Exhibit 10.48
KLA-TENCOR
CORPORATION
EXECUTIVE SEVERANCE
PLAN
AS AMENDED AND RESTATED NOVEMBER
13, 2008
1. Introduction
The KLA-Tencor Corporation Executive
Severance Plan (the “Plan”) is designed to
(i) assure the Company that it will have the continued
dedication and availability of, and objective advice and counsel
from, the Participants and (ii) provide Participants with the
compensation and benefits described in the Plan in the event of
their termination of employment with the Company under the
circumstances described in the Plan. This document constitutes the
written instrument under which the Plan is maintained and
supersedes any prior plan or practice of the Company that provides
severance benefits to Participants.
The primary purposes of this
November 13, 2008 amendment and restatement are to clarify
certain benefits payable under the Plan and to bring the provisions
of the Plan into documentary compliance with the applicable
requirements of Section 409A of the Internal Revenue Code and
the Treasury Regulations issued thereunder and thereby continue to
facilitate the administration of the Plan in compliance with those
requirements.
Participants shall be those
Employees selected at the sole discretion of the
Committee.
2. Definitions
For purposes of this Plan, the
following terms shall have the meanings set forth below:
(a) “ Acceleration
Ratio ” shall mean the ratio of (i) the number of
months (with any fractional month rounded up to the next whole
month) that elapse between the grant date of an outstanding equity
award and the date of the Participant’s Separation from
Service hereunder to (ii) the number of months (with any
fractional month rounded up to the next whole month) in the total
vesting period in effect for such award.
(b) “ Amended Plan
Effective Date ” shall mean November 13,
2008.
(c) “ Average Annual
Incentive ” shall mean the average annual incentive cash
compensation earned in the aggregate by the Participant under the
Company’s various incentive bonus plans for the last three
completed fiscal years of the Company, including any portion earned
but deferred; provided, however that if a Participant
has not been in Employee status for the last three full fiscal
years, the Average Annual Incentive shall mean the
Participant’s aggregate target bonus for the fiscal year in
which he or she ceases Employee status.
(d) “ Base Salary
” shall mean the Participant’s annual rate of base
salary in effect as of the date of his or her cessation of Employee
status, but prior to any reduction to such Base Salary that would
qualify as a Good Reason termination event.
(e) “ Board ”
means the Board of Directors of the Company.
(f) “ Cause ”
shall mean (A) outside the Change of Control Period, the
occurrence of any of the following events: (i) the
Participant’s conviction of, or plea of nolo contendre to, a
felony; (ii) the Participant’s gross misconduct;
(iii) any material act of personal dishonesty taken by the
Participant in connection with his or her responsibilities as an
employee of the Company, or (iv) the Participant’s
willful and continued failure to perform the duties and
responsibilities of his or her position after there has been
delivered to the Participant a written demand for performance from
the Board which describes the basis for the Board’s belief
that the Participant has not substantially performed his or her
duties and provides the Participant with thirty (30) days to
take corrective action, and (B) within the Change of Control
Period, the occurrence of any of the following events: (i) the
Participant’s conviction of, or plea of nolo contendre to, a
felony that the Board reasonably believes has had or will have a
material detrimental effect on the Company’s reputation or
business; (ii) the Participant’s willful gross
misconduct with regard to the Company that is materially injurious
to the Company; (iii) any act of personal dishonesty taken by
the Participant in connection with his or her responsibilities as
an employee of the Company with the intention or reasonable
expectation that such action may result in substantial personal
enrichment of the Participant or (iv) the Participant’s
willful and continued failure to perform the duties and
responsibilities of his or her position after there has been
delivered to the Participant a written demand for performance from
the Board which describes the basis for the Board’s belief
that the Participant has not substantially performed his or her
duties and provides the Participant with thirty (30) days to
take corrective action.
(g) “ 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) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing 50% or more of the total
voting power represented by the Company’s then outstanding
voting securities; (ii) the sale or disposition by the Company
of all or substantially all of the Company’s assets;
(iii) the consummation of any 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) more than 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, as a result of which fewer than a majority of the
Board members are Incumbent Directors. “Incumbent
Directors” shall mean Board members who either (A) are
members of the Board on the Amended Plan Effective Date or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those Board members
whose election or nomination was not in connection with any
transactions described in subsections (i), (ii) or
(iii) or in connection with an actual or threatened proxy
contest relating to the election of directors of the
Company.
(h) “ Change of Control
Period ” shall mean the two (2) year period
commencing upon the occurrence of a Change of Control.
(i) “ Code ”
shall mean the Internal Revenue Code of 1986, as
amended.
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(j) “ Committee ”
shall mean the Board or such committee appointed by the Board to
act as the committee for purposes of administering the
Plan.
(k) “ Company ”
shall mean KLA-Tencor Corporation, a Delaware corporation, and any
successor entity.
(l) “ Employee ”
shall mean an individual who is a full-time regular employee of one
or more members of the Employer Group, subject to the control and
direction of the employer entity as to both the work to be
performed and the manner and method of performance. An individual
shall be deemed to continue in Employee status for so long as he or
she continues as a full-time regular employee of at least one
member of the Employer Group.
(m) “ Employer
Group ” means (i) the Company and (ii) each of
the other members of the controlled group that includes the
Company, as determined in accordance with Sections 414(b) and
(c) of the Code, except that in applying Sections 1563(1),
(2) and (3) of the Code for purposes of determining the
controlled group of corporations under Section 414(b), the
phrase “at least 50 percent” shall be used instead of
“at least 80 percent” each place the latter phrase
appears in such sections and in applying Section 1.414(c)-2 of
the Treasury Regulations for purposes of determining trades or
businesses that are under common control for purposes of
Section 414(c), the phrase “at least 50 percent”
shall be used instead of “at least 80 percent” each
place the latter phrase appears in Section 1.414(c)-2 of the
Treasury Regulations.
(n) “ Excise Tax
” shall mean the excise tax imposed by Section 4999 of
the Code.
(o) “ Good Reason
” shall mean (i) a material reduction of the
Participant’s duties, authority or responsibilities;
(ii) a material change in the Participant’s reporting
requirements such that the Participant is required to report to a
person whose duties, responsibilities and authority are materially
less than those of the person to whom the Participant was reporting
immediately prior to such change, (iii) a material reduction
in the Participant’s Base Salary, other than a reduction that
applies to other executives generally; (iv) a material
reduction in the aggregate level of the Participant’s overall
compensation, other than a reduction that applies to other
executives generally; or (iv) a material relocation of the
Participant’s office, with a relocation of more than fifty
(50) miles from its then present location to be deemed
material, unless the relocated office is closer to the
Participant’s then principal residence; provided
however , that in no event shall the Participant’s
Separation from Service be deemed to be for Good Reason unless
(x) the Participant provides the Company with written notice
specifying in detail the event or transaction constituting grounds
for a Good Reason resignation and delivered to the Company within
ninety (90) days after the occurrence of that event or
transaction, (y) the Company fails to remedy the purported
Good Reason event or transaction within a reasonable cure period of
at least thirty (30) days following receipt of such notice and
(z) the Participant resigns for such Good Reason within sixty
(60) days after the Company’s failure to take such
timely curative action, but in no event more than one hundred
eighty (180) days after the occurrence of the event or
transaction identified in the clause (x) notice to the Company
as the grounds for the Good Reason resignation.
(p) “ Original Effective
Date ” shall mean January 1, 2006.
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(q) “ Participant
” shall mean an Employee who meets the eligibility
requirements of Section 3.
(r) “ Plan ”
shall mean this KLA-Tencor Corporation Executive Severance
Plan.
(s) “ Plan Year ”
shall mean the Company’s fiscal year.
(t) “ Prorated Annual
Incentive ” shall mean the aggregate incentive bonus paid
to the Participant under the Company’s various incentive
bonus plans for the Company’s most recently completed fiscal
year, including any portion earned but deferred, multiplied by a
fraction, the numerator of which is the number of days in the
Company’s then current fiscal year through the date of the
Participant’s Separation from Service, and the denominator of
which is equal to 365.
(u) “ Separation from
Service ” means the Participant’s cessation of
Employee status by reason of his or her death, retirement or
termination of employment. The Participant shall be deemed to have
terminated employment for such purpose at such time as the level of
his or her bona fide services to be performed as an Employee (or
non-employee consultant) permanently decreases to a level that is
not more than twenty percent (20%) of the average level of
services he or she rendered as an Employee during the immediately
preceding thirty-six (36) months (or such shorter period for
which he or she may have rendered such service). Any such
determination as to Separation from Service, however, shall be made
in accordance with the applicable standards of the Treasury
Regulations issued under Code Section 409A. In addition to the
foregoing, a Separation from Service will not be deemed to have
occurred while an Employee is on military leave, sick leave or
other bona fide leave of absence if the period of such leave does
not exceed six (6) months or any longer period for which such
Employee’s right to reemployment with one or more members of
the Employer Group is provided either by statute or contract;
provided, however, that in the event of an
Employee’s leave of absence due to any medically determinable
physical or mental impairment that can be expected to result in
death or to last for a continuous period of not less than six
(6) months and that causes such individual to be unable to
perform his or her duties as an Employee, no Separation from
Service shall be deemed to occur during the first twenty-nine
(29) months of such leave. If the period of leave exceeds six
(6) months (or twenty-nine (29) months in the event of
disability as indicated above) and the Employee’s right to
reemployment is not provided either by statute or contract, then
such Employee will be deemed to have a Separation from Service on
the first day immediately following the expiration of such six
(6)-month or twenty-nine (29)-month period.
(v) “ Severance
Multiple ” shall mean the Participant’s Severance
Period, expressed in years or fractions thereof (e.g., a Severance
Period of two years results in a Severance Multiple of two). The
Severance Multiple may be different for periods outside of the
Change of Control Period and within the Change of Control
Period.
(w) “ Severance Payment
” shall mean the payment of severance compensation as
provided in Section 4 hereof.
(x) “ Severance Period
” shall mean the number of years (which may include
fractional years) established by the Committee for an individual
Participant. The Severance Period may be different for periods
outside of the Change of Control Period and within the Change of
Control Period.
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(y) Specified Employee
” means any individual who is, at any time during the twelve
(12)-month period ending with the identification date specified
below, a “key employee” (within the meaning of that
term under Code Section 416(i)), as determined by the
Committee in accordance with the applicable standards of Code
Section 409A and the Treasury Regulations thereunder and
applied on a consistent basis for all non-qualified deferred
compensation plans of the Employer Group subject to Code
Section 409A. The Specified Employees shall be identified by
the Committee on December 31 each year and shall have that
status for the twelve (12)-month period beginning on the
April 1 subsequent to such determination by the
Committee.
3. Eligibility
(a) Required Release . In
order to qualify for severance benefits under Section 4(b),
4(c) or 4(d) of the Plan, the Participant must, within twenty-one
(21) days (or forty-five (45) days to the extent any such
longer period is required under applicable law) after the date of
his or her Separation from Service, sign and deliver to the Company
a general waiver and release (the “Required Release”)
in the form provided by (and in favor of) the Company, and such
Required Release must become effective under applicable law
following the expiration of any applicable revocation period under
federal or state law.
(b) Participation in Plan .
The Committee shall from time to time designate the Employees who
are to participate in the Plan. The Committee may, with respect to
one or more such designated Participants, limit their participation
to certain Separations from Service during or related to the Change
of Control Period as set forth in Sections 4(c) and 4(d) hereof and
not allow them to participate with respect to certain Separations
from Service outside of and unrelated to the Change of Control
Period, as set forth in Section 4(b) hereof. A Participant
shall cease to be a Participant upon cessation of Employee status
(unless such Participant is then entitled to a Severance Payment
under the Plan) or upon the expiration date of the Plan. However, a
Participant who becomes entitled to a Severance Payment shall
remain a Participant in the Plan until the full amount of his or
her benefits under the Plan have been provided to such Participant,
notwithstanding the prior expiration of the Plan. Upon receipt of
all the Severance Payments, the Participant releases the Company
from any and all further obligations under the Plan.
4. Severance
Benefits
(a) Termination of Employment
. Except as otherwise provided in this Section 4(a), upon the
termination of the Participant’s Employee status for any
reason, the Participant shall be immediately entitled to any
(i) unpaid Base Salary accrued through the effective date of
such termination; (ii) unreimbursed business expenses required
to be reimbursed to the Participant in accordance with the
Company’s business expense reimbursement policy, and
(iii) pay for accrued but unused vacation that the Company is
legally obligated to pay the Participant. Any amounts deferred by
such Participant under one or more of the Company’s
non-qualified deferred compensation programs subject to
Section 409A of the Code which remain unpaid on the
termination date shall be paid at such time and in such manner as
set forth in each applicable plan or agreement governing the
payment of those deferred amounts, subject, however, to the
deferred payment provisions of Section 6 below. Amounts
deferred under any other deferred compensation plans or programs
shall be paid to the Participant in accordance with the terms
and
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provisions of each such applicable
plan or program. In addition, should the Participant incur a
Separation from Service because his or her service as an Employee
is terminated or reduced by the Company other than for Cause or by
the Participant for Good Reason, then the Participant shall be
entitled to the amounts and benefits specified below.
(b) Termination by the Company
Without Cause or the Participant Terminates for Good Reason Outside
of the Change of Control Period . If the Participant incurs a
Separation from Service because his or her service as an Employee
is reduced or terminated by the Company without Cause or by the
Participant for Good Reason, and such Separation from Service does
not occur during the Change of Control Period, then, subject to
Sections 3(a) and 5, the Participant shall receive:
(i) an amount equal to the Participant’s Severance
Multiple multiplied by the Participant’s Base Salary, payable
in successive equal installments over the Severance Period in
accordance with the Company’s normal payroll policies for
salaried employees, with the first such payment to begin on the
first payday within the sixty (60)-day period following the date of
such Separation from Service on which the Participant’s
Required Release is effective, but in no event shall such initial
payment be made later than the last business day of such sixty
(60)-day period on which the Release is so effective; (ii) the
Participant’s Prorated Annual Incentive, with such payment to
be made in a lump sum at the same time as the first installment
payment under clause (i) above; (iii) partial vesting
acceleration with respect to the Participant’s then
outstanding unvested equity awards, with the amount of such
accelerated vesting being equal to, for each such award,
(A) the product of the number of shares originally granted
under such award (as such number may be modified based upon the
satisfaction of (or failure to satisfy) any performance criteria or
other criteria applicable to such award) multiplied by the
Acceleration Ratio, less (B) the number of shares under such
award that have actually vested in accordance with the terms of
such award (without giving effect to the acceleration terms
hereunder) as of the date of the Participant’s Separation
from Service hereunder; and (iv) with respect to any of the
Participant’s then outstanding options or stock appreciation
rights granted on or after the Original Effective Date (“New
Options/SARs”), an extended post-termination exercise period
for each such New Option/SAR equal to the earlier of
(x) twelve (12) months from the date of the
Participant’s cessation of Employee status or (y) the
expiration date of the maximum term (not to exceed ten years) of
such New Option/SAR.
(c) Termination Without Cause or
Resignation for Good Reason During the Change of Control Period
. If the Participant incurs a Separation from Service because his
or her service as an Employee is reduced or terminated by the
Company without Cause or by the Participant for Good Reason, and
such Separation from Service occurs within the Change of Control
Period, then, subject to Sections 3(a) and 5, Participant
shall receive:
