Exhibit 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of October 21, 1998, by and between Xxxxxx X. Xxxxxxxx
(the "Employee") and Cymer, Inc., a Nevada corporation (the "Company").
RECITALS
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors
of the Company (the "Board") recognizes that such events can be a distraction
to the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of
the Company and its stockholders to assure that the Company will have the
continued dedication and objectivity of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company, although no such Change is now contemplated.
B. The Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances,
upon termination of the Employee's employment in connection with a Change of
Control, which benefits are intended to provide the Employee with financial
security and provide sufficient incentive and encouragement to the Employee
to remain with the Company notwithstanding the possibility of a Change of
Control.
D. To accomplish the foregoing objectives, the Board has directed the Company,
upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
E. Certain capitalized terms used in this Agreement are defined in Section 7
below.
AGREEMENT
In consideration of the mutual covenants herein contained, and in consideration
of the continuing employment of the Employee by the Company, the parties
agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee in
the position of Senior Vice President, Process Quality, as such position has
been defined in terms of responsibilities and compensation as of the effective
date of this Agreement; provided, however, that the Board shall have the
right, at any time prior to the occurrence of a Change of Control, to revise
such responsibilities and compensation as the Board in its discretion may
deem necessary or appropriate. The Employee shall comply with and be bound
by the Company's operating policies, procedures and practices from time
to time in effect during his employment. During the term of the Employee's
employment with the Company, the Employee shall continue to devote his full
time, skill and attention to his duties and responsibilities, and shall
perform them faithfully, diligently and competently, and the Employee shall
use his best efforts to further the business of the Company and its
affiliated entities.
2. Base Compensation. The Company shall pay the Employee as compensation
for her services a base salary at the annualized rate of $175,000.00. Such
salary shall be paid periodically in accordance with normal Company payroll
practices. The Board or Compensation Committee of the Board shall review the
base salary of the Employee according to normal Company practice, but no less
frequently than annually, and may in its discretion increase but not
decrease the base salary below the amount specified in this agreement.
3. Annual Incentive. Beginning with the Company's current fiscal year and
for each fiscal year thereafter during the term of this Agreement, the
Employee shall be eligible to receive an annual bonus under the Company's
annual incentive plan (the "Annual Incentive") based upon performance
targets approved by the Compensation Committee of the Board (the "Target
Incentive"). The Annual Incentive payable hereunder shall be payable in
accordance with the Company's normal practices and policies.
4. Employee Benefits. The Employee shall be eligible to participate in
the employee benefit plans and executive compensation programs maintained
by the Company applicable to other key executives of the Company, including
(without limitation) retirement plans, savings or profit-sharing plans,
stock option, incentive or other bonus plans, life, disability, health,
accident and other insurance programs, paid vacations, and similar plans
or programs, subject in each case to the generally applicable terms and
conditions of the applicable plan or program in question and to the
sole determination of the Board or any committee administering such plan
or program.
5. Employment Relationship. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any
reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement,
or as may otherwise be available in accordance with the Company's
established employee plans and policies at the time of termination.
6. Termination Benefits. Subject to Sections 8 and 9 below, in the
event Employee's employment terminates as a result of an Involuntary
Termination other than for Cause upon or within 18 months after a Change
of Control, then the Employee shall be entitled to receive severance
and other benefits as follows:
(a) Pay Continuation. The Employee shall be entitled to monthly
payments equal to the Employee's monthly Base Compensation as in
effect immediately prior to the Change of Control plus one-twelfth
(1/12) of the average of the annual bonus amount paid to the
Employee with respect to the three previous calendar years. Such
monthly amounts shall be paid according to the normal payroll
practice of the Company for 12 months following the date of
termination (the "Termination Period").
(b) Annual Incentive. The Employee shall be entitled to receive a
percentage of the Employee's Target Incentive for the calendar year
in which such termination occurrs. Such percentage shall equal a
fraction, the numerator of which shall be the number of days in such
calendar year up to and including the date of such termination and
the denominator of which shall be the number of days in such calendar
year. Such amount shall be payable according to the normal practice
of the Company with respect to the payment of bonuses.
(c) Options. The unvested portion of any stock option(s) held by
the Employee under the Company's stock option plans shall vest and
become exercisable in full upon the date of such termination.
(d) Medical Benefits. The Company shall reimburse the Employee for
the cost of the Employee's group health, vision and dental plan
coverage in effect until the end of the Termination Period. The
Employee may use this payment, as well as any other payment made
under this Section 6, for such continuation coverage or for any
other purpose. To the extent the Employee pays the cost of such
coverage, and the cost of such coverage is not deductible as a
medical expense by the Employee, the Company shall "gross-up" the
amount of such reimbursement for all taxes payable by the Employee
on the amount of such reimbursement and the amount of such gross-up.
7. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Employee in connection with his responsibilities as an
employee and intended to result in substantial personal enrichment
of the Employee, (ii) conviction of a felony that is injurious to the
Company, (iii) a willful act by the Employee which constitutes gross
misconduct and which is injurious to the Company, and (iv) continued
violations by the Employee of the Employee's obligations under
Section 1 of this Agreement that are demonstrably willful and deliberate
on the Employee's part after there has been delivered to the Employee
a written demand for performance from the Company which describes the
basis for the Company's belief that the Employee has not substantially
performed his duties.
(b) Change of Control. "Change of Control" shall mean the occurrence
of any of the following events:
(i) The acquisition by any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) (other than the
Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company)
of the "beneficial ownership" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting
power represented by the Company's then outstanding voting
securities; or
(ii) A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are
directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual not otherwise an
Incumbent Director whose election or nomination is in connection
with an actual or threatened proxy contest relating to the
election of directors to the Company); or
(iii) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company
or such surviving entity outstanding immediately after such merger
or consolidation, or the approval by the stockholders of the
Company of a plan of complete liquidation of the Company or of an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(c) Disability. "Disability" shall mean that the Employee has been
unable to substantially perform his duties under this Agreement as the
result of his incapacity due to physical or mental illness, and such
inability, at least 26 weeks after its commencement, is determined
to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be
unreasonably withheld).
(d) Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(e) Involuntary Termination. "Involuntary Termination" shall mean (i)
without the Employee's express written consent, the significiant
reduction of the Employee's duties or responsibilities relative to the
Employee's duties or responsibilities in effect immediately prior to
such reduction; provided, however, that a reduction in duties or
responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, when the Chief Financial
Officer of Company remains as such following a Change of Control and
is not made the Chief Financial Officer of the acquiring corporation)
shall not constitute an "Involuntary Termination"; (ii) without the
Employee's express written consent, a substantial reduction, without
good business reasons, of the facilities and perquisites (including
office space and location) available to the Employee immediately prior
to such reduction; (iii) without the Employee's express written consent,
a material reduction by the Company in the Base Compensation or Target
Incentive of the Employee as in effect immediately prior to such reduction,
or the ineligibility of the Employee to continue to participate in any
long-term incentive plan of the Company; (iv) a material reduction by
the Company in the kind or level of employee benefits to which the
Employee is entitled immediately prior to such reduction with the result
that the Employee's overall benefits package is significantly reduced;
(v) the relocation of the Employee to a facility or a location more than
50 miles from the Employee's then present location, without the Employee's
express written consent; (vi) any purported termination or the Employee
by the Company which is not effected for death or Disability or for
Cause, or any purported termination for which the grounds relied upon
are not valid or (vii) the failure of the Company to obtain the assumption
of this agreement by any successors contemplated in Section 10 below.
8. Limitation on Payments.
(a) In the event that the severance and other benefits provided for in
this Agreement or otherwise payable to the Employee (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 8 would be subject to the excise tax imposed by Section 4999
of the Code, then the Employee's severance benefits under Section 6 shall
be payable either (i) in full, or (ii) as to such lesser amount which
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
taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest amount of
severance benefits under this Agreement, nothwithstanding that all or
some portion of such severance benefits may be taxable under Section
4999 of the Code.
(b) If a reduction in the payments and benefits that would otherwise be
paid or provided to the Employee under the terms of this Agreement is
necessary to comply with the provisions of Section 8(a), the Employee
shall be entitled to select which payments or benefits will be reduced
and the manner and method of any such reduction of such payments or
benefits (including but not limited to the number of options that
would vest under Section 6(b) subject to reasonable limitations
(including, for example, express provisions under the Company's benefit
plans) (so long as the requirements of Section 8(a) are met). Within
thirty (30) days after the amount of any required reduction in payments
and benefits is finally determined in accordance with the provisions of
Section 8(c), the Employee shall notify the Company in writing regarding
which payments or benefits are to be reduced. If no notification is
given by the Employee, the Company will determine which amounts to reduce.
If, as a result of any reduction required by Section 8(a), amounts
previously paid to the Employee exceed the amount to which the Employee is
entitled, the Employee will promptly return the excess amount to the
Company.
(c) Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section 8 shall be made in writing by
the Company's independent public accountants (the "Accountants"),
whose determination shall be conclusive and binding upon the Employee
and the Company for all purposes. For purposes of making the calculations
required by this Section 8, 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 Employee 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 8.
9. Certain Business Combinations. In the event it is determined by the
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, including, but not limited to, Section 6(b) hereof, which allows
for the acceleration of vesting of options to purchase shares of the Company's
common stock upon a termination in connection with a Change of Control, would
preclude accounting for any proposed business combination of the Company
involving a Change of Control as a pooling of interests, and the Board
otherwise desires to approve such a proposed business transaction which
requires as a condition to the closing of such transaction that it be
accounted for as a pooling of interests, then any such Section of this
Agreement shall be null and void, but only if the absence of enforcement
of such Section would preserve the pooling treatment. For purposes of this
Section 9, the Board's determination shall require the unanimous approval
of the disinterested Board members.
10. Successors.
(a) Company's Successors. Any successors to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and assets shall assume the obligations under this Agreement
and agree expressly to perform the obligations under this Agreement in
the same mannner annd to the same extent as the Company would be required
to perform such obligations in the absence of a succession. For all
purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and assets which executes and delivers
the assumption agreement described in this Section 10(a) or which becomes
bound by the terms of this Agreement by operation of law.
(b) Employee's Successor. The terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable
by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
11. Notice. Notice and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified
mail, return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address
which he most recently communicated to the Company in writing. In the case
of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Secretary.
12. Miscellaneous Provisions
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not
expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of California.
(d) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
to or in connection with this Agreement shall be settled exclusively by
binding arbitration in San Diego, California, in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company and the
Employee shall each pay one-half of the costs and expenses of such
arbitration, and each shall separately pay its counsel fees and expenses.
Punitive damages shall not be awarded.
(f) No Assignment of Benefits. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation
of law, including (without limitation) bankruptcy, garnishment, attachment
or other creditor's process, and any action in violation of this Section 12(g)
shall be void.
(g) Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, and an affilate may assign its rights under this
Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the
assignee is less than the net worth of the Company at the time of the
assignment. In the case of any such assignment, the term "Company" when
used in a section of this Agreement shall mean the corporation that actually
employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY: CYMER, INC.
/s/ XXXXXX X. XXXXX
By: Xxxxxx X. Xxxxx
Title: Chairman of the Board, Chief Executive Officer
and President
EMPLOYEE: /s/ XXXXXX X. XXXXXXXX
Xxxxxx X. Xxxxxxxx
