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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 0-26784
SPEEDFAM INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Illinois 36-2421613
- -------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7406 West Detroit, Chandler, Arizona 85226
- ----------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (602) 961-2175
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _______
------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (April 11, 1997).
Common Stock, no par value: 13,274,563 shares
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SpeedFam International, Inc.
INDEX
<TABLE>
<CAPTION>
Page
----
Part I FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
February 28, 1997 and May 31, 1996......................... 2
Condensed Consolidated Statements of Earnings
Three Months and Nine Months Ended February 28,
1997 and February 29, 1996................................. 3
Condensed Consolidated Statements of Cash Flows
Nine Months Ended February 28, 1997 and February 29, 1996...4
Notes to Condensed Consolidated Financial Statements........5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................8
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................14
SIGNATURE..................................................................15
</TABLE>
EXHIBIT INDEX
Exhibit 10.1 Employment Agreement between the Registrant and James N.
Farley
Exhibit 10.2 Employment Agreement between the Registrant and Makoto
Kouzuma
Exhibit 10.3 Employment Agreement between the Registrant and Roger K.
Marach
Exhibit 10.4 Employment Agreement between the Registrant and Christopher
E. Augur
Exhibit 10.5 Employment Agreement between the Registrant and Robert R.
Smith
Exhibit 11 Computation of Net Earnings Per Share
Exhibit 27 Financial Data Schedule
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<PAGE>
Part I--Financial Information
SpeedFam International, Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
February 28, May 31,
1997 1996
------------ -------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 77,366 $ 10,871
Trade accounts and notes receivable, net 41,768 34,693
Inventories 33,362 27,931
Other current assets 5,113 2,470
-------- --------
Total current assets 157,609 75,965
Investments in affiliates 23,171 20,450
Property, plant and equipment, net 18,682 9,969
Other assets 1,993 1,600
-------- --------
Total assets $201,455 $107,984
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 250 $ 727
Accounts payable and due to affiliates 29,488 26,460
Customer deposits 5,013 4,814
Other current liabilities 15,150 12,771
-------- --------
Total current liabilities 49,901 44,772
-------- --------
Long-term liabilities:
Long-term debt 337 2,593
Deferred income taxes 586 580
-------- --------
Total long-term liabilities 923 3,173
-------- --------
Shareholders' equity:
Common stock, no par value, 20,000,000
shares authorized, 13,270,979 and
10,514,868 shares issued and
outstanding at February 28, 1997 and
May 31, 1996, respectively 1 1
Additional paid-in capital 105,501 26,174
Retained earnings 42,977 29,247
Foreign currency translation adjustment 2,152 4,617
-------- --------
Total shareholders' equity 150,631 60,039
-------- --------
Total liabilities and shareholders' equity $201,455 $107,984
======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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SpeedFam International, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Earnings
Three Months and Nine Months Ended February 28, 1997 and February 29, 1996
(dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 29, February 28, February 29,
------------ ------------ ------------ ------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Net sales $40,918 $30,083 $115,202 $72,353
Commissions from affiliate 4,362 3,057 8,925 4,041
------- ------- -------- -------
Total revenue 45,280 33,140 124,127 76,394
Cost of sales 25,591 20,295 75,465 51,481
------- ------- -------- -------
Gross margin 19,689 12,845 48,662 24,913
Research, development and engineering 4,884 3,496 12,779 6,993
Selling, general and administrative 9,003 5,183 22,483 12,617
------- ------- -------- -------
Operating profit 5,802 4,166 13,400 5,303
Interest expense (62) (90) (185) (615)
Other income (expense), net 126 172 (216) 440
------- ------- -------- -------
Earnings from consolidated companies
before income taxes 5,866 4,248 12,999 5,128
Income tax expense 2,286 1,616 5,053 2,002
------- ------- -------- -------
Earnings from consolidated companies 3,580 2,632 7,946 3,126
Equity in net earnings of affiliates 1,329 1,728 5,784 3,563
------- ------- -------- -------
Net earnings $ 4,909 $ 4,360 $ 13,730 $ 6,689
======= ======= ======== =======
Net earnings per share $ 0.42 $ 0.39 $ 1.20 $ 0.68
======= ======= ======== =======
Weighted average common and common
equivalent shares 11,801 11,211 11,463 9,790
======= ======= ======== =======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE>
SpeedFam International, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Cash Flows
Nine Months Ended February 28, 1997 and February 29, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
February 28, February 29,
------------ ------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 13,730 $ 6,689
Adjustments to reconcile net earnings
to net cash used in operating
activities:
Equity in net earnings of affiliates (5,784) (3,563)
