Exhibit 10.1


 


MEMORANDUM OF UNDERSTANDING


 


The
undersigned parties to this action (“Action”) now pending in Travis County,
Texas, District Court have reached an agreement in principle providing for the
settlement of the Action on the terms and subject to the conditions set forth
below.


 


WHEREAS, on
October 5, 2004, DuPont Photomasks, Inc. (“DPMI” or the “Company”), agreed to
be acquired by Toppan Printing Co., Ltd.. (“Toppan”)
for $27.00 in cash for each share of DPMI common stock (the “Acquisition”);


 


WHEREAS,
thereafter plaintiff’s counsel reviewed DPMI’s public filings as well as media
and analyst reports regarding DPMI and the Acquisition, and on or about October
9, 2004, filed Carpenter v. Dupont Photomasks, Inc., et al.,
Travis County District Court Cause No. GN 403201, as putative class action on
behalf of holders of DPMI common stock naming as defendants the Company and its
Board of Directors including Preston M. Adcox, Isabella C. M. Cunningham, Susan
Vladuchick Sam, Robert J. Boehlke, Kevin P. Hegarty, E. James Prendergast, John
C. Sargent, William T. Siegle, and Marshall C. Turner (collectively, “Defendants”);


 


WHEREAS,
plaintiff alleges that the Acquisition constitutes a breach of the fiduciary
duties owed to the class by the Defendants;


 


WHEREAS, on or
about November 8 and 12, 2004, and March 9, 2005, Defendants filed and served
their Answers to plaintiff’s Complaint, as well as Special Exceptions thereto,
denying the allegations in Plaintiff’s Original Petition and alleging that
plaintiff has failed to state a valid cause of action;


 


WHEREAS, on or
about November 1, 2004, DPMI filed with the Securities and Exchange Commission
(“SEC”) a Preliminary Merger Proxy Statement setting forth information


 





















 


concerning
the Acquisition, which counsel for plaintiff reviewed and analyzed along with
other public filings and media and analyst reports regarding the Acquisition;


 


WHEREAS, on or
about December 23, 2004, plaintiff served a First Request for Production of
Documents seeking documents concerning the Acquisition and related materials,
and contemporaneously therewith the parties met and conferred regarding the
appropriate scope of a confidentiality agreement;


 


WHEREAS,
beginning on January 11, 2005, after agreeing on the scope of the initial
document production and without waiving the right to compel or contest
additional responsive documents, Defendants produced to plaintiff hundreds of
pages of confidential Company documents in response to plaintiff’s First
Request for Production of Documents, including Board minutes and presentations
by Credit Suisse First Boston LLC (“CSFB”), the investment banker hired by
Defendants in connection with the Acquisition, which plaintiff’s counsel
subsequently reviewed;


 


WHEREAS, on or
about January 28, 2005, Defendants served their objections and responses to
plaintiff’s First Request for Production of Documents;


 


WHEREAS, on
February 28, 2005, Defendants filed the Definitive Merger Proxy Statement
related to the Acquisition


 


WHEREAS,
between October 2004 and March 2005, after a detailed investigation and review
of the Preliminary Merger Proxy Statement and thousands of pages of public
filings and analyst and media reports, as well as hundreds of pages of
documents produced by Defendants, the parties participated in negotiations
which have lead DPMI to make certain additional disclosures relating to the
Acquisition that were included in the Definitive Merger Proxy Statement as
detailed herein;


 





















 


WHEREAS,
plaintiff and his counsel have determined that the settlement of the Action on
the terms reflected in this Memorandum of Understanding (“MOU”) is fair,
reasonable, and adequate and in the best interest of DPMI’s stockholders;


 


WHEREAS,
Defendants deny the allegations and all other charges of wrongdoing or
liability arising out of any conduct, statements, acts or omissions relating to
the Acquisition that were or could be alleged in the Action, and Defendants
continue to believe that the Acquisition is in the best interests of DPMI’s
shareholders; and


 


WHEREAS,
notwithstanding their belief that the allegations are without merit, Defendants
have concluded that, in the interest of expediency, it is desirable that the
claims against them be settled on the terms reflected in this MOU, and agreed
solely in the context of settlement to make certain additional disclosures in
the Definitive Merger Proxy Statement filed with the SEC and disseminated to
DPMI shareholders.


 


NOW,
THEREFORE, following discussions among counsel, there have been negotiations
between the parties which have resulted in their reaching an agreement in
principle providing for the settlement of the Action between and among
plaintiff, for himself and the class of persons on behalf of whom the Action
was brought, and Defendants on the terms and conditions set forth below (the “Settlement”).


