This Employment Agreement, dated as of July 27,
2007, is entered into between Tegal Corporation (the
“Company”) and Christine T. Hergenrother
(“Employee”).
WHEREAS , Employee is the Chief Financial Officer of the
Company;
WHEREAS , the Company desires to continue to employ and
retain the services of Employee, and Employee wishes to continue
employment by the Company, on the terms set forth in this
Agreement;
NOW, THEREFORE , in consideration of the promises and the
mutual covenants set forth in this Agreement, the Company and
Employee agree as follows:
1.
Term of
Employment .
Subject to the termination provisions hereinafter set forth, the
Company will employ the Employee, and the Employee accepts
employment with the Company, for a period of one year (the
“Initial Term”) commencing as of the date first set
forth above. The Initial Term shall be automatically renewed for
successive one year periods (“Successive Terms”) unless
either party gives ninety (90) calendar days written notice of
nonrenewal. The giving by the Company of a notice of nonrenewal
shall be deemed to be a notice of termination without Cause given
by the Company to Employee for purposes of Section 8(a) hereof;
provided , however , that the giving by the
Company of a notice of nonrenewal within twelve (12) months
following a “change of control” shall be deemed to be a
notice of termination without Cause given by the Company to
Employee for the purposes of Section 8(c) hereof.
2.
Duties . The Employee will serve as Vice President and
Chief Financial Officer, reporting to the Company’s Chief
Executive Officer and the Company’s Board of Directors (the
“ Board of Directors ”). The Employee will
discharge such duties and responsibilities as are customary for
such position or are prescribed from time to time by the Company.
The Employee will devote her full time and attention to the affairs
of the Company and will not enter the employ of or serve as a
consultant to, or in any way perform any services for, with or
without compensation, any other person, business or organization
without the prior approval of the Board of Directors. In no event
may any such service be inconsistent with, or prevent Employee from
carrying out, her duties under this Agreement, as determined at the
sole discretion of the Board of Directors.
3.
Maintaining Confidential
Information/Property Rights . Employee agrees to sign and abide by all
Company policies regarding confidential information and ethics
including, but not limited to the Confidential & Proprietary
Information and Intellectual Property/Property Rights policy, as
attached hereto.
4.
Non-Competition;
Non-Solicitation . During the Initial Term, any Successive Term,
and for any Salary Continuation Period as provided in Section 8(a)
Employee shall not, directly or indirectly:
(a) own, manage, operate, advise, consult, join,
control or participate in the ownership, management, operation or
control of, be employed by, perform services for, or be connected
in any manner with, any enterprise which is engaged in providing:
i) any plasma etch system or any other system capable of etching
“new materials”; ii) any PVD (physical vapor
deposition) system competitive with the Company’s products;
iii) any ALD (atomic level deposition) system or NLD (nano layer
deposition) or MOCVD (metal organic deposition systems), or their
equivalents, to any semiconductor, thin film head, MEMS or other
device manufacturers anywhere in the world; provided ,
however , that such restriction shall not apply to
Employee’s ownership of any passive investment representing
an interest of less than five percent (5%) of an outstanding class
of publicly traded securities; or
(b) recruit, encourage or solicit any person who is
an employee or contractor of the Company or any entity affiliated
with the Company (the “Affiliated Entity”) to leave the
Company’s or Affiliated Entity’s employ or service for
any reason, or interfere in any material manner with employment or
service relationships at the time existing between the Company or
Affiliated Entity and the subject employee or contractor (except as
may be required in any bona fide termination decision during the
Term or any Successive Term regarding any Company or Affiliated
Entity employee) in order to induce such employee or contractor of
the Company to accept other employment or a consulting agreement
with any other person or entity.
Employee
acknowledges that the services that she shall provide to the
Company under this Agreement are unique and that irreparable harm
shall be suffered by the Company in the event of the breach by
Employee of any of her obligations under this Section 4, and that
the Company shall be entitled, in addition to its other rights and
remedies, whether legal or equitable, to enforce such obligations
by an injunction or decree of specific performance. If any
restriction set forth in this non-competition section is found by a
court to be unreasonable, then Employee agrees, and hereby submits,
to the reduction and limitation of such prohibition to such area or
period as shall be deemed reasonable by such court.
5.
Salary and
Incentives .
(a) Salary . During the Term, the Company will pay the
Employee an annual salary of one hundred and seventy-five thousand
dollars ($175,000) (the “Base Salary”); provided that
Employee’s Base Salary may be reduced to the extent that the
Employee elects to defer any portion thereof under the terms of any
deferred compensation or savings plan maintained by the Company.
