Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into effective
as of June 25, 2001 by and between Xxxxx X. Xxxxx (the "Employee") and Cymer,
Inc., a Nevada corporation (the "Company").
R E C I T A L S
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.
A G R E E M E N T
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, Marketing, 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 his services a base salary at the annualized rate of $225,750.46. 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 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
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 twelve (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 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. Such
vested options may be exercised throughout the Termination Period and
until specified in the applicable Option Plan.
(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
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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
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 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
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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 of 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 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 the unanimous approval of the disinterested Board members.
10. SUCCESSORS.
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(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 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, devisees 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 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 affiliate may assign its rights
under this Agreement to another affiliate of the Company or to
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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.
(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 Xxxxxx
Title: President and Chief Operating Officer
/s/ Xxxxxx Xxxxxx
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EMPLOYEE: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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