Exhibit 10.4
CHANGE IN CONTROL
AGREEMENT
Effective July 1,
2009
This Change in Control Agreement
(the “Agreement”) is made and entered into between [
NAME ] (the “Executive”) and Lam Research
Corporation, a Delaware corporation (the
“Company”).
RECITALS
A. The Company and Executive desire
to enter into this Agreement effective as of July 1,
2009.
In consideration of the mutual
covenants herein contained, the parties agree as
follows:
1. Benefits Upon a Change in
Control . If a Change in Control (as defined in
Section 5(e) below) occurs during the term of this Agreement,
and an Involuntary Termination of Executive’s employment
occurs either in contemplation of such Change in Control (as
defined in Section 5(g) below) or within twelve
(12) months following a Change in Control
1 , then:
(a) Base Salary . Within ten
(10) days following the Termination Date (as defined in
Section 5(d) below), the Company shall pay Executive a lump
sum payment equal to twelve (12) months of Executive’s
base salary, as currently in effect (such amount to be computed
without regard to any salary reduction program then in
effect).
(b) Variable Compensation
.
(i) Within ten (10) days
following the Termination Date, the Company shall pay Executive an
amount equal to the average of the short-term variable compensation
plan (currently the Annual Incentive Plan, and for prior years the
annual variable compensation plan called the “MBO”, and
together with any future short-term variable compensation plan,
collectively hereinafter referred to as the “Short Term
Plan”) payments earned by the Executive over the last five
(5) years in which the Executive was employed with the Company
on December 31 st of
such year (the “Five Year Average Amount”)
2 ;
(ii) Within ten (10) days
following the Termination Date, the Company shall pay Executive a
pro-rata amount (based on the number of full months worked during
the calendar year during which the Termination Date occurs) of the
Five Year Average Amount;
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For purposes of clarity,
(1) the Termination Date (as defined in Section 5(d))
applicable to the Involuntary Termination must occur in
contemplation of a Change in Control or (2) notice of the
Involuntary Termination, in accordance with Section 7, must be
given or received by the Company, as applicable, within twelve
(12) months following the Change in Control.
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If the Executive received a
partial year Short Term Plan payment in any year included in the
Five Year Average Amount due to being a new hire, such partial year
payment shall be annualized for purposes of the calculation of the
Five Year Average Amount. If the Executive has been employed with
the Company for less than five years (or partial years), the
average shall be computed based on such fewer number of years. Any
guaranteed bonus payment paid to the Executive shall be included in
the calculation of the Five Year Average Amount, unless such
payment was a one-time event (such as a sign-on bonus for a new
hire).
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(iii) If at the Termination Date,
payment has not been made under the Short Term Plan that was in
effect during the calendar year prior to the year in which the
Termination Date occurs, the Company shall pay the Executive, not
later than March 15 th of the year in which the Termination Date
occurs, the full amount Executive would have earned under such
prior-year plan (based on the performance results achieved under
such plan), as if Executive’s employment had not been
terminated.
(c) Medical Insurance
.
(i) If the Executive qualifies for
participation in the Company’s Executive Retiree Medical
Benefit Plan prior to the Termination Date, then the Executive will
receive the benefits Executive qualifies for under the Executive
Retiree Medical Benefit Plan, or if such plan has been terminated
prior to the Termination Date, within ten (10) days following
the Termination Date the Company shall pay the Executive a lump sum
amount (the “Medical Plan Payment”) equal to the
present value of the benefits for which the Executive qualified
prior to the termination of such plan. The present value of such
benefits shall be determined actuarially based on the actual cost
of replacing the benefits as of the Termination Date.
(ii) If the Executive does not
qualify for participation in the Executive Retiree Medical Benefit
Plan prior to the Termination Date, within ten (10) days
following the Termination Date, the Company shall pay in a lump sum
any COBRA premiums the Executive would be required to pay for the
COBRA benefits selected by Executive for twelve (12) months
after the Executive’s Termination Date (eighteen
(18) months for an Executive who has been employed with the
Company for twenty (20) years or more as of the Termination
Date).
