Exhibit 10.3
VEECO INSTRUMENTS
INC.
SENIOR EXECUTIVE CHANGE IN
CONTROL POLICY
1.
Purpose
. Effective
as of September 12, 2008, Veeco Instruments Inc., a Delaware
corporation (the “ Company ” or “
Veeco ”), has adopted this Senior Executive Change in
Control Policy (as may be amended from time to time, the “
Policy ”). The Compensation Committee of the Board
(the “ Committee ”) recognizes that, as is the
case for most publicly held companies, the possibility of a Change
in Control (as defined below) exists, and the Company wishes to
ensure that certain Eligible Employees (as defined below) are not
practically disabled from discharging their duties in respect of a
proposed or actual transaction involving a Change in Control.
Accordingly, the Company wishes to provide additional inducement
for the Eligible Employees to continue to remain in the employ of
the Company and to provide certain severance benefits to the
Eligible Employees in the event that their employment is terminated
under certain circumstances related to a Change in
Control.
2.
Certain
Defined Terms . In addition to terms
defined elsewhere herein, the following capitalized terms have the
following meanings when used herein:
“
Affiliate ” shall mean with respect to any Person, any
other Person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control
with, such Person. For purposes of this definition,
“control” shall have the meaning given such term under
Rule 405 of the Securities Act of 1933, as
amended.
“
Board ” shall mean the Board of Directors of the
Company.
“ Cause ” shall
mean a termination based on (i) Eligible Employee’s
willful and substantial misconduct in the performance of his
duties, (ii) Eligible Employee’s willful failure to
perform his duties after two weeks written notice from the Company
(other than as a result of a total or partial incapacity due to a
physical or mental illness, accident or similar event),
(iii) the Eligible Employee’s material breach of any of
the agreements contained in Section 6 hereof, (iv) the
commission by the Eligible Employee of any material fraudulent act
with respect to the business and affairs of the Company or any
subsidiary or affiliate thereof, or (v) Eligible
Employee’s conviction of (or plea of nolo contendere to) a
crime constituting a felony.
“ Change
in Control ” shall mean:
(i)
the acquisition,
as evidenced by the filing with the Securities and Exchange
Commission (the “Commission”) of an executed report on
Schedule 13D, by any Person, including any syndicate or group
deemed to be a “person” under
Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), of beneficial
ownership (determined in accordance with Rule 13d-3 under the
Exchange Act), directly or indirectly, through a purchase, merger
or other acquisition transaction or series of transactions, of
shares of the capital stock of the Company entitling that Person to
exercise (A) 25% or more of the total voting power of all
shares of such capital stock entitled to vote generally in
elections of directors without the prior written consent of a
majority of the Continuing Directors or (B) 40% or more of the
total voting power of all shares of such capital stock entitled to
vote generally in elections of directors with the prior written
consent of a majority of the Continuing Directors.
(ii)
any consolidation
or merger of the Company with or into any other person, any merger
of another person into the Company, or any conveyance, transfer,
sale, lease
1
or other disposition of all or substantially all
of the Company’s properties and assets to another person,
other than:
(A)
any transaction (1) that does
not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of the capital stock of the
Company or (2) pursuant to which holders of the capital stock
of the Company immediately prior to the transaction are entitled to
exercise, directly or indirectly, 50% or more of the total voting
power of all shares of the capital stock of the Company entitled to
vote generally in the election of directors of the continuing or
surviving person immediately after the transaction; or
(B)
any merger solely for the purpose of
changing the Company’s jurisdiction of incorporation and
resulting in a reclassification, conversion or exchange of
outstanding shares of common stock of the Company solely into
shares of common stock of the surviving entity;
(iii)
during any
consecutive two-year period, individuals who at the beginning of
that two-year period constituted the Board of Directors (together
with any new directors whose election or nomination to the Board of
Directors was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of
such period or whose election or nomination for election was
approved by the Board of Directors or a nominating committee
thereof, the majority of the members of which meet the above
criteria) (each, a “Continuing Director”) cease for any
reason to constitute a majority of the Board of Directors then in
office;
(iv)
the Company is
liquidated or dissolved or a resolution is passed by the
Company’s stockholders approving a plan of liquidation or
dissolution of the Company; or
(v)
in the case of a
Group Executive Participant, the Company sells to a third party, or
otherwise disposes of, all or substantially all of the relevant
Group’s assets or sells to a third party or otherwise
disposes of a majority of the outstanding capital stock of the
entity which owns the assets and conducts the business of the
relevant Group, each as determined by the Committee in its sole
discretion (as described in this clause (v), a “Group Change
in Control”).
“
Code ” shall mean Internal Revenue Code of 1986, as
amended.
“ Confidential
Information ” shall mean any information
that: (a) is disclosed to an Eligible Employee, learned
by an Eligible or created by an Eligible Employee in connection
with his employment with Veeco (or a predecessor company now owned
by or part of Veeco), and (b) Veeco treats as proprietary,
private or confidential. Confidential Information may
include, without limitation, information relating to Veeco’s
products, services and methods of operation, the identities and
competencies of Veeco’s employees, customers and suppliers,
trade secrets, know-how, processes, techniques, data, sketches,
plans, drawings, chemical formulae, computer software, financial
information, operating and cost data, research databases, selling
and pricing information, business and marketing plans, and
information concerning potential acquisitions, dispositions or
joint ventures. Notwithstanding the foregoing,
“Confidential Information” does not include any of the
foregoing items which has become publicly known or made generally
available (provided that information will not cease to be
“Confidential Information” as a result of an Eligible
Employee’s breach of confidentiality).
2
“
Eligible Employee ” shall mean an employee of the
Company selected by the Committee to be covered by the Policy
pursuant to Section 3 and listed on Exhibit A
hereto, as it may be amended from time to time.
“ Good
Reason ” shall mean any of the following events:
(i) any reduction in the total amount of an Eligible
Employee’s base salary or target bonus; or (ii) any
involuntary relocation of an Eligible Employee’s principal
place of business to a location more than 50 miles from the
Eligible Employee’s current principal place of business (or,
in the case of employees whose principal place of business is more
than 50 miles from their primary residence, an involuntary
relocation of such employee’s principal place of business
such that the employee’s overall level of commuting
substantially increases). Good Reason shall not be deemed to have
occurred unless the Eligible Employee provides the Company with
written notice of the existence of the applicable condition
described in clauses (i) and (ii) above, within 90 days
after the initial existence of such condition and the Company fails
to remedy such condition within 30 days of the date of such written
notice.
“ Group
Executive Participants ” shall mean those Eligible
Employees who are designated as “Group Executive
Participants” on Exhibit A hereto. If
applicable, the relevant Group shall also be specified on
Exhibit A opposite the name of the Eligible
Employee.
“
Person ” shall mean an individual, partnership,
corporation, business trust, limited liability company, joint stock
company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever
nature.
“ Voting
Stock ” shall mean all capital stock of the Company which
by its terms may be voted on all matters submitted to stockholders
of the Company generally.
3.
Eligibility
. The
Committee shall determine which employees of the Company shall be
Eligible Employees covered by the Policy. As of the effective
date of the Policy, all Eligible Employees are listed on
Exhibit A . From time to time, the Committee may,
in its sole discretion, revise the list of individuals who are
Eligible Employees by adding additional employees to, or, subject
to Section 13, removing any Eligible Employee from, the list
of Eligible Employees set forth on Exhibit A
.
4.
Effect of
Change in Control; Certain Terminations in Connection with a Change
in Control .
(a)
Upon the
consummation of a Change in Control (other than a Group Change in
Control), the vesting, payment and/or exercisability of all stock
option grants, restricted stock awards and any other equity-based
compensation awards held by the Eligible Employee that would
otherwise be eligible to become vested during the Eligible
Employee’s continued employment shall be accelerated and any
outstanding stock options then held by the Eligible Employee shall
remain exercisable until the earlier of (x) 12 months
following the date of termination of the Eligible Employee’s
employment with the Company and (y) the expiration of the
original term of such options.
(b)
If an Eligible
Employee’s employment shall be terminated by the Company
without Cause, or by the Eligible Employee for Good Reason, during
the period commencing three (3) months prior to, and ending
eighteen (18) months following, a Change in Control,
and
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subject to the Eligible Employee’s
execution of a separation and release agreement in a form
reasonably satisfactory to the Company:
(i)
The Company shall
pay to the Eligible Employee an amount equal to the product of
(i) the sum of his then current (A) annual base salary
and (B) the target bonus payable to the Eligible Employee
pursuant to the Company’s performance-based compensation
bonus plan with respect to the fiscal year ending immediately prior
to the date of termination, and (ii) 1.5; such amount shall be
payable in a lump sum as soon as reasonably practicable (x) if
such termination of employment occurs on or following the
consummation of the Change in Control, after the date of such
termination of employment, or (y) if such termination occurs
prior to the consummation of the Change in Control, after the
effective date of such Change in Control (either such date, the
“ Vesting Date ”), but in any event, such
payment shall be made within 2½ months following the end of
the calendar year in which the Vesting Date occurs;
(ii)
The Company shall
continue to provide the Eligible Employee (and his dependents) with
all health and welfare benefits which he (or his dependents) was
participating in or receiving as of the date of termination (at a
level then in effect with respect to coverage and employee
premiums) until the 18-month anniversary of the date of
termination. If such benefits cannot be provided under the
Company’s programs, such benefits and perquisites will be
provided on an individual basis to the Eligible Employee such that
his after-tax costs will be no greater than the costs for such
benefits and perquisites under the Company’s
programs;
(iii)
The Company shall
pay to the Eligible Employee a pro-rated amount of the Eligible
Employee’s bonus for the fiscal year in which the date of
termination occurs equal to the product of (i) the amount of
the bonus the Eligible Employee would have otherwise earned had he
been employed by the Company on the last day of the fiscal year in
which the date of termination occurs multiplied by (ii) the
number of days elapsed during such
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