Exhibit 10.10
AMENDED RETENTION AND NON-COMPETITION AGREEMENT
This Amended Retention and Non-Competition Agreement (the "Amended Agreement")
is entered into by and between KLA-Tencor Corporation (the "Company") and
Xxxxxxx X. Xxxxxxxxx ("Executive") effective as of April 29, 1998 (the
"Effective Date").
Recitals:
A. The Company desires to continue to retain the services of Executive as set
forth in this Amended Retention and Non-Competition Agreement and Executive
desires to continue to provide services to the Company upon the terms and
conditions set forth herein.
B. The Company desires to ensure that Executive does not compete with and is
available to continue to provide services to the Company as set forth herein.
Agreement:
In consideration of the covenants and agreements contained herein, the parties
agree as follows:
1. Effectiveness of Amended Agreement.This Amended Agreement shall become
effective upon the Effective Date and amends that Retention and Non-Competition
Agreement dated April 30, 1997 contemplated by the Agreement and Plan of
Reorganization (the "Merger Agreement") by and among Tencor Instruments
("Tencor"), Tiger Acquisition Corp. and KLA Instruments Corporation ("KLA"). The
Company and Executive agree that this Amended Agreement shall govern the terms
and conditions of Executive's provision of services to the Company from and
after the Effective Date.
2. Term. This Amended Agreement shall commence on the Effective Date and shall
end on the date that all obligations hereunder have been fully discharged.
3. Duties.
a. Responsibilities. From and after the Effective Date until the commencement of
any Part-Time Employment Term (as defined in Section 7 of this Amended
Agreement) (the "Full-Time Employment Period"), the Company shall employ the
Executive with such duties and responsibilities as determined from time to time
by the Board of Directors (the "Board") of the Company. It is understood and
agreed that Executive will be considered an employee of the Company for tax
withholding purposes for the duration of both the Full-Time Employment Period
and the Part-Time Employment Term. Executive acknowledges that as a part-time
Employee he shall not have the power to bind the Company.
b. Board Membership. If Executive is serving as a member of the Board on the
date of termination of the Full-Time Employment Period, he shall tender to the
Board his resignation from the Board effective as of such date. The Board shall
not be obligated to accept such resignation.
4. Obligations. Executive agrees, during the Full-Time Employment Period, not to
actively engage in any other employment, occupation or consulting activity for
any direct or indirect remuneration without the prior approval of the Board;
provided, however, that Executive may serve in any capacity with any civic,
educational or charitable organization, or as a member of corporate Boards of
Directors or committees thereof without the approval of the Board.
5. Employee Benefits. During the Full-Time Employment Period, Executive shall be
eligible to participate in (i) all employee benefit plans currently and
hereafter maintained by the Company for senior management according to their
terms, and (ii) such other employee benefits as are set forth in this Amended
Agreement. During any Part-Time Employment Term, Executive shall only be
eligible to participate in the Company's group health, vision and dental plans
and shall not be eligible to participate in the Company's other employee benefit
plans and arrangements.
6. Full-Time Employment Period Compensation.
a. Base Salary. During the Full-Time Employment Period, and during certain
Part-Time Employment Terms as specified in Section 7 hereof, the Company shall
pay the Executive as compensation for his services a base salary at an initial
annualized rate (which initial rate shall in no event be less than the
Executive's current base salary with KLA or Tencor) recommended by the
Compensation Committee of the Board and approved by the Board, as adjusted from
time to time by the Board or its Compensation Committee (the "Base Salary"). The
Base Salary shall be paid periodically in accordance with normal Company payroll
practices and subject to the usual, required withholding. Base Salary shall mean
the last full time salary as of the beginning of the Part-Time Employment
Period. During the Full-Time Employment Period, Executive's Base Salary shall be
reviewed annually for possible adjustments in light of Executive's performance
of his duties, as determined by the Board or its Compensation Committee.
b. Bonus. During the Full-Time Employment Period and during certain Part-Time
Employment Terms as specified in Section 7 hereof, Executive shall be eligible
to receive bonuses as determined by the Board or its Compensation Committee. The
Company shall have the obligation to pay any and all bonuses referred to in this
Amended Agreement only at the same time as bonuses are normally paid to senior
management of the Company and contingent in each case upon the Company's payment
of bonuses to the senior officers of the Company in such fiscal year.
7. Termination of Employment; Transition to Part-Time Employment.
a. Part-Time Employment Term Definition; Obligations. The periods of part-time
employment specified in this Section 7 shall be defined as the "Part-Time
Employment Term" for the purposes of this Amended Agreement. During any
Part-Time Employment Term, Executive shall be required to devote such time in
rendering services to the Company as shall be mutually agreed upon and
acceptable to the Executive and the Company. During the Part-Time Employment
Term, Executive shall be free to serve as a director, employee, consultant or
advisor to any other corporation or other business enterprise without the prior
written consent of the Company so long as such activities do not interfere with
his duties and obligations under this Amended Agreement, including, without
limitation, Executive's obligations under Section 10 hereof. In consideration of
Executive's not working for a Non-Competing Company or a Competing Company and
being available to provide the mutually agreed upon services required hereunder
during the Part-Time Employment Term, the Executive shall receive the
compensation specified in this Section 7. At the end of such Part-Time
Employment Term, the Executive's employment with the Company shall terminate.
b. Termination of Full-Time Employment for Cause. The Company may at any time
terminate Executive's full-time employment hereunder for "Cause." For the
purposes of this Amended Agreement "Cause" shall mean (i) Executive's gross
negligence or willful misconduct in connection with the performance of his
duties, (ii) Executive's conviction of or plea of nolo contendere to, any felony
in a court of competent jurisdiction, or (iii) Executive's embezzlement or
misappropriation of Company property. If the Executive's full-time employment is
terminated by the Company for Cause, then, subject to Executive entering into a
release of claims agreement with the Company in a form reasonably approved by
the Company (the "Release"), the Executive will receive a lump-sum payment equal
to 25% of Base Salary and Executive shall not be entitled to any other benefits
hereunder.
c. Voluntary Termination of Full-Time Employment by Executive Other
than for Good Reason. If the Executive desires to voluntarily terminate his
full-time employment with the Company, then Executive shall provide the Company
with written notice of such termination. Subject to Executive entering into the
Release, the Executive shall remain employed by the Company as a part-time
employee on the terms described herein. If such notice is given (or deemed
given) to the Company on or after April 30, 1998, the Part-Time Employment Term
shall be 36 months. During such 36-month period, Executive shall be paid
(A) Base Salary for the first 24 months, paid in accordance with the Company's
normal payroll practices,
(B) a mutually agreeable level of compensation per month (determined based on
the level of services expected to be rendered) for the final 12 months, paid
monthly,
(C) an annual bonus equal to the amount that would otherwise have been payable
to Executive upon Executive's achievement of 100% of his individual bonus
objectives (in distinction to Company bonus objectives, which shall be based
upon actual Company performance for such fiscal year) for the Company's fiscal
year in which Executive's transition to part-time employment occurs (the "Target
Bonus"),
(D) for the Company's fiscal year ending in the period between the first
anniversary of the date of termination of Executive's full-time employment and
the second anniversary of the date of termination of Executive's full-time
employment with the Company, an amount equal to the amount that would otherwise
have been payable to Executive upon Executive's achievement of 100% of his
individual bonus objectives (in distinction to Company bonus objectives, which
shall be based upon actual Company performance for such fiscal year) under the
Company's bonus plan for such fiscal year (the "Second Year Bonus"), and
(E) a pro-rated bonus for the Company's fiscal year in which Executive's
part-time employment terminates (the "Part-Time Employment Termination Fiscal
Year") determined by multiplying the amount that would otherwise have been
payable to Executive upon Executive's achievement of 100% of his individual
bonus objectives (in distinction to Company bonus objectives, which shall be
based upon actual Company performance for such fiscal year) for the Part-Time
Employment Termination Fiscal Year by a fraction, the numerator of which is the
number of days in the Part-Time Employment Termination Fiscal Year covered by
the Part-Time Employment Term and the denominator of which is three hundred and
sixty-five (the "Pro-Rated Bonus").
d. Termination of Full-Time Employment by Company Other than for Cause. If the
Company desires to terminate Executive's full-time employment with the Company
other than for Cause, then the Company shall provide Executive with written
notice of such termination. If the Executive's full-time employment is
terminated by the Company other than for Cause, then, subject to Executive
entering into a Release, the Executive shall receive the same benefits as set
forth in (c) above.
e. Reduction of Part-Time Employment Term Compensation and Benefits if Executive
Becomes Employed by a Non-Competing Company. If during the Part-Time Employment
Term, Executive becomes employed by an entity that is not a "Competing Company"
(as defined in Section 10 hereof), Executive (i) shall have his Base Salary
reduced to a mutually agreeable amount per month (determined based on the level
of services expected to be rendered) in exchange for Executive providing
mutually agreed upon services to the Company, (ii) shall not be eligible to
receive any Target Bonus, Second Year Bonus or Pro-Rated Bonus to the extent not
already earned by Executive, and (iii) shall not be eligible to participate or
receive benefits under any other employee benefit plans, policies, practices or
arrangements of the Company or its predecessors. For the purposes of the
foregoing, the Target Bonus and Second Year Bonus shall be deemed earned, to the
extent otherwise payable, if Executive is a part-time Employee of the Company
and is not employed by a non-Competing Company through the last day of the
fiscal year to which such bonuses relate, and the Pro-Rated Bonus shall be
deemed earned, to the extent otherwise payable, on the last day of the Part-Time
Employment Term if Executive is not employed by a non-Competing Company through
the last day of the Part-Time Employment Term.
f. Stock Option Vesting During Part-Time Employment Term. During any Part-Time
Employment Term provided for in this Amended Agreement, stock options that were
granted to Executive more than 12 months prior to the Executive's full time
employment termination date ("Old Options") shall continue to vest in accordance
with the terms and conditions of the original option agreements relating to such
Old Options, but any stock options granted to Executive within the 12 months
prior to the Executive's full time employment termination date ("New Options")
shall not vest during the Part-Time Employment Term. The term "stock option" as
used herein does not include any right to participate in the employee stock
purchase plans of the Company or the Prior Companies, which right shall
terminate immediately upon the commencement of any Part-Time Employment Period.
8. Termination of Employment Relationship. Executive's part-time employment
relationship with the Company may not be terminated by the Company prior to the
end of the Part-Time Employment Term, except (i) upon the death or permanent
disability of Executive, (ii) by written agreement between both of the parties
hereto; provided, however, that Executive's employment with the Company, whether
full-time or part-time, shall immediately and automatically terminate upon
Executive's breach of Section 10 hereof. No additional benefits or payments will
become payable to Executive hereunder upon a termination of Executive's
Part-Time Employment Term.
9. Death or Disability. In the event of Executive's death or permanent
disability, this Amended Agreement shall terminate, unless otherwise decided by
the Board.
10. Covenant Not to Compete.
a. Covenant Not to Compete. During the Full-Time Employment Period and the
Part-Time Employment Term, Executive will not render services as an employee,
consultant, director, partner, owner to, or participate as more than a two
percent shareholder in, any Competing Company in a Restricted Territory, as such
terms are defined immediately below.
b. Competing Company. "Competing Company" shall mean another semiconductor
capital equipment company, partnership, limited liability corporation or other
entity any portion of whose business, including, without limitation,
development, manufacturing, marketing, sales or technical or sales support,
competes with the Company's business at that time.
c. Restricted Territory. "Restricted Territory" means any county in the State of
California, each state in the United States and each country in the world.
11. Limitation on Payments. If the benefits provided for in this Amended
Agreement or otherwise payable to the Executive
(i) constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section 11, would be subject to the excise tax imposed by Section 4999 of the
Code, then the Executive's benefits hereunder shall be either (i) delivered in
full, or
(ii) delivered as to such lesser extent which, or at such later time as, would
result in no portion of such severance benefits being subject to excise tax
under Section 4999 of the Code, whichever of the foregoing amounts, taking into
account the applicable federal, state and local income taxes and the excise tax
imposed by Section 4999, results in the receipt by the Executive on an after-tax
basis, of the greatest amount of severance benefits, notwithstanding that all or
some portion of such benefits may (or might otherwise) be taxable under Section
4999 of the Code. Unless the Company and the Executive otherwise agree in
writing, any determination required under this Section 11 shall be made in
writing by the Company's independent public accountants (the "Accountants"),
whose determination shall be conclusive and binding upon the Executive and the
Company for all purposes; provided that if benefits are reduced or deferred, the
Executive shall choose the order in which such benefits are reduced or deferred.
For purposes of making the calculations required by this Section 11, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 11.
12. Assignment. Executive's rights and obligations under this Amended Agreement
shall not be assignable by Executive. The Company's rights and obligations under
this Amended Agreement shall not be assignable by the Company except as incident
to the transfer, by merger, liquidation, or otherwise, of all or substantially
all of the business of the Company.
13. Notices. Any notice required or permitted under this Amended Agreement shall
be given in writing and shall be deemed to have been effectively made or given
if personally delivered, or if sent by facsimile, or mailed or sent via Federal
Express to the other party at its address set forth below in this Section 13, or
at such other address as such party may designate by written notice to the other
party hereto. Any effective notice hereunder shall be deemed given on the date
personally delivered or on the date sent by facsimile or deposited in the United
States mail (sent by certified mail, return receipt requested), as the case may
be, at the following addresses:
If to the Company: KLA-Tencor Corporation
000 Xxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
If to Executive: Xxxxxxx X. Xxxxxxxxx
00000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
14. Arbitration. The parties hereto agree that any dispute or controversy
arising out of, relating to, or in connection with this Amended Agreement, or
the interpretation, validity, construction, performance, breach, or termination
thereof, shall be finally settled by binding arbitration to be held in Santa
Xxxxx County, California under the Employment Dispute Resolution Rules of the
American Arbitration Association as then in effect (the "Rules"). The
arbitrator(s) may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator(s) shall be final, conclusive and
binding on the parties to the arbitration, and judgment may be entered on the
decision of the arbitrator(s) in any court having jurisdiction.
The arbitrator(s) shall apply California law to the merits of any dispute or
claim, without reference to rules of conflicts of law, and the arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law.
The parties shall each pay one-half of the costs and expenses of such
arbitration, and each party shall pay its own counsel fees and expenses.
EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION 14, WHICH DISCUSSES ARBITRATION.
EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AMENDED AGREEMENT, EXECUTIVE AGREES
TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS
AMENDED AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO EXECUTIVE'S RELATIONSHIP WITH THE
COMPANY.
15. Withholding. The Company shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.
16. Severability. If any term or provision of this Amended Agreement shall to
any extent be declared illegal or unenforceable by arbitrator(s) or by a duly
authorized court of competent jurisdiction, then the remainder of this Amended
Agreement or the application of such term or provision in circumstances other
than those as to which it is so declared illegal or unenforceable, shall not be
affected thereby, each term and provision of this Amended Agreement shall be
valid and enforceable to the fullest extent permitted by law and the illegal or
unenforceable. term or provision shall be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term of provision.
17. Entire Agreement. This Amended Agreement and the agreements relating to the
New Options and Old Options represent the entire agreement of the parties with
respect to the matters set forth herein, and to the extent inconsistent with
other prior contracts, arrangements or understandings between the parties,
supersedes all such previous contracts, arrangements or understandings between
the Company and Executive. The Amended Agreement may be amended at any time only
by mutual written agreement signed by the parties hereto.
18. Governing Law. This Amended Agreement shall be construed, interpreted, and
governed in accordance with the laws of the State of California without
reference to rules relating to conflict of law (other than any such rules
directing application of California law).
19. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Amended Agreement.
20. Counterparts. This Amended Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
EXECUTIVE KLA-TENCOR CORPORATION
/s/ XXXXXXX X. XXXXXXXXX /s/ XXXXXX X. XXXXXXXXX
----------------------------- -------------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxxx
Executive Vice President
Human Resources
Date:April 29, 1998