(d) Equity Awards . The
unvested portion(s) of any stock options/Restricted Stock Units
(“RSUs”) that were granted to Executive prior to the
Change in Control shall automatically be accelerated in full so as
to become completely vested as of the Termination Date. Unless the
grant was made prior to the effective date of this Agreement, the
stock options shall remain exercisable for two years following the
Termination Date unless they are earlier exercised or expire
pursuant to their original terms, or unless they are exchanged for
cash in connection with any Change in Control. For options granted
prior to the effective date of this Agreement, the grant’s
award agreement shall control its exercisability
3 . The Company will issue the shares underlying
the RSUs within ten (10) days of the Termination
Date.
2. Long-Term Cash Plan Awards
. In the event of a Change in Control, for any long-term cash-based
variable compensation plan (currently the Multi-Year Incentive
Plan, and together with any future long-term cash-based variable
compensation plan, hereinafter the “Long Term Cash
Plan”) awards outstanding (which currently would include two
Long Term Cash Plan performance cycles) at the time of the Change
in Control, performance cycles under such plans shall cease as of
the date of the Change in Control. The Company shall pay Executive,
subject to
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Generally, option award
agreements allow exercise of the option for periods ranging from
thirty (30) days to one (1) year after termination of
employment, depending on the option plan and the nature of the
termination.
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the payout dates and restrictions below, all
accrued amounts as of the last full completed quarter as of the
date of the Change in Control, under each performance cycle of such
plan, plus the Remaining Target Amount for each performance cycle
under each such plan (together, the “Payment Amounts”).
The Remaining Target Amount shall equal, for each performance cycle
under each plan, the target amount multiplied by the number of
quarters in the performance cycle that end after the time of the
Change in Control, divided by the total number of quarters in the
full performance cycle. Payment shall be made at the times
specified below, and pending payment, the Company shall hold such
amount in a book account for the Executive.
(a) Change in Control,
Involuntary Termination . In the case of a Change in Control
where the Executive’s employment terminates due to an
Involuntary Termination prior to twelve (12) months following
the Change in Control or in contemplation of a Change in Control,
the Payment Amounts shall be paid out to the Executive within ten
(10) days following the Termination Date.
(b) Change in Control, No
Termination . In the case of a Change in Control where the
Executive’s employment does not terminate within twelve
(12) months following the Change in Control or in
contemplation of a Change in Control, the Executive shall receive
the Payment Amounts when it is ordinarily paid out. For avoidance
of doubt, if there are multiple Long Term Cash Plan performance
cycles, portions of the Payment Amounts may be paid in different
years, each in accordance with the terms of the relevant
performance cycle.
3. Limitations . No Change in
Control benefits under Sections 1 or 2 will apply if the Change in
Control or Involuntary Termination occurs after the Executive has
(i) given notice of Voluntary Resignation or (ii) been
given notice of termination for Cause by the Company, unless that
notice of termination for Cause is subsequently withdrawn (in
writing) by the Company and Executive’s employment does not
terminate as a result of such notice.
4. Acceleration . If the
Company is acquired by another entity in connection with a Change
in Control and there is or will be no market for the Common Stock
of the Company, the vesting of all Executive’s stock
options/RSUs, granted prior to the Change in Control, will
accelerate immediately prior to the Change in Control (and, for
stock options, be immediately exercisable) if the acquiring company
does not provide Executive with stock options/RSUs comparable to
the unvested stock options/RSUs granted Executive by the Company,
regardless of whether the Executive’s employment is
terminated.
5. Definition of Terms . The
following terms referred to in this Agreement shall have the
following meanings:
(a) Cause .
“Cause” shall mean: (1) Executive’s willful
and continued failure to perform the duties and responsibilities of
Executive’s position after there has been delivered to
Executive a written demand for performance from the Board of
Directors of the Company (the “Board”) which describes
the basis for the Board’s belief that Executive has not
substantially performed Executive’s duties and
responsibilities and provides Executive with thirty (30) days
to take corrective action; (2) Any act of personal dishonesty
knowingly taken by Executive in connection with Executive’s
responsibilities as an employee of the Company with the intention
or reasonable expectation that such action may result in
substantial financial enrichment of
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Executive; (3) Executive’s conviction
of, or plea of guilty or nolo contendere to, a felony; (4) a
willful and knowing act by the executive which constitutes gross
misconduct; or (5) A willful breach of a material provision of
this Agreement by the Executive. Termination for Cause shall not be
deemed to have occurred unless, by the affirmative vote of all of
the members of the Board (excluding the Executive and any person
who reports to the Executive, if applicable), at a meeting called
and held for that purpose (after reasonable notice to the Executive
and Executive’s counsel and after allowing the Executive and
Executive’s counsel to be heard before the Board), a
resolution is adopted finding that in the good faith opinion of
such Board members the Executive was guilty of conduct set forth in
(1), (2), (3), (4) or (5) of this Section 5(a),
specifying the particulars thereof.
(b) Disability .
“Disability” shall mean that the Executive is unable to
engage in any substantial gainful activity by reasons of any
readily determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuing period of not less than twelve (12) months. A
Disability must be certified by an approved Company
physician.
(c) Involuntary Termination .
“Involuntary Termination” shall mean:
(i) a material reduction of the
Executive’s duties or responsibilities (other than for Cause
or as a result of death or Disability);
(ii) a material reduction in the
Executive’s base salary and benefits package, other than a
reduction in base salary which is part of, and generally consistent
with, a general reduction of salaries of all executive officers of
the Company and of any party acquiring control of the Company in a
Change in Control, or other than a change in Executive’s
benefits package that continues to provide Executive with
comparable benefits to those enjoyed prior to the
change;
(iii) a material reduction by the
Company in the Executive’s current Target Total Direct
Compensation, other than any such reduction applicable to all
executive officers of the Company and any party acquiring control
of the Company in a Change in Control generally. For purposes of
the foregoing, Target Total Direct Compensation means current
annual base salary (determined in the same manner as in
Section 5(c)(ii)) plus current annual benefits plus current
annual target amounts under the Combined Plans, and to the extent
that Target Direct Compensation includes equity awards, the value
of such equity shall be determined at the time of grant based on
the total stock compensation expense (FAS 123R) associated with
that award;
(iv) the relocation of the
Company’s principal executive office to a location more than
fifty (50) miles from its present location but only if the
Executive is required to change Executive’s principal place
of employment to such new location;
(v) any termination of the
Executive’s employment by or at the request of the Company
other than for Cause, Disability or death;
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(vi) the failure of the Company to
obtain the assumption of this Agreement by any successors
contemplated in Section 6 below; or
(vii) any material breach by the
Company of any material provision of this Agreement;
subject to the following:
(A) None of the foregoing actions shall constitute Involuntary
Termination if the Executive has agreed thereto. (B) Except
with respect to an event described in Section 5(c)(v), the
foregoing actions shall constitute Involuntary Termination only if
and to the extent that (x) within 90 days of the occurrence of
the events giving rise to an Involuntary Termination, the Executive
provides written notice to the Company setting forth in reasonable
detail such facts which Executive believes constitute Involuntary
Termination, (y) any circumstances constituting Involuntary
Termination remain uncured for a period of thirty (30) days
following the Company’s receipt of such written notice, and
(z) the Termination Date occurs within one hundred and eighty
(180) days following the initial existence of the event giving
rise to an Involuntary Termination.
(d) Termination Date .
