Exhibit 10.19
Execution Copy
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This Amended and Restated Employment
Agreement (“ Agreement ”), entered into
effective July 24, 2008, is between Novellus Systems, Inc., a
California corporation (the “ Company ”), and
Richard S. Hill (“ 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.
3. The Company and Employee have
previously entered into an Employment Agreement, dated as of
March 11, 2005 (the “ 2005 Employment Agreement
”), and now desire to amend and restate in its entirety the
2005 Employment Agreement with this Agreement to address the
applicable requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (“ Code ”) and
to adopt certain other technical revisions.
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, 2010 (the “ Term Date ”, and
such initial period of continued employment under the Agreement,
the “ Basic Term ”), unless Executive’s
employment is terminated sooner in accordance with Section 4
below.
(b) Renewal. The term and
provisions of this Agreement shall automatically extend for
additional two-year periods if Executive remains employed on and
after December 31 of each year during the Basic Term, unless
either party notifies the other in writing to the contrary at least
three (3) months prior to the applicable December 31 date
that it, or he, does not want the term to so extend. Renewal
extends the Term Date.
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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, 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 time that he is employed by the Company,
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
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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 pay Executive
a base annual salary of $878,000, payable bi-weekly.
Executive’s salary will be reviewed from time to time in
accordance with the 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 employee 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.
(c) 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. The 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 the Company under this Agreement
shall cease. Nothing in this Section shall affect any entitlement
of Executive’s heirs or designated beneficiaries to the
benefits of any life insurance plan or other applicable benefits.
Upon Executive’s attainment of the age of 55 and still being
employed by the Company, termination by death will automatically
entitle Executive’s estate to the retirement benefits of
Section 4(e).
(b) Termination By
Disability. If, in the sole opinion of the Company,
(i) Executive is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period
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of not less than 12
months, or (ii) Executive is, by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than 3 months under an accident and health
plan covering the Company’s employees, then, to the extent
permitted by law, the Company may relieve Executive of his duties
as Chief Executive Officer and Chairman. In such event, the 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 his disability 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. For the avoidance of doubt, Executive’s
continued receipt of compensation under this Section 4(b)
shall be taken into account for purposes of determining his length
of employment service under the Company’s existing officer
retirement health benefit program, as evidenced by the July 2005
Board of Directors’ Resolution regarding Officers’
Retirement Medical and Dental Coverage. Any long term disability
insurance payments received by Executive shall be credited to the
Company’s obligation for such disability payments.
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 at the time his disability
arises.
(c) Termination By Company Not
For Cause. At any time, the Company may terminate
Executive’s employment with the Company for any reason by
providing Executive ninety (90) 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 (2) years of Executive’s base
salary as in effect on the date of his termination, 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) An additional severance benefit
equal to three hundred (300) percent of his annual base salary
as in effect on the date of his termination, payable in a single
lump sum payment within thirty (30) days following his date of
termination.
(iii) Payment of Executive’s
share of health insurance premiums for Executive and his qualified
dependents, in accordance with the Company’s existing officer
retirement health benefit program, as evidenced by the July 2005
Board of Directors’ Resolution regarding Officers’
Retirement Medical and Dental Coverage without regard to age or
length of service limitations therein.
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(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 Executive and the Company; provided, however,
that in no event will the exercise period of each stock option
described in this paragraph extend beyond its original
term.
(v) Executive’s restricted
stock shall immediately vest on the date his termination becomes
effective and, as a consequence, the Company’s right to
repurchase such restricted stock shall immediately lapse on that
date.
(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(d) shall
cease.
(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 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 his employment with
the Company for any reason, with or without cause, by providing the
Company ninety (90) days’ advance written notice.
The
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Company shall have the option, in its complete
discretion, to make termination of Executive’s employment
effective at any time prior to the end of such notice period,
provided the Company 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,