Depreciation and amortization 1,494 721
Other 550 13
Changes in assets and liabilities:
Increase in trade accounts and
notes receivable (7,419) (14,578)
Increase in inventories (5,453) (7,910)
Increase in other current assets (2,604) (1,866)
Increase in accounts payable and
due to affiliates 3,005 6,854
Increase in accrued expenses,
customer deposits and other
liabilities 2,539 7,507
-------- --------
Net cash provided by (used in)
operating activities 58 (6,133)
-------- --------
Cash flows from investing activities
Capital expenditures (10,185) (5,579)
Other investing activities 186 238
-------- --------
Net cash used in investing activities (9,999) (5,341)
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock 77,778 28,380
Proceeds from exercise of stock options 472 --
Proceeds from sale of stock to employees 887 --
Treasury stock transactions -- 16
Proceeds from long-term debt 414 3,999
Principal payments on long-term debt (3,155) (11,848)
-------- --------
Net cash provided by financing activities 76,396 20,547
-------- --------
Effects of foreign currency rate
changes on cash 40 (68)
-------- --------
Net increase in cash and cash
equivalents 66,495 9,005
Cash and cash equivalents at beginning
of year 10,871 1,095
-------- --------
Cash and cash equivalents at February
28, 1997 and February 29, 1996 $ 77,366 $ 10,100
======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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SpeedFam International, Inc. and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements
(dollars in thousands)
(1) Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by management without audit. Certain information and note
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted, although management believes that the disclosures
made are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements of the Company for the year
ended May 31, 1996, as filed with the Securities and Exchange Commission on
September 5, 1996 as part of its Annual Report on Form 10-K/A. In the
opinion of management the information furnished herein reflects all
adjustments (consisting of normal recurring adjustments) necessary for a
fair statement of results for the interim periods presented. Results of
operations for the three months and nine months ended February 28, 1997 are
not necessarily indicative of results to be expected for the full fiscal
year.
(2) Inventories
The components of inventory were:
February 28, May 31,
1997 1996
------------ -------
Raw materials $16,467 $14,626
Work-in-process 11,502 10,777
Finished goods 5,393 2,528
------- -------
$33,362 $27,931
======= =======
(3) Investments in Affiliates
The Company owns a 50% interest in SpeedFam Co., Ltd. The Company's equity
interest in SpeedFam Co., Ltd. was $20,124 and $18,545 at February 28, 1997
and at May 31, 1996, respectively, based on the balance sheet of SpeedFam
Co., Ltd. at January 31, 1997 and April 30, 1996, respectively. The
remaining equity interest included in investments in affiliates relates to
the Company's 50% ownership interest in Fujimi Corporation. Condensed
consolidated financial statements of SpeedFam Co., Ltd., which are
consolidated on a fiscal year that ends April 30, are as follows:
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SpeedFam International, Inc. and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements
(dollars in thousands)
Balance Sheets
<TABLE>
<CAPTION>
January 31, April 30,
1997 1996
----------- ---------
Assets
<S> <C> <C>
Total current assets $110,120 $ 98,492
Investment in affiliates 765 891
Property, plant and equipment, net 24,288 20,161
Deferred income taxes and other assets 7,751 7,007
-------- --------
Total assets $142,924 $126,551
======== ========
Liabilities and Stockholders' Equity
Total current liabilities $ 87,657 $ 74,966
Long-term debt 8,117 9,106
Other long-term liabilities 6,903 5,388
Stockholders' equity
Common stock 664 664
Retained earnings 35,266 26,943
Foreign currency translation
adjustment 4,185 9,346
Unrealized gains on marketable
securities 132 138
-------- --------
Total liabilities and
stockholders' equity $142,924 $126,551
======== ========
</TABLE>
Statements of Earnings and Retained Earnings
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
------------------ --------------------
1997 1996 1997 1996
-------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $45,219 $53,181 $156,073 $115,325
Costs and operating expenses 42,572 46,907 137,620 101,633
------- ------- -------- --------
Earnings before income taxes 2,647 6,274 18,453 13,692
Income taxes 845 3,059 8,589 6,653
------- ------- -------- --------
Net earnings before minority interest 1,802 3,215 9,864 7,039
Minority interest 132 (35) 634 244
------- ------- -------- --------
Net earnings 1,670 3,250 9,230 6,795
Beginning retained earnings 33,596 20,851 26,943 18,036
Dividends -- -- (907) (276)
Transfers to capital -- -- -- (454)
------- ------- -------- --------
Ending retained earnings $35,266 $24,101 $ 35,266 $ 24,101
======= ======= ======== ========
</TABLE>
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<PAGE>
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
The Company pays a commission to SpeedFam Co., Ltd. on sales of equipment
produced by the Company in the U.S. and exported to Pacific Rim customers
through SpeedFam Co., Ltd. As of February 28, 1997 the Company had accrued
$1,965 of commission expense to SpeedFam Co., Ltd.