During the Initial Term and any Successive Term, Employee shall be
entitled to merit increases of her Base Salary, from time to time,
in accordance with Company policy. Employee’s Base Salary may
also be reduced during the Initial Term or any Successive Term,
consistent with reductions made to the salaries of other employees
or groups of employees of the Company.
(b)
Incentive Payment
. Employee will be eligible to
receive incentive bonus payments from time to time in accordance
with any incentive bonus program then in effect. Employee will be
entitled to receive an annual cash incentive bonus under such
program at a target level of 30% of Base Salary upon the
achievement of targets and other objectives for each fiscal year as
approved annually on behalf of the Company by the Board of
Directors. Such a plan will be administered on the Company’s
fiscal year basis (currently fiscal year ending March 31). For the
fiscal year ending March 31, 2008, the Board of Directors and
Employee shall mutually agree upon the targets and other objectives
to be achieved for Employee’s entitlement to an incentive
payment for such fiscal year as soon as reasonably practicable
after execution of this Agreement. For subsequent fiscal years
(beginning with the fiscal year ending March 31, 2009), the Board
of Directors and Employee shall mutually agree upon the targets and
other objectives to be achieved for Employee’s entitlement to
an incentive payment for such fiscal year no later than the end of
the first quarter of each fiscal year, provided that the completion
and approval by the Board of Directors of the Company’s
audited financial statements for the prior fiscal year has
occurred. In the event that an incentive payment is earned by
Employee under such a plan for any fiscal year, such payment shall
be made to Employee in a lump sum all-cash amount as earned on or
before the later of (1) the end of the first fiscal quarter of the
subsequent fiscal year, or (2) the completion and approval by the
Board of Directors of the Company’s audited financial
statements for the prior fiscal year has occurred, provided that
Employee has remained continuously employed in the Company’s
service through the end of the fiscal year for which the payment is
being made.
(c) Expenses . The Company will reimburse the Employee for
all reasonable travel, entertainment and miscellaneous expenses
actually and necessarily incurred in connection with the
performance of her duties under this Agreement, provided that the
Employee’s expenses are in accordance with the
Company’s current practices and that Employee properly
accounts for such expenses.
6.
Benefits
.
The Employee will be entitled during
the Term or any Successive Term of this Agreement to participate in
any vacation, pension, insurance or other benefit plan that is
maintained by the Company for its employees to the extent and in
the manner prescribed by the applicable plan documents.
7.
Long-term
Incentives .
Employee will be eligible to receive annual long-term incentive
awards in accordance with the terms and conditions of any
applicable long-term incentive compensation plans and programs as
in effect from time to time as approved by the Company’s
Compensation Committee and the Board of Directors. The Company will
provide for annual target level award(s) pursuant to such program
with a fair market value on the date of grant equal to 30% of Base
Salary.
(a) Termination by the Company Without
Cause . The Company may
terminate the Employee’s employment under this Agreement
without Cause at any time by giving no less than ninety (90)
calendar days’ written notice to the Employee. However, in
the event that the Company desires to terminate Employee’s
employment without Cause, the Company agrees that it will pay to
Employee the following:
1. Employee’s then-prevailing Base Salary for
a period of twelve months from the date of termination (the “
Salary Continuation Period ”); and
2. an amount equal to one times the average annual
incentive bonus paid to Employee by the Company for the three most
recently completed fiscal years in which a cash bonus program
covering the Employee was in effect, payable in equal installments
over the Salary Continuation Period. For the avoidance of doubt, in
the event there are less than three years in which a cash bonus
program covering the Employee was in effect or a cash bonus was
otherwise paid, the average annual incentive bonus shall be
determined solely with respect to such lesser number of
years.
(b) Termination by Employee for Good
Reason . Employee may
voluntarily elect to resign her employment with the Company prior
to the end of the Initial Term or any Successive Term for Good
Reason (as hereinafter defined) upon giving the Company ninety (90)
calendar days’ advance notice in writing of such termination.
If Employee terminates her employment for Good Reason, it shall be
equivalent to a “Termination Without Cause”, and the
Employee shall be entitled to receive the payments or benefits
subject to the terms and conditions of Section 8(a). "Good Reason"
shall mean any of the following that are undertaken without the
Employee’s express written consent: (i) the assignment to the
Employee of principal duties or responsibilities, or the
substantial reduction of Employee’s duties and
responsibi