“Termination Date” shall mean the last day of notice
period required by Section 5(c) above, although the Company
may pay to the Executive the compensation Executive would have
otherwise received during such period in lieu of such notice, in
which case the earlier date at which the Company waives notice and
pays the Executive in lieu of such notice shall be the Termination
Date. Notwithstanding the foregoing, in the event of an Involuntary
Termination occuring in contemplation of a Change in Control, if
the Termination Date would otherwise have occurred prior to the
Change in Control, the Termination Date shall take place on the
date of the Change in Control. The Company and the Executive shall
take all steps necessary to ensure that any termination described
in this Agreement constitutes a “separation from
service” within the meaning of Section 409A of the
Internal Revenue Code (the “Code”), and notwithstanding
anything to the contrary, the date on which such separation from
service takes place shall be the Termination Date.
(e) Change in Control .
“Change in Control” shall mean the occurrence of any of
the following events:
(i) Any “person” or
“group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, but
excluding any person or group as such terms is used in Rule
13d-1(b) under the Exchange Act) is or becomes the
“beneficial owner” (as defined in Rule 13-d-3 under
said Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the total voting
power represented by the Company’s then outstanding voting
securities;
(ii) 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 effective date of
this Agreement, or (B) are elected, or nominated for election,
to the Board 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 whose election or nomination
is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company);
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(iii) The stockholders of the
Company approve 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 hereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 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 stockholders of the Company approve
a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all
the Company’s assets (other than to a subsidiary or
subsidiaries); or
(iv) Any other event as determined
by the independent members of the Board, in the sole discretion of
the independent members of the Board.
(f) Voluntary Resignation .
“Voluntary Resignation” shall mean Executive’s
termination of Executive’s employment at any time, for any
reason, by the Executive, other than by reason of Involuntary
Termination, death or Disability.
(g) Occurring in Contemplation of
a Change in Control . “in contemplation of a Change in
Control” means an Involuntary Termination occurring within
one (1) month prior to an actual Change in Control. It shall
also include any termination if the termination was a condition of
a party other than the Company to entry into an agreement, the
consummation of which would cause a Change in Control (an
“Acquisition Agreement”), whether or not such person
actually enters into such agreement. Finally, it shall also include
any Involuntary Termination if the actions constituting grounds for
Involuntary Termination were taken at the request or direction of a
person who has entered into an Acquisition Agreement.
(h) Combined Plans .
“Combined Plans” means any short-term or long-term
variable compensation plan offered by the Company to its executive
officers generally (and which are currently the Annual Incentive
Plan and the Long-Term Incentive Plan, which includes the
Multi-Year Incentive Plan and the equity components of the
Long-Term Incentive Plan). “Combined Plans” does not
include the Global Products Group RSU program or any other one-time
equity or cash award. “Combined Plans” does include any
guaranteed payment that is part of an annual compensation program
for the Executive.
6. Successors .
(a) Company’s
Successors . The Company shall require a successor to the
Company (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) or to all or
substantially all of the Company’s business and/or assets
(each a “Successor Company”) to assume the
Company’s obligations under this Agreement and agree
expressly to perform such obligations 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 Company which executes and delivers the assumption
agreement described in this subsection (a) or which becomes
bound by the terms of this Agreement by operation of
law.
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(b) Executive’s
Successors . The terms of this Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive’s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
7. Notice .
(a) General . 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 Federal Express or a comparable air
courier company. In the case of the Executive, notices sent by
courier shall be addressed to him at the home address that
Executive most recently communicated to the Company in writing. In
the case of the Company, notices sent by courier shall be addressed
to its corporate headquarters, and all notices shall be directed to
the attention of its Chief Legal Officer.
(b) Notice of Termination .
Any termination by the Company for Cause or by the Executive as a
result of any Involuntary Termination shall be communicated by a
notice of termination to the other party hereto given in accordance
with Section 7(a) of this Agreement. Such notice shall
indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the
provision so indicated, and shall specify the Termination
Date.
8. Non-Compete; Non-Solicit
.
(a) The parties hereto recognize
that the Executive’s services are special and unique and that
Executive’s level of