(4) Long-Term Debt
In fiscal year 1996, the Company entered into an unsecured credit agreement
with two U.S. banks. The credit agreement includes a $22,500 revolving line
of credit maturing April 14, 1999. During the third quarter ended February
28, 1997, the Company paid off the outstanding balance on the unsecured
revolving line of credit, and as of February 28, 1997, no amounts were
outstanding on this line of credit.
As of September 13, 1996, the Company had negotiated an amendment to the
$22,500 credit facility, providing for an additional $14,000 in a 5-year
unsecured term loan to fund the construction of a new corporate
headquarters and manufacturing facility in Chandler, Arizona. As of
February 28, 1997, no amounts were outstanding on the term loan. Terms of
the loan provide that principal would be repaid in fifteen (15) quarterly
installments of $350 each beginning in October of 1997. The remaining
outstanding balance would be repaid at the end of the loan's term. Interest
on the term loan would accrue and be paid monthly on the outstanding
balance based on a 90-day LIBOR rate plus 140 basis points.
On October 31, 1996, SpeedFam Limited in the United Kingdom, a wholly owned
subsidiary of SpeedFam International, Inc., entered into a (Pounds)950
($1,522) Multi-Currency Revolving Line of Credit with the London branch of
a U.S. bank. The revolving line of credit is secured by property and
equipment of the subsidiary and is payable on demand. Interest accrues on
the outstanding balance at 2.0% above the bank's base rate (6.0% at January
31, 1997) and is payable monthly. As of January 31, 1997 no amounts were
outstanding on this credit facility.
(5) Offering of Common Stock
On February 20, 1997, the Company completed a public offering of common
stock. In connection therewith, the Company issued 2,500,000 shares of
common stock and received proceeds of $77.8 million, net of underwriters'
discounts and commissions and offering expenses.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Segments
The Company's total revenue consists of net sales in two segments: (i)
equipment, parts and expendables, and (ii) slurries, as well as commissions
earned on the distribution in the U.S. and Europe of products produced by
SpeedFam Co., Ltd., the Company's Far East Joint Venture.
Results of Operations
The following table sets forth certain consolidated statements of earnings
data for the periods indicated as a percentage of total revenue:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 29, February 28, February 29,
------------ ------------ ------------ ------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Net sales 90.4% 90.8% 92.8% 94.7%
Commissions from affiliate 9.6 9.2 7.2 5.3
------------ ------------ ------------ ------------
Total revenue 100.0 100.0 100.0 100.0
Cost of sales 56.5 61.2 60.8 67.4
------------ ------------ ------------ ------------
Gross margin 43.5 38.8 39.2 32.6
Research, development and engineering 10.8 10.5 10.3 9.2
Selling, general and administrative 19.9 15.7 18.1 16.5
------------ ------------- ------------ ------------
Operating profit 12.8 12.6 10.8 6.9
Interest expense (0.1) (0.3) (0.1) (0.8)
Other income (expense), net 0.3 0.5 (0.2) 0.6
------------ ------------ ------------ ------------
Earnings from consolidated companies before
income taxes 13.0 12.8 10.5 6.7
Income tax expense 5.1 4.9 4.1 2.6
------------ ------------ ------------ ------------
Earnings from consolidated companies 7.9 7.9 6.4 4.1
Equity in net earnings of affiliates 2.9 5.3 4.7 4.7
------------ ------------ ------------ ------------
Net earnings 10.8% 13.2% 11.1% 8.8%
============ ============ ============ ============
</TABLE>
-8-
<PAGE>
Net Sales. The Company's net sales for the three months ended February 28,
1997 were $40.9 million, an increase of 36.0% over net sales of $30.1 million
for the corresponding period in the prior year. This increase in net sales
resulted from growth in the equipment, parts and expendables segment. Sales of
equipment, parts and expendables increased to $35.3 million or 86.2% of net
sales in the third quarter of fiscal 1997 as compared to $23.2 million or 77.3%
of net sales in the same period of fiscal 1996. The growth in this segment was
attributable to higher sales of the Company's CMP planarization systems to the
semiconductor industry.
