with your
benefits or this Offer Letter until we receive a signed Offer Letter from you.
CODE OF BUSINESS CONDUCT AND DRUG TEST
Enclosed is a copy of ON Semi's Code of Business Conduct ("Code"), which
explains ON Semi's principles in this important subject area and the importance
of adhering to the highest standards of business conduct. We expect every ON
Semi employee to follow these principles and to read and understand the contents
of this booklet. When you report to work, you will be required to sign a
certificate indicating that you have read and understand the Code and that you
commit to follow the guidelines contained in the booklet. You will also be asked
to disclose any potential issues that you may have that pertain to these
guidelines. We will be discussing the subject matter in greater detail in your
orientation session.
ON Semi is committed to providing a drug-free workplace. Therefore, all
prospective employees are required to undergo a drug test before becoming an ON
Semi employee. By accepting this employment offer you agree to participate in a
pre-employment drug-screening test and understand that employment is contingent
upon successfully passing such a test. If you require further information,
please notify me so that we can address any issues or concerns you may
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have. In order to allow sufficient time for processing; please complete the
drug-screening test within 3 days of acceptance of this offer.
OTHER
By signing this Offer Letter, you acknowledge that your acceptance of this offer
and future performance of services hereunder will not violate any other
agreement or obligation that you may have with any of your current or former
employers.
As used in this Offer Letter, commencement date shall mean the first day you
render compensable services to ON Semi. You further agree and acknowledge that
this Offer Letter contains all of the terms of our offer of employment with ON
Semi and SCI, LLC and that you have not relied on any oral or written
representations that are not explicitly set forth in this Offer Letter in
deciding whether to accept this offer. Your commencement date would be on or
about March 15, 2002.
OFFER ACCEPTANCE
Upon receiving this offer, please contact me at (602) 244-4636 to confirm your
receipt of the offer packet and to discuss any questions that you may have. Your
offer is valid through February 22, 2002.
Please indicate your acceptance of this offer by signing below and returning
this letter to the undersigned. A second copy of this letter is provided for
your personal files.
We are confident ON Semi can offer you a challenging and rewarding job
opportunity, and we look forward to you joining our team.
Very truly yours,
/s/ Jim Stoeckmann
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Jim Stoeckmann
Vice President, Human Resources
I hereby accept this Offer Letter and its conditions and terms:
/s/ John T. Kurtzweil Dated: February 17, 2002
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John Kurtzweil
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