 


1.             Plaintiff contends
that the Preliminary Merger Proxy Statement omitted certain material
information relating to DPMI and the Acquisition.  While specifically disputing and without
admitting such claims, DPMI agreed to make certain additional disclosures in
the Definitive Merger Proxy Statement filed with the SEC and disseminated to
the DPMI shareholders, some of which were updates necessary to reflect the
passage of time since the filing of the Preliminary Proxy Statement and some of
which were made in recognition of the


 





















 


prosecution
of the Action, and the extensive discussions between counsel for plaintiff and
counsel for Defendants.  The supplemental
disclosures agreed to as part of the Settlement that were contained in the Definitive
Merger Proxy are, inter alia:


 


(a)           When Marshall Turner entered into an
employment contract with the post-Acquisition entity and the timing of the
discussions about that contract;


 


(b)           A statement that the options granted
to the Company’s non-employee directors in November, 2004 were consistent with
the terms of the applicable stock option plan;


 


(c)           More detail regarding the reasons why
the Company decided not to conduct a “market check” prior to entering into the
exclusivity agreement with Toppan.


 


(d)           More detail about the past investment
banking services CSFB has performed for DPMI.


 


Plaintiff also
made a request for information and a potential disclosure regarding other
indications of interest after the announcement of the Acquisition in October
2004 and other contracts between DPMI employees and the post-Acquisition
entity.  DPMI received this request.  No other contracts between DPMI employees and
the post-Acquisition entity existed on November 1, 2004 when DPMI filed with
the SEC the Preliminary Merger Proxy Statement, and no other indications of
interest had been received by DPMI. 
However, as of the time the Definitive Merger Proxy was filed and mailed
to DPMI shareholders, no other indications of interest had been received by
DPMI, and three other DPMI employees had entered into contracts with the
post-Acquisition entity.  The Definitive
Merger Proxy disclosed this additional information.


 





















 


2.             The parties to the
Action will attempt in good faith to agree upon and execute an appropriate Stipulation
of Settlement (the “Stipulation”) and such other documentation as may be
required to obtain final Court approval of the Settlement and the dismissal of
the Action upon the terms outlined in this MOU (collectively, the “Settlement
Documents”).  The Stipulation will
expressly provide, inter alia, (i)
for the certification as a class for settlement purposes of all persons who
held DPMI stock between October 5, 2004 through and including the completion of
the Acquisition, and their successors in interest and transferees (“Settlement
Class”) under Texas Rule of Civil Procedure 42(b)(2); (ii) for entry of a
judgment of dismissal with prejudice; and (iii) for a release and settlement of
all known and unknown claims for damages, injunctive relief, or any other
remedies against Defendants and their respective predecessors, successors,
parents, subsidiaries, affiliates and agents (including, without limitation,
any investment bankers, accountants, insurers, reinsurers or attorneys and any
past, present or future officers, directors and employees of DPMI, their
predecessors, successors, parents, subsidiaries, affiliates, agents, and their
subsidiaries, affiliates and agents) which have been or could have been
asserted by any member of the proposed Settlement Class, including class,
derivative, individual or other claims, in state or federal court or in
arbitration or similar proceedings, based upon, arising from, or related to any
matter discussed in the Definitive Merger Proxy Statement or any disclosure
related thereto or the actual or alleged acts or omissions of Defendants
relating to the Acquisition, including, without limitation, any allegations of
misrepresentations and/or omissions in the Definitive Merger Proxy Statement,
exhibits thereto, or other disclosure related thereto, or any matter that could
have been asserted in the Action (regardless of its forum) regarding breach of
fiduciary duty or other duty imposed by law relating to any alleged failure to
disclose material facts, inadequate investigation, valuation, conflict of
interest, the fairness of the


 





















 


transaction, both substantively
and procedurally, or other breach of the duty of care, duty of loyalty, or duty
of good faith and fair dealing (the “Released Claims”).  The Stipulation shall include a waiver of the
provisions of California Civil Code §1542 and any similar provision of the law
of any other jurisdiction.  Plaintiff and
his counsel represent that they are not aware of any alleged breaches of fiduciary
duty concerning any other DPMI filings or press releases beyond those alleged
in the Action.  The Stipulation will
further provide that Defendants have denied and continue to deny that they have
committed or attempted to commit any violations of law or breached any duty
owed to DPMI or its stockholders or otherwise. 
The parties shall in good faith attempt to present to the Court a motion
for preliminary approval promptly following the date on which the Acquisition
is consummated.  Pending final approval
of this Settlement, plaintiff and his counsel shall not prosecute the
Action.  The parties contemplate that
confirmatory discovery, including the review of thousands of pages of
additional documents and two (2) depositions, will be conducted in connection
with the Settlement and they agree to cooperate with regard to the scope and
timing of such discovery.


 


3.             Any notice of the
proposed Settlement as well as a description of the supplemental disclosures
related to the Acquisition that are necessary to effect a final settlement for
approval by the Court shall be provided at Defendants’ expense.  The parties shall set forth the manner in
which the notice requirement shall be satisfied in the Stipulation.


 


4.             The Settlement is
subject to: (a) the drafting and execution of the Settlement Documents; (b)
final Court approval of the Settlement and dismissal of the Action with
prejudice and without awarding costs to any party (except as provided in ¶5
below); and (c) consummation of the Acquisition.  As employed in this MOU, “final Court
approval of the Settlement” means the Court has entered an order approving the
Settlement in accordance with the Settlement


 





















 


Documents, and that order is
finally affirmed on appeal or is no longer subject to appeal.  This MOU (including the recitals set forth
above) shall be null and void and of no force and effect should any of these
conditions not be met and, in that event, this MOU shall neither be deemed to
prejudice in any way the positions of the parties with respect to the Action
nor entitle any party to recover any costs or expenses incurred in connection
with the implementation of the MOU.


 


5.             After agreeing to
take the actions set forth above, Defendants and plaintiff negotiated the
attorneys’ fees that DPMI would pay to plaintiff’s counsel.  As part of the Settlement, DPMI has agreed
that it shall pay the sum of $299,000.00 to plaintiff’s counsel for their fees
and reimbursement of expenses and costs. 
Such fees and expenses shall be paid by DPMI within fourteen (14) days
of the entry of an order by the District Court finally approving the Settlement
on the terms contained in the Settlement Documents, even if such order may be
subject to appeal.  In the event that the
District Court’s order is reversed or modified on appeal, plaintiff’s counsel
shall refund to DPMI (or the post-Acquisition entity) the advanced amount and
all interest accrued or accumulated thereon consistent with such reversal or
modification.  Interest shall be equal to
the published rate identified as the “3-Month Treasury bill.  In addition to any other rights or
remedies provided by law, DMPI or the post-Acquisition entity may recover all attorneys fees and costs expended to enforce the terms of
this paragraph.


 


6.             While retaining
their right to deny liability, the Action is being settled voluntarily by the
parties after consultation with competent legal counsel.  The releases between the parties will include
releases of all counsel in the Action.


 


7.             Plaintiff and his
counsel agree to not issue any press releases or directly or indirectly make or
cause to be made any public statements (including disclosures on any website)


 





















 


regarding
the existence or terms of the Settlement, unless necessary to complete the
Settlement or is otherwise required by law. 
Plaintiff and his counsel acknowledge and agree that DPMI may disclose
the existence and terms of the Settlement and this MOU in any SEC filings,
press releases, notices or other public statements as DPMI determines are
necessary or appropriate in light of its obligations under applicable securities
laws and listing requirements.


 


8.             This MOU may be
modified or amended only by a writing signed by all of the signatories hereto.


 


9.             The plaintiff and
his counsel represent and warrant that none of plaintiff’s claims or causes of
action referred to in this MOU or that could have been alleged in the Action
have been assigned, encumbered or in any manner transferred in whole or in
part.


 


10.           Except as otherwise
provided herein, this MOU shall be binding upon and shall inure to the benefit
of the parties and their respective agents, successors, executors, heirs and
assigns.


 


11.           By signing this MOU,
plaintiff’s counsel represent and warrant that the named plaintiff is a
stockholder of DPMI.


 


12.           This MOU may be
executed in counterparts by any of the signatories hereto, including by telecopier, and as so executed shall constitute one
agreement.


 


13.           Each of the
attorneys executing this MOU on behalf of his/her respective client(s) hereby
represents and warrants that they have full authority to do so.


 


14.           The parties agree to
take all reasonable and necessary steps to expeditiously implement the terms of
this MOU and to complete the Settlement.


 


Signed this 1st day of April, 2005.


 





















 


	
   

  	
  COUNSEL FOR
  JAY CARPENTER, PLAINTIFF

  ON BEHALF OF HIMSELF AND THE CLASS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Rick
  Atwood

  	
   

  
	
   

  	
  By: Rick
  Atwood

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DUPONT
  PHOTOMASKS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Marshall
  Turner

  	
   

  
	
   

  	
  By:

  	
  Marshall
  Turner, Chairman and Chief

  
	
   

  	
   

  	
  Executive
  Officer of DuPont Photomasks, Inc.