The Company believes that the market for thin film memory disk polishing
equipment is evolving from manual load/unload systems to automated load/unload
systems. Consequently, the historical growth rate in sales of manual disk
polishing machines to the thin film memory disk market may not be sustained in
the future as several of the Company's customers have begun the process of
evaluating how to migrate from manual to automated systems. Currently, the
automated disk polishing machine is manufactured exclusively by SpeedFam Co.,
Ltd. (Far East Joint Venture). Revenue from the sale of automated disk polishing
systems by the Company would be recognized as commission revenue since these
systems are solely produced by the Far East Joint Venture. The Company is
currently evaluating whether to begin producing automated machines in the U.S.,
although it expects that any decision to do so will take a number of months to
implement.
Sales of slurries decreased to $5.7 million or 13.8% of net sales in the
third quarter of fiscal 1997 from $6.8 million or 22.7% of net sales in the
comparable period of fiscal 1996. This decrease is specifically due to certain
manufacturers of thin film memory disk media using slurry formulations that
achieve certain desired surface characteristics, but which the Company does not
currently sell. The Company is working with its supplier of memory disk slurry
to develop new slurry formulations, but expects that sales of slurries to the
thin film memory disk media market will remain at current levels in the near
future.
Net sales for the nine months ended February 28, 1997 were $115.2 million,
up 59.2% over net sales of $72.4 million for the same period in fiscal 1996.
Equipment, parts and expendables accounted for 84.1% of net sales in the first
nine months of fiscal 1997 compared to 73.6% in the same period of fiscal 1996.
CMP planarization equipment accounted for a significant portion of this sales
growth. In addition, net sales for the nine month period have increased due to
higher levels of equipment shipments to the thin film memory disk media market.
Sales of slurries as a percent of net sales decreased to 15.9% in the first nine
months of fiscal 1997 from 26.4% in the comparable period of fiscal 1996.
-9-
<PAGE>
Commissions from Affiliate. Commissions from affiliate increased to $4.4
million during the third quarter of fiscal 1997 from $3.1 million in the
corresponding period of fiscal 1996. Commissions from affiliate increased to
$8.9 million in the first nine months of fiscal 1997 compared to $4.0 million in
the first nine months of fiscal 1996. The increases in the three and nine month
periods, as compared to the respective periods in fiscal 1996, were due
primarily to the continuing demand in the silicon wafer industry for polishing
systems developed and manufactured by the Far East Joint Venture. In addition,
sales of cleaning and polishing systems, also produced by the Far East Joint
Venture, to customers in the thin film memory disk media market increased
significantly in the third quarter and first nine months of fiscal 1997 over the
same periods in the prior year.
Gross Margin. Gross margin increased to $19.7 million or 43.5% of total
revenue for the three months ended February 28, 1997 from $12.8 million or 38.8%
of total revenue for the three months ended February 29, 1996. For the first
nine months of fiscal 1997, gross margin was $48.7 million or 39.2% of total
revenue compared to $24.9 million or 32.6% of total revenue for the first nine
months of fiscal 1996. The increase in gross margin and gross margin percentage
for both the three and nine months ended February 28, 1997 over the respective
prior year periods is due to a higher level of net sales in total as well as a
continuing increase in sales of higher-margin equipment, especially systems for
planarization of semiconductor devices. In addition, higher commission revenue
contributed to the increased gross margins in the three and nine month periods.
