EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
August 10, 1998, between Therma-Wave, Inc., a Delaware corporation (the
"Company"), and L Xxx Xxxxxxxx ("Executive").
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In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
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accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending on the
earlier of (a) the fifth anniversary of the date hereof and (b) the date of
termination as provided in Section 4 hereof (the "Employment Period").
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Position and Duties.
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(a) During the Employment Period, Executive shall serve as the Vice
President of Finance and Chief Financial Officer of the Company and shall have
the normal duties, responsibilities and authority of the Vice President of
Finance and Chief Financial Officer, subject to the overall direction and
authority of the Company's board of directors (the "Board") and the Company's
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President and/or Chief Executive Officer.
Executive shall report to the Company's President and Chief Operating
Officer, and Executive shall devote his best efforts and his full business time
and attention to the business and affairs of the Company and its Subsidiaries.
For purposes of this Agreement, "Subsidiaries" shall mean any
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corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
2. Base Salary and Benefits.
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(a) During the Employment Period, Executive's base salary shall be at
least $155,000 per annum, subject to review by the Board and the President
and/or Chief Executive Officer on an annual basis (the "Base Salary"), which
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salary shall be payable in regular installments in accordance with the Company's
general payroll practices and shall be subject to customary withholding. In
addition, during the Employment Period, Executive shall be entitled to the
fringe benefits listed on Exhibit A attached hereto and (to the extent not
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listed on Exhibit A) shall be entitled to participate in all of the Company's
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employee benefit programs for which senior executive employees of the Company
and its Subsidiaries are generally eligible (collectively, the
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("Benefits").
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The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
In addition to the Base Salary, for each of the Company's fiscal years
beginning with the 1999 fiscal year, Executive will be eligible to earn a bonus
of up to 30% of his Base Salary (the "Bonus") based on the Company achieving
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certain corporate performance goals and Executive achieving certain individual
goals. The target amount of the Bonus, the corporate performance goals and the
individual goals each shall be set annually by the Board and the Company's Chief
Executive Officer. The amount of the Bonus shall be determined in accordance
with the procedures set forth on Exhibit B attached hereto.
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2. Termination.
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(a) The Employment Period (i) shall terminate upon Executive's
resignation (other than for Good Reason) or death, (ii) shall terminate upon
Executive's Disability, (iii) may be terminated by the Company at any time for
Cause (as defined below) or without Cause and (iv) may be terminated by
Executive for Good Reason.
If the Employment Period is terminated by the Company without Cause,
by Executive for Good Reason or as a result of Executive's Disability, Executive
shall be entitled to receive the Base Salary, the Bonus (which during the
Severance Period will be equal to 30% of the Base Salary in effect immediately
prior to the termination) and the Benefits (the "Severance Payment"), in each
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case until the date which is six (6) months after the date of such termination
(the "Severance Period"); provided that the portion of the Bonus that Executive
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would have been entitled to receive for the fiscal year in which the Severance
Period terminates shall be reduced proportionately by the ratio of the number of
days of such fiscal year not included in the Severance Period to the total
number of days in such fiscal year. The Severance Payment will be payable at
such times as such payments would have been payable had Executive not been
terminated. Notwithstanding anything in this Agreement to the contrary, the
Company shall have no obligation to pay any part or all of the Severance Payment
if at any time during the Severance Period Executive is in breach of Section 6
hereof. If the Employment Period is terminated for any of the foregoing reasons,
the Severance Payment shall be reduced by fifty percent (50%) of the amount of
any compensation Executive receives in respect of any other employment during
the Severance Period. Upon request from time to time, Executive shall furnish
the Company with a true and complete certificate specifying any such
compensation due to or received by him. As a condition to the Company's
obligations (if any) to make the Severance Payment pursuant to this Section
4(b), Executive will execute and deliver a general release in
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form and substance satisfactory to the Company.
(b) If the Employment Period is terminated by the Company for Cause or
is terminated pursuant to subsection 4(a)(i) above, Executive shall be entitled
to receive the Base Salary through the date of termination.
Except as specifically provided herein, all of Executive's rights to
Benefits and bonuses which accrue or become payable after the termination of the
Employment Period shall cease upon such termination.
For purposes of this Agreement, "Disability" shall mean any physical
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or mental illness or incapacity of Executive if, as determined by the Board,
such illness or incapacity results in Executive's inability to perform his
full-time duties and responsibility for the Company (i) for a period of three
consecutive months, (ii) for a period of 6 months in any twelve month period, or
(iii) at such time when satisfactory medical evidence exists that Executive has
a physical or mental illness or incapacity that will likely prevent him from
returning to the performance of his work duties for 6 months or longer.
For purposes of this Agreement, "Cause" shall mean (i) the commission
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of a felony or any other act or omission involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct tending to bring the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
and repeated failure to perform duties as reasonably directed by the Board, (iv)
gross negligence or willful misconduct with respect to the Company or any of its
Subsidiaries, or (v) any other material breach of this Agreement or the Option
Agreement (as hereinafter defined).
For purposes of this Agreement, "Good Reason" shall mean the
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occurrence (without Executive's consent) of any one of the following acts by the
Company, or failure by the Company to act: (i) the assignment to Executive of
duties that represent a substantial adverse alteration in the nature or status
of his responsibilities as a senior executive officer of the Company, except in
the event Executive is unable to or fails to perform his normal full-time duties
and responsibility with the Company as a result of incapacity due to physical or
mental illness or incapacity; (ii) a reduction in the Base Salary as in effect
on the date hereof; (iii) the relocation of the Company's principal executive
offices to a location outside the San Francisco Bay Area (which includes the
counties of San Francisco, Alameda, Santa Xxxxx, Contra Costa, San Mateo and
Marin) or the Company's requiring Executive to be based anywhere other than the
Company's principal executive offices (but not including required travel on the
Company's business); or (iv) the wrongful failure by the Company to pay to
Executive any portion of the Base Salary, Bonus or Benefits, or to pay to
Executive any portion of an installment of deferred compensation or Benefits
under any deferred compensation or benefits program of the Company, within 45
days of the date such Base Salary, Bonus, compensation or Benefit is due.
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2.Stock Option.
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(a) Executive shall be granted nonstatutory options to purchase 70,000
shares of the Company's Common Stock on the effective date of this Agreement
(the "Grant Date"). The options shall vest annually in equal installments over a
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vesting term of 5 years from the Grant Date and shall have an exercise price of
$4.00 per share. The vesting of the options shall be accelerated and the options
shall become immediately exercisable upon a Sale of the Company (as defined
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below). The grant of options shall be set forth in the Company's standard form
of option agreement (the "Option Agreement").
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For purposes of this Agreement, a "Sale of the Company" means any
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transaction involving the Company and an Independent Third Party or affiliated
group of Independent Third Parities pursuant to which such party or parties
acquire (i) a majority of the outstanding shares of capital stock of the Company
entitled to vote generally in the election of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
(b) For purposes of this Agreement, an "Independent Third Party")
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means any Person who, immediately prior to the contemplated transaction, does
not own in excess of 5% of the capital stock on a fully diluted basis, who is
not controlling, controlled by or under common control with any such 5% owner of
the capital stock and who is not the spouse or descendant (by birth or adoption)
of any such 5% owner of the capital stock; provided that in no event will Xxxx
Capital, Inc. or any of its affiliates be an Independent Third Party.
3.Noncompetition; Confidentiality; Nonsolicitation.
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(a) Noncompetition. Executive agrees that while he is employed by the
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Company he will not Compete with the Company or any of its Subsidiaries. For
purposes of this Agreement, "Compete" or "Competing" shall mean, directly or
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indirectly, without the prior written consent of the Company, providing
consultive service with or without pay, owning, managing, operating, joining,
controlling, participating in, or being connected as a stockholder, partner or
otherwise with any business, individual, partner, firm, corporation or other
entity that (i) is in competition with the Company or any Subsidiary or Related
Entity (as defined in Section 6(d) below) to the extent its products are similar
or materially related to those of the Company or any Subsidiary or Related
Entity (including products under development by the Company, or to Executive's
knowledge, by any Subsidiary or Related Entity) or (ii) otherwise engages in any
business in which the Company or any Subsidiary or Related Entity is engaged or
proposes to engage, in either case as of the date of the termination of
Executive's employment; provided that "Compete" and "Competing" shall not mean
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being a passive owner of not more than 2% of the outstanding stock of any class
of a corporation which is publicly traded, so long as Executive has no active
participation in the business of
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such corporation.
Confidential Information. Executive agrees that he will not at any
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time, during and/or after the term of this Agreement, directly or indirectly,
divulge, furnish or make accessible to any party or otherwise use or exploit any
of the proprietary or confidential information or knowledge, including without
limitation, any financial information, marketing plans, strategies, trade
secrets (as defined by California Civil Code Section 3426), data, know-how,
processes, techniques, patents, patent applications, improvements, inventions,
formulas and other Proprietary Information, as such term is used in the
Proprietary Information and Employee Inventions Agreement between the Company
and Executive, of the Company or its Subsidiaries, affiliates, vendors,
suppliers or customers, other than in the course of performing his duties
hereunder and with the consent of the Company in accordance with the Company's
policies and regulations, as established from time to time, for the protection
of the Company's Proprietary Information. The provisions of this Section 6(b)
shall not apply to any information, documents or materials which are, as shown
by appropriate written evidence, in the public domain, other than by reason of a
default by Executive of his obligations hereunder.
Right to Company Materials. Executive agrees that all styles, designs,
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lists, materials, books, files, reports, correspondence, data, records, and
other documents pertaining to his employment or to any confidential information
referred to above ("Company Material") used or prepared by, or made available
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to, Executive, shall be and shall remain the property of the Company or its
designees. Upon the termination of Executive's employment or the expiration of
this Agreement, all Company Materials shall be returned immediately to the
Company, and Executive shall not make or retain any copies or excerpts thereof.
Antisolicitation. Executive promises and agrees that while he is
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employed by the Company, during the Severance Period, and for a period of two
(2) years thereafter (the "Antisolicitation Periods"), he will not induce or
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attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its present or future
Subsidiaries or any affiliate of the Company to which the technology of the
Company is hereafter transferred and which at such time engages in activities
similar or materially related to those of the Company (a "Related Entity"),
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either directly or indirectly, to cease doing business with the Company or any
Subsidiary or Related Entity or in any way materially interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary or Related Entity.
(a)Soliciting Employees. Executive promises and agrees that for a
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period of five years following the date of termination of employment hereunder,
he will not directly or indirectly (i) solicit any employee of the Company to
work for any business, individual, partnership, firm, corporation, or other
entity in competition with the business of the Company or any subsidiary of the
Company or Related Entity at any time during
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such period or (ii) hire any person who was an employee of the Company or any
Subsidiary or Related Entity at any time during the last year of the Employment
Period.
(a) Disclosure to Company; Inventions as Sole Property of the Company.
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(i) Executive agrees promptly to disclose to the Company any and
all inventions, discoveries, improvements, trade secrets, formulas, techniques,
processes, and know-how, whether or not subject to patent, trademark, copyright,
trade secret or mask work protection and whether or not reduced to practice,
conceived or learned by Executive during his employment with the Company or any
Subsidiary or affiliate of the Company, either alone or jointly with others,
which relate to or result from the actual or anticipated business, work,
research or investigations of the Company or any Subsidiary or affiliate of the
Company, or which result, to any extent, from its use of the Company's premises
or property (the work being hereinafter collectively referred to as the
"Inventions").
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(ii) Executive acknowledges and agrees that all the Inventions
shall be the sole property of the Company or any other entity designated by it
and Executive hereby assigns to the Company his entire right and Interest in and
to all the Inventions; provided, however, that such assignment does not apply to
any Invention which qualifies under the provisions of Section 2870 of the
California Labor Code. The Company or any other entity designated by it shall be
the sole owner of all domestic and foreign rights pertaining to the Inventions.
Executive further agrees as to all the Inventions to assist the Company or
entity designated by it in every way (at the Company's expense) to obtain and
from time to time enforce patents on the Inventions in any and all countries. To
that end, by way of illustration but not limitation, Executive will testify in
any suit or other proceeding involving any of the Inventions, execute all
documents which the Company reasonably determines to be necessary or convenient
for use in applying for and obtaining patents thereon and enforcing same, and
execute all necessary assignments thereof to the Company or entity designated by
it. Executive's obligation to assist the Company or entity designated by it in
obtaining and enforcing patents for the Inventions shall continue beyond the
termination of his employment with the Company, but the Company shall compensate
Executive at a reasonable rate after such termination for the time actually
spent by Executive at the Company's request on such assistance.
(b) List of Prior Inventions. Attached hereto as Exhibit C is a
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complete list of all inventions, discoveries or improvements relating to the
Company's business (or the business of any Subsidiary or affiliate of the
Company) which have been made by Executive prior to the date of this Agreement
and which are not owned by the Company (or any Subsidiary or affiliate thereof).
Executive represents and warrants that such list is complete and accurate in all
respects and acknowledges and agrees that the Company owns the entire right and
interest to each of the Inventions, discoveries or improvements relating to the
Company's or any Subsidiary's or affiliate's business that may be made by
Executive during the Employment Period and that are not listed in
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Exhibit C.
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(b) Injunction. Executive agrees that it would be difficult to
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measure damages to the Company from any breach by Executive of the promises set
forth in subsections (a) through (g) of this Section 6, that injury to the
Company from any such breach would be impossible to calculate, and that money
damages would therefore be an inadequate remedy for any such breach.
Accordingly, Executive agrees that if Executive shall breach any provision of
subsections (a) through (g) of this Section 6 or any of them, the Company shall
be entitled, in addition to all other remedies it may have, to injunctions or
other appropriate orders to restrain any such breach by Executive without
showing or proving any actual damage sustained by the Company.
4. Other Businesses. As long as Executive is employed by the Company or
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any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services for,
any business other than the business of the Company, any of its Subsidiaries or
any corporation or partnership in which the Company or any of its Subsidiaries
have an equity interest.
Executive's Representations. Executive hereby represents and warrants to
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the Company that (i) the execution, delivery and performance of this Agreement
by Executive do not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which he is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity that would be violated
or breached by the execution, delivery and performance of this Agreement by
Executive, and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms. Executive hereby acknowledges and
represents that he has consulted with independent legal counsel regarding his
rights and obligations under this Agreement and that he fully understands the
terms and conditions contained herein.
Survival. The Company's obligation to make Severance Payments under Section
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4(b), if any, and the provisions of Sections 6, 9, 10, 11, 12, 13, 15, 16 and 17
shall survive and continue in full force in accordance with their respective
terms notwithstanding any termination of the Employment Period.
5. Notices. Any notice provided for in this Agreement shall be in writing
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and shall be either personally delivered, mailed by first class mail, return
receipt requested, or delivered by express courier service, to the recipient at
the address below indicated:
Notices to Executive:
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L. Xxx Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
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Notices to the Company:
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Therma-Wave, Inc.
0000 Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to:
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Xxxx Capital, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Xxxxx Xxxxxxx
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
6. Severability. Whenever possible, each provision of this Agreement shall
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be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
Complete Agreement. This Agreement and those documents expressly referred
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to herein embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
No Strict Construction. The language used in this Agreement shall be deemed
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to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Counterparts. This Agreement may be executed in separate counterparts,
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each
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of which is deemed to be an original and all of which taken together constitute
one and the same agreement.
Successors and Assigns. This Agreement is intended to bind and inure to the
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benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign his rights
or delegate his obligations hereunder without the prior written consent of the
Company.
7. Choice of Law. All issues and questions concerning the construction,
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validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of California, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of California or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
Amendment and Waiver. The provisions of this Agreement may be amended or
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waived only with the prior written consent of the Company and Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THERMA-WAVE, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Its: President and COO
/s/ X. Xxx Xxxxxxxx
X. Xxx Xxxxxxxx
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EXHIBIT "A"
1. Personal time off (PTO) of fifteen (15) days per year and ten (10) paid
holidays per year.
2. Car allowance of $900 per month.
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EXHIBIT "B"
BONUS CALCULATION
Vice President: base salary x 30% x CPR x IPR
Note:
CPR - Corporate Performance Rating:
Ranges from .33 to 3.0 based on financial results.
IPR - Individual Performance Rating:
See attached.
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INDIVIDUAL PERFORMANCE RATING (IPR)
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The Individual Performance Rating, IPR, is based on the accumulated weight of
the Individual Goals that have been successfully met and the IPR is calculated
in accordance with the following table:
Accumulated Weight
From Individual Goals IPR
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Below 50 0.00
50 0.25
60 0.50
70 0.70
80 0.90
90 1.00
100 1.00
110* 1.10
120 1.20
130 1.30
etc. etc.
If the accumulated weight falls in between two of the numbers listed above, then
the IPR is calculated in a pro rata fashion from the two closest IPR's in the
table.
* If accumulated weight exceeds 100.
00
XXXXXXX "X"
Xxxx
00
