EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of March 1, 2000, by and between Xxxxxxx 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 aquisition 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 shareholders 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 recognition 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 Vice President, Human Resources and
Administration, 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 the affiliated entities.
2. BASE COMPENSATION. The Company shall pay the Employee as
compensation for her services a base salary at the annualized rate of
$180,000.00 Such salary shall be paid periodically in accordance with normal
Company payroll practices. The Board or the 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.
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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 Committees 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 program 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 of 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 Section 8 and 9 below, in the event
the 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 9 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 occurs. 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 each gross up.
7. DEFINITION OF TERMS. The following terms referred to in this
Agreement shall have the following meanings:
(a) CAUSE "Cause" shall mean (1) 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
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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 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 significant
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 the 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
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location, without the Employee's express written consent, (vi) any
purported termination of the Employee by the Company which is not
affected 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 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
income 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, notwithstanding 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 this unanimous approval of
the disinterested Board members.
10. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the
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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 manner and 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 SUCCESSORS. 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, divisees and legatees.
11. NOTICE. Notices 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
make 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.
Judgement 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 affiliate 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 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.
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(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.
By: Xxxxxx X. Xxxxx
Title: Chairman of the Board,
Chief Executive Officer and President
/s/ Xxxxxx X. Xxxxx
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EMPLOYEE: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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