Research, Development and Engineering. Research, development and
engineering expense increased to $4.9 million or 10.8% of total revenue in the
third quarter of fiscal 1997 from $3.5 million or 10.5% of total revenue in
third quarter of fiscal 1996. In the nine months ended February 28, 1997,
research, development and engineering expense increased to $12.8 million or
10.3% of total revenue compared to $7.0 million or 9.2% of total revenue in the
first nine months of fiscal 1996. The increase in both the dollar amount and
as a percent of total revenue is a result of the continued investment in the
development of the CMP process and products for key markets, particularly for
the semiconductor sector, and increasing the Company's field suport organization
throughout the world. Such expenditures have resulted in the development and
sale of the Auriga machine, the next generation of the CMP-V system, and the
development of the Capella post-CMP cleaning system. Two Capella systems were
shipped into two beta sites during the third quarter of fiscal 1997.
Selling, General and Administrative. Selling, general and administrative
expense increased to $9.0 million in the third quarter of fiscal 1997 from $5.2
million in the third quarter of fiscal 1996. For the three month period ended
February 28, 1997, selling, general and administrative expense as a percent of
total revenue increased to 19.9% compared to 15.7% of total revenue in the
similar period of fiscal 1996. Selling, general and administrative expense
increased to $22.5 million in the first nine months of fiscal 1997 from $12.6
million in the corresponding period in the prior year. As a percentage of total
revenue, selling, general and administrative expense increased to 18.1% from
16.5% in the first nine months of fiscal 1996. Higher levels of spending were
required to support the sales growth in the first nine months of fiscal 1997.
This increase in selling, general and administrative expense as a percentage of
revenue reflects continued investments in sales and administrative
infrastructure, as well as increased commissions paid to the Far East Joint
Venture as a result of increased sales of CMP systems produced by the Company in
the U.S. and exported to Pacific Rim customers through its joint venture
affiliate.
Interest Expense. The decreases in interest expense for the three and nine
months ended February 28, 1997, were due to the reduction of long-term debt
since the end of the first quarter of fiscal 1996 using funds received from the
initial public offering completed in October 1995 and the public offering
completed in February 1997.
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<PAGE>
Other Income (Expense), Net. Other income decreased to $126,000 in the
third quarter of fiscal 1997 from $172,000 in the comparable period of fiscal
1996. Other expense increased to $216,000 in the first nine months of fiscal
1997 from $440,000 of other income in the comparable period of fiscal 1996.
Other expense for the first nine months of fiscal 1997 consists primarily of
charges associated with the Company's public common stock offering in the first
quarter of fiscal 1997 which was subsequently canceled. These charges were
partially offset by interest income.
Equity in Net Earnings of Affiliates. Equity in net earnings of affiliates
decreased to $1.3 million for the three months ended February 28, 1997 from $1.7
million in the comparable period of fiscal 1996. While revenue of the Far East
Joint Venture reported in yen grew from the same quarter a year ago, a change in
product mix lowered gross margin. In addition, operating expenses increased in
relation to the buildup of the Far East Joint Venture's CMP organization
throughout the Pacific Rim. The equity contribution from the Far East Joint
Venture was also down due to a declining yen relationship against the U.S.
dollar versus the same period last year.
Equity in net earnings of affiliates increased to $5.8 million in the first
nine months of fiscal 1997 from $3.6 million in the corresponding period in the
prior year. The Company's share of the net earnings of its other joint venture,
Fujimi Corporation, were significantly higher than in the comparable periods of
fiscal 1996 due primarily to increased sales and improved margins realized on
slurry products sold by Fujimi Corporation to the U.S. silicon wafer market.
-11-
<PAGE>
Liquidity and Capital Resources
For the first nine months ended February 28, 1997, $58,000 in cash was
provided by operating activities. Cash provided by net earnings and increases in
current liabilities was almost all offset by increases in accounts receivable,
inventories and other current assets.
Through February 28, 1997, the Company had spent approximately $12.0
million in land and construction costs for a new corporate headquarters and
manufacturing facility in Chandler, Arizona. The Company presently estimates the
total costs to be incurred for the project will be approximately $20.4 million.
The current total estimated project cost has increased from previous estimates
due to changes in equipment production capacity and waste neutralization
requirements, power and HVAC demands.
On February 20, 1997, the Company completed a public offering of common
stock. In connection therewith, the Company issued 2,500,000 shares of common
stock and received proceeds of $77.8 million, net of underwriters' discounts and
commissