Exhibit 10.11
KLA-TENCOR CORPORATION
ADDENDUM TO ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ AMENDED RETENTION AND NON-COMPETITION AGREEMENT
This Addendum (the "Addendum") is made this 15th day of November, 2001, by and
between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Executive") and KLA-Tencor Corporation (the
"Company").
WHEREAS, the Company and Executive have previously entered into an Amended
Retention and Non-Competition Agreement (the "Retention and Non-Competition
Agreement");
WHEREAS, the parties hereto desire to amend the Retention and Non-Competition
Agreement to (i) provide Executive with 100% vesting acceleration in the event
of a "double-trigger," and (ii) to modify the golden parachute excise tax
provisions of the Retention and Non-Competition Agreement by incorporating a
$50,000 "hurdle" to provide greater protection for the Company;
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, the Executive and the Company agree that the Retention and
Non-Competition Agreement is hereby amended as follows:
1. Double-Trigger Option Vesting Acceleration. A new Section 21 is added to the
Retention and Non-Competition Agreement, providing:
"21. Double-Trigger Option Vesting Acceleration. If, on or after a Change of
Control (as defined herein), Executive's employment with the Company terminates
due to (i) a voluntary termination for "Good Reason" (as defined herein), or
(ii) an involuntary termination by the Company other than for "Cause" (as
defined in Section 7(b) hereof), then, subject to Executive executing and not
revoking a Release and not breaching the terms of Section 10 hereof, all of
Executive's Company stock options shall immediately accelerate vesting as to
100% of the then unvested shares.
For purposes of this Agreement, "Good Reason" means, without Executive's express
consent,
(i) a material reduction of Executive's duties, title, authority or
responsibilities, relative to Executive's duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to Executive of such reduced duties, title, authority or
responsibilities,
(ii) a reduction by the Company in the Base Salary of Executive as in effect
immediately prior to such reduction;
(iii) a material reduction by the Company in the aggregate level of employee
benefits, or overall compensation, including Target Bonuses, to which Executive
was entitled immediately prior to such reduction with the result that
Executive's aggregate benefits package is materially reduced (other than a
reduction that generally applies to Company employees);
(iv) the relocation of Executive to a facility or a location more than
thirty-five (35) miles from Executive's then present location; or (vi) any act
or set of facts or circumstances which would, under California case law or
statute constitute a constructive termination of Executive.
For purposes of this Agreement, "Change of Control" shall mean the occurrence of
any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the "beneficial owner" (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) The consummation of the sale or disposition by the Company of all or
substantially all the Company's assets; or
(iii) The consummation of 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
(iv) A change in the composition of the Board 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 upon which this Agreement was
entered into, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors whose election
or nomination was not in connection with any transaction described in
subsections (i), (ii), or (iii) above, or in connection with an actual or
threatened proxy contest relating to the election of directors to the Company."
2. Golden Parachute Excise Taxes. Section 11 of the Retention and
Non-Competition Agreement is hereby amended and replaced in its entirety with
the following provision:
"11. Golden Parachute Excise Taxes.
(a) Parachute Payments of Less than 3x Base Amount Plus Fifty Thousand Dollars.
In the event that the benefits provided for in this agreement or otherwise
payable to Executive (a) constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), (b)
would be subject to the excise tax imposed by Section 4999 of the Code, and (c)
the aggregate value of such parachute payments, as determined in accordance with
Section 280G of the Code and the proposed Treasury Regulations thereunder (or
the final Treasury Regulations, if they have then been adopted) is less than the
product obtained by multiplying three by Executive's "base amount" within the
meaning of Code Section 280G(b)(3) and adding to such product fifty thousand
dollars, then such benefits shall be reduced to the extent necessary (but only
to that extent) so that no portion of such benefits will be subject to excise
tax under Section 4999 of the Code.
(b) Parachute Payments Equal to or Greater than 3x Base Amount Plus Fifty
Thousand Dollars. In the event that the benefits provided for in this agreement
or otherwise payable to Executive (a) constitute "parachute payments" within the
meaning of Section 280G of the Code, (b) would be subject to the excise tax
imposed by Section 4999 of the Code, and (c) the aggregate value of such
parachute payments, as determined in accordance with Section 280G of the Code
and the proposed Treasury Regulations thereunder (or the final Treasury
Regulations, if they have then been adopted) is equal to or greater than the
product obtained by multiplying three by Executive's "base amount" within the
meaning of Code Section 280G(b)(3) and adding to such product fifty thousand
dollars, then the benefits shall be delivered in full.
(c) 280G Determinations. Unless the Company and the Executive otherwise agree in
writing, the determination of Executive's excise tax liability and the amount
required to be paid or reduced under this Section 11 shall be made in writing by
the Company's independent auditors who are primarily used by the Company
immediately prior to the Change of Control (the "Accountants"). For purposes of
making the calculations required by this Section 11, 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 Executive 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 11."
3. Retention and Non-Competition Agreement. To the extent not expressly amended
hereby, the Retention and Non-Competition Agreement remains in full force and
effect.
4. Entire Agreement. This Addendum, taken together with the Retention and
Non-Competition Agreement, represents the entire agreement of the parties and
shall supersede any and all previous contracts, arrangements or understandings
between the parties with respect to the subject matter hereof. This Addendum may
be amended at any time only by mutual written agreement of the parties hereto.
IN WITNESS WHEREOF, this Addendum has been entered into as of the date first set
forth above.
KLA-TENCOR CORPORATION EXECUTIVE
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Date:November 15, 2001
