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EXHIBIT 10.27
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), entered into effective October
1, 1998, is between Novellus Systems, Inc., a California corporation (the
"Company"), and Xxxxxxx Xxxx ("Executive") (collectively, "the parties").
RECITALS
1. Executive has been employed by the Company and is currently serving
as the Chairman and Chief Executive Officer.
2. The Company desires to continue to employ Executive and to assure
itself of the continued services of Executive for the term of this Agreement,
and Executive desires to be employed by the Company for such period, upon the
following terms and conditions.
AGREEMENT
ACCORDINGLY, the parties agree as follows:
1. PERIOD OF EMPLOYMENT
a. BASIC TERM. The Company shall continue to employ Executive
to render services to the Company in the position and with the duties and
responsibilities described in Section 2 from the date of this Agreement through
December 31, 2001 (the "Term Date"), unless Executive's employment is terminated
sooner in accordance with Section 4 below.
2. POSITION, DUTIES, RESPONSIBILITIES
a. POSITION: Executive is employed by the Company to render
services to the Company in the position of Chairman and Chief Executive Officer
and shall perform all services appropriate to that position, as well as such
other services as may reasonably be assigned by the Company. Executive shall
devote his best efforts and full-time attention to the performance of his
duties. Executive shall report to the Board of Directors of the Company.
b. OTHER ACTIVITIES. Except upon the prior written consent of
the Company, Executive will not (i) accept any other employment, or (ii) engage,
directly or indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that is or may be in conflict with, or that might place
Executive in a conflicting position to that of, the Company. Notwithstanding the
foregoing, while the Company does not request Executive's service on the boards
of directors of other corporations, the Company does not, in principle, object
to such service where Executive would have no conflict of interest with duties
owed to the Company.
c. PROPRIETARY INFORMATION. "Proprietary Information" is all
information and any idea in whatever form, tangible or intangible, pertaining in
any manner to the business of the Company, or any Affiliate, or its employees,
clients, consultants, or business associates,
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which was produced by any employee of the Company, or any Affiliate, in the
course of his or her employment or otherwise produced or acquired by or on
behalf of the Company, or any Affiliate. All Proprietary Information not
generally known outside of the Company's organization, and all Proprietary
Information so known only through improper means, shall be deemed "Confidential
Information." Without limiting the foregoing definition, Proprietary and
Confidential Information shall include, but not be limited to: (i) formulas,
teaching and development techniques, processes, trade secrets, computer
programs, electronic codes, inventions, improvements, and research projects;
(ii) information about costs, profits, markets, sales, and lists of customers or
clients; (iii) business, marketing, and strategic plans; and (iv) employee
personnel files and compensation information. Executive should consult any
Company procedures instituted to identify and protect certain types of
Confidential Information, which are considered by the Company to be safeguards
in addition to the protection provided by this Agreement. Nothing contained in
those procedures or in this Agreement is intended to limit the effect of the
other.
d. GENERAL RESTRICTIONS ON USE. During the Period of
Employment, Executive shall use Proprietary Information, and shall disclose
Confidential Information, only for the benefit of the Company and as is
necessary to carry out his responsibilities under this Agreement. Following
termination, Executive shall neither, directly or indirectly, use any
Proprietary Information nor disclose any Confidential Information, except as
expressly and specifically authorized in writing by the Company. The publication
of any Proprietary Information through literature or speeches must be approved
in advance in writing by the Company.
3. COMPENSATION. In consideration of the services to be rendered under
this Agreement, Executive shall be entitled to the following:
a. The Company shall continue to pay Executive at an initial
base annual salary equivalent to Executive's current annual base rate of pay of
$382,885.00, payable bi-weekly. Payment of Executive's current base rate of pay
is subject to a temporary fifteen percent (15%) reduction, pursuant to the
Company's management's decision to temporarily reduce the annual base salaries
of all of its officers. At such time when the Company's management decides to
restore the annual base salaries of its officers to their prior base rate of pay
or higher, the Company shall adjust Executive's base annual salary to
$525,000.00. Thereafter, Executive's salary will be reviewed from time to time
in accordance with Company's established procedures for adjusting salaries for
similarly situated employees. Executive shall also be eligible to participate in
the Company's executive bonus plan, as already established by the Company, and
as may be amended from time to time in the Company's sole discretion.
b. Executive shall be eligible to participate in the Company's
benefit plans, and to receive perquisites of employment, as established by the
Company, and as may be amended from time to time in the Company's sole
discretion at least equal to those provided to other Company officers.
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c. The Company shall pay any interest accrued to date and
shall, through December 31, 1999, pay any additional interest on the two
relocation loans made by the Company to Executive in June and July 1997, as
evidenced by the two promissory notes.
d. The Company shall pay the monthly dues, fees, and
assessments for Executive's membership in a golf club, to be selected by
Executive. Company shall also reimburse Executive in accordance with Company
guidelines and procedures for golf club expenses associated with the normal
course of conduct with customers.
e. The Company shall have the right to deduct or withhold from
the compensation due to Executive hereunder any and all sums required for
federal income and social security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
4. TERMINATION OF EMPLOYMENT
a. TERMINATION BY DEATH. Executive's employment shall
terminate automatically upon the death of Executive. Company shall pay to
Executive's beneficiaries or estate, as appropriate, any compensation then due
and owing, and shall continue to pay Executive's salary and benefits, bi-weekly,
through the second full month after Executive's death. As of the date of death,
all stock options available to Executive through the Term Date shall, in
accordance with the terms of the Company's stock option plan and Executive's
stock option agreements, be exercisable by the appropriate representative
beneficiary of Executive's estate. Thereafter, all obligations of Company under
this Agreement shall cease. Nothing in this Section shall affect any entitlement
of Executive's heirs to the benefits of any life insurance plan or other
applicable benefits.
b. TERMINATION BY DISABILITY. If, in the sole opinion of the
Company, Executive shall be prevented from properly performing his duties
hereunder by reason of any physical or mental incapacity for a period of more
than one hundred eighty (180) days in the aggregate in any twelve-month period,
then, to the extent permitted by law, Company may relieve Executive of his
duties. Company shall pay to Executive all compensation to which Executive is
entitled up through the last day of the month in which the 180th day of
incapacity occurs, and thereafter, the Company shall continue to employ
Executive at 66 2/3% of his base annual salary at the time of disability and
shall include Executive in the Company's health insurance benefit plans
beginning on the 181st day of his disability, such payment of salary and
inclusion in Company health insurance benefits to continue until Executive
reaches age 65. Any long term disability insurance payments received by
Executive shall be credited to the Company's obligation for such disability
payments. The Executive's rights to exercise stock options shall be in
accordance with the terms of the Company's stock option plan and Executive's
stock option agreements. Nothing in this Section shall affect Executive's rights
under any disability plan in which he is a participant.
Executive agrees that he shall, on or about the
first and second anniversary dates of this agreement, undergo at the Company's
expense a complete medical examination.
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c. TERMINATION BY COMPANY NOT FOR CAUSE. At any time, Employer
may terminate the Period of Employment Not For Cause for any reason by providing
Executive ten (10) days' advance written notice, provided that Executive shall,
in addition to all compensation due and owing through the last day actually
worked, receive the following:
(i) The greater of a severance payment equal to two
years of the Executive's then current base salary, or his base salary through
the Term Date per paragraph 1(a) above. The severance payment will be made in
the form of salary continuation for two years (the "Severance Period"), payable
on the Company's normal payroll schedule.
(ii) During the Severance Period, Executive will
continue to receive annual bonus payments equal to 150 percent of his then
current base annual salary, payable in any year in which any bonus payments are
made by the Company to any other employees. During the Severance Period,
Executive's annual bonus payments, if any, shall be payable when the Company
makes annual bonus payments to any other similarly situated employees.
(iii) Payment of the Executive's share of health
insurance premiums throughout the Severance Period and for a period of eighteen
(18) months thereafter. Thereafter, the Company shall use reasonable efforts to
cause health insurance benefits to be made available to Executive and his
dependents under the Company's group health insurance plans for as long as
permitted under such plans.
(iv) Executive's stock options shall continue to
vest during the Severance Period. Executive shall not be required to exercise
such options until three (3) years following the end of the Severance Period
during which three (3) year period he shall serve as a consultant to the Company
on terms agreeable to the Executive and the Company.
(v) Executive's obligation to repay the Company for
the relocation loans made by the Company to Executive in June and July 1997,
evidenced by two promissory notes, shall not become payable until the end of the
Severance Period. In the event that Executive's employment is terminated
following a change of control, the Company shall pay interest on and shall not
require repayment of the principal of the Executive's two relocation loans until
the date two years following the end of the Severance Period.
(vi) The amount of any payment provided for in this
Section 4.c. shall not be reduced, offset or subject to recovery by the Company
by reason of any compensation earned by Executive as the result of employment by
another employer during the Severance Period so long as Executive does not
violate the provisions of Section 5.d. below.
(vii) The severance benefits described in this
Section 4.c. shall be conditioned upon Executive's continued observance of the
obligations described in Section 5.d. throughout the Severance Period. Should
Executive engage in or pursue any of the activities described in Section 5.d. at
any time during the Severance Period, all severance benefits described in this
Section 4.c. shall cease and the two promissory notes described in Section
4.c(v) shall become immediately due and payable in full.
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d. TERMINATION BY COMPANY FOR CAUSE. At any time, and without
prior notice, the Company may terminate Executive's employment For Cause (as
defined below). The Company shall pay Executive all compensation then due and
owing; thereafter, all of the Company's obligations under this Agreement shall
cease. Termination for "Cause" shall mean termination of Executive's employment
because of Executive's (i) involvement in fraud, misappropriation or
embezzlement related to the business or property of the company; (ii) conviction
for, or guilty plea to, a felony; (iii) willful material breach of this
Agreement; (iv) willful and continued failure to substantially perform his
duties under this Agreement, provided, however, that if such Cause is reasonably
curable, the company shall not terminate Executive's employment hereunder unless
the Company first gives notice of its intention to terminate and the grounds of
such termination, and the Executive has not within ninety (90) days following
receipt of this notice, cured such Cause.
e. BY EXECUTIVE NOT FOR CAUSE. At any time, Executive may
terminate the Period of Employment for any reason, with or without cause, by
providing Employer thirty (30) days' advance written notice. Employer shall have
the option, in its complete discretion, to make termination of the Period of
Employment effective at any time prior to the end of such notice period,
provided Employer pays Executive all compensation due and owing through the last
day actually worked, plus an amount equal to the base salary Executive would
have earned through the balance of the above notice period; thereafter, all of
Employer's obligations under this Agreement shall cease.
f. BY EXECUTIVE FOR GOOD REASON. Executive may terminate,
without liability, the Period of Employment for Good Reason (as defined below),
provided Executive gives Employer ninety (90) days' advance written notice of
the reason for termination and his intent to terminate this Agreement. During
this period, Employer shall have an opportunity to correct the condition
constituting Good Reason. If the condition is remedied within this period,
Executive's notice to terminate shall be rescinded automatically; if not
remedied, termination of the Period of Employment shall become effective upon
expiration of the above notice period. In this event, Employer shall pay
Executive all compensation due and owing through the last day actually worked
including any accrued but unused vacation. Employer shall also have the option,
in its complete discretion, to make termination effective at any time prior to
the end of the notice period, provided that Employer pays Executive all
compensation due and owing through the balance of the notice period (not to
exceed ninety (90) days). Executive shall be entitled to exercise his right to
terminate this Agreement for Good Reason only if he gives the required notice
not more than ninety (90) days after the occurrence of the event that is the
basis for the Good Reason. If Executive terminates the Period of Employment for
Good Reason pursuant to the provisions of this Section 4.f., Executive shall
receive the severance benefits described in and pursuant to the terms of
subparagraphs 4.c.(i)-(vii) above.
Termination shall be for "Good Reason" if Executive
voluntarily resigns following: (i) a change in Executive's position with
employer which materially reduces Executive's level of responsibility; (ii) a
relocation of Executive's principal place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is effected by
the Employer
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without Executive's consent; (iii) a reduction in base
compensation; or (iv) a reduction in bonus payments not permitted by this
Employment Agreement.
5. TERMINATION OBLIGATIONS
a. RETURN OF COMPANY'S PROPERTY Executive hereby acknowledges
and agrees that all personal property, including, without limitation, all books,
manuals, records, reports, notes, contracts, lists, blueprints, and other
documents, or materials, or copies thereof, and equipment furnished to or
prepared by Executive in the course of or incident to Executive's employment,
belong to Company and shall be promptly returned to Company upon termination of
Executive's employment.
b. REPRESENTATIONS AND WARRANTIES SURVIVE TERMINATION OF
EMPLOYMENT. The representations and warranties contained herein, except
Executive's obligations under Section 2(b), shall survive termination of
Executive's employment and expiration of this Agreement.
c. COOPERATION IN PENDING WORK. Following any termination of
Executive's employment, Executive shall fully cooperate with Company in all
matters relating to the winding up of pending work on behalf of Company and the
orderly transfer of work to other employees of Company. Executive shall also
cooperate in the defense of any action brought by any third party against
Company that relates in any way to Executive's acts or omissions while employed
by Company.
d. NONCOMPETITION. Executive acknowledges and agrees that
during his employment with the Company, he has had access to confidential
information and the activities forbidden by this subsection would necessarily
involve the improper use and disclosure of this confidential information. To
forestall this use or disclosure, Executive agrees that during the Severance
Period described in Section 4.c., Executive shall not, directly or indirectly,
(i) divert or attempt to divert from the Company (or any Affiliate) any business
of any kind in which it is engaged; (ii) employ or recommend for employment any
person employed by the Company (of any Affiliate); or (iii) engage in any
business activity that is competitive with the Company (of any Affiliate) in any
state where the Company conducts its business, unless Executive can prove that
any of the above actions was done without the use of confidential information.
In addition to the above restrictions on noncompetitive activity, and regardless
of whether any use of confidential information is involved, Executive agrees
that during the Severance Period Executive shall not, directly or indirectly,
(i) solicit any customer of the Company (or any Affiliate) known to Executive
(while he was employed by the Company) to have been a customer with respect to
products or services competitive with products or services offered by the
Company; or (ii) solicit for employment any person employed by the Company (or
any Affiliate).
6. ALTERNATIVE DISPUTE RESOLUTION
Company and Executive mutually agree that any controversy or claim
arising out of or relating to this Agreement or the breach thereof, or any other
dispute between the parties, shall be
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submitted to mediation before a mutually agreeable mediator, which cost is to be
borne by the Company. In the event mediation is unsuccessful in resolving the
claim or controversy, such claim or controversy shall be resolved by
arbitration. The claims covered by this Agreement ("Arbitrable Claims") include,
but are not limited to, claims for wages or other compensation due; claims for
breach of any contract (including this Agreement) or covenant (express or
implied); tort claims; claims for discrimination (including, but not limited to,
race, sex, religion, national origin, age, marital status, medical condition, or
disability); claims for benefits (except where an employee benefit or pension
plan specifies that its claims procedure shall culminate in an arbitration
procedure different from this one), and claims for violation of any federal,
state, or other law, statute, regulation, or ordinance, except claims excluded
in the following paragraph. The parties hereby waive any rights they may have to
trial by jury in regard to Arbitrable Claims.
Claims Executive may have for Workers' Compensation or unemployment
compensation benefits are not covered by this Agreement. Also not covered is
either party's right to obtain provisional remedies or interim relief from a
court of competent jurisdiction.
Arbitration under this Agreement shall be the exclusive remedy for all
Arbitrable Claims. Company and Executive agree that arbitration shall be held in
or near Santa Xxxxx County, California, and shall be in accordance with the then
current Employment Dispute Resolution Rules of the American Arbitration
Association, before an arbitrator licensed to practice law in the State of
California. The arbitrator shall have authority to award or grant both legal,
equitable, and declaratory relief. Such arbitration shall be final and binding
on the parties. The Federal Arbitration Act shall govern the interpretation and
enforcement of this section pertaining to Alternative Dispute Resolution.
This Agreement to mediate and arbitrate survives termination of
Executive's employment.
7. NOTICES
All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or mailed, postage prepaid, by certified or registered mail,
return receipt requested, and addressed to the Company:
Novellus Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Corporate Secretary
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
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and to Executive at:
Mr. Xxxxxxx Xxxx
000 Xxxxxxx
Xxxxxxxx, XX 00000
with a copy to:
Miller, Nash, Wiener, Hager & Xxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxx, Esq.
Executive and the Company shall be obligated to notify the other party
of any change in address. Notice of change of address shall be effective only
when made in accordance with this Section.
8. ENTIRE AGREEMENT
This Agreement is intended to be the final, complete, and exclusive
statement of the terms of Executive's employment by The Company. Except for any
stock option agreements and any other agreements evidencing a loan or trust from
the Company to Executive (including but not limited to the two loan agreements
between Executive and the Company dated July 1, 1997 and July 31, 1997, and the
agreement evidencing the creation of a trust for the benefit of Executive dated
May 26, 1994, this Agreement supersedes all other prior and contemporaneous
agreements and statements pertaining in any manner to the employment of
Executive and it may not be contradicted by evidence of any prior or
contemporaneous statements or agreements. To the extent that the practices,
policies, or procedures of Company, now or in the future, apply to Executive and
are inconsistent with the terms of this Agreement, the provisions of this
Agreement shall control.
9. AMENDMENTS, WAIVERS
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by Executive and by a duly authorized
representative of Company other than Executive. No failure to exercise and no
delay in exercising any right, remedy, or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power under this Agreement preclude any other or further
exercise thereof, or the exercise of any other right, remedy, or power provided
herein or by law or in equity.
10. ASSIGNMENT; SUCCESSORS AND ASSIGNS
Executive agrees that he will not assign, sell, transfer, delegate or
otherwise dispose of, whether voluntarily or involuntarily, or by operation of
law, any rights or obligations under this Agreement, nor shall Executive's
rights be subject to encumbrance or the claims of creditors.
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Any purported assignment, transfer, or delegation shall be null and void.
Nothing in this Agreement shall prevent the consolidation of the Company with,
or its merger into, any other corporation, or the sale by the Company of all or
substantially all of its properties or assets, or the assignment by the Company
of this Agreement and the performance of its obligations hereunder to any
successor in interest. In the event of a change in ownership or control of the
Company, the terms of this Agreement will remain in effect and shall be binding
upon any successor in interest. Notwithstanding and subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors, and
permitted assigns, and shall not benefit any person or entity other than those
enumerated above.
11. SEVERABILITY; ENFORCEMENT
If any provision of this Agreement, or the application thereof to any
person, place, or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this
Agreement and such provisions as applied to other persons, places, and
circumstances shall remain in full force and effect. 12. GOVERNING LAW
The validity, interpretation, enforceability, and performance of this
Agreement shall be governed by and construed in accordance with the law of the
State of California.
13. ACKNOWLEDGMENT OF PARTIES
The parties acknowledge (a) that they have consulted with or have had
the opportunity to consult with independent counsel of their own choice
concerning this Agreement, and (b) that they have read and understand the
Agreement, are fully aware of its legal effect, and have entered into it freely
based on their own judgment and not on any representations or promises other
than those contained in this Agreement.
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14. DATE OF AGREEMENT
The parties have duly executed this Agreement as of the date first
written above.
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Xxxxxxx Xxxx
NOVELLUS SYSTEMS, INC.
By:
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Xxxxxx X. Xxxxx
Executive Vice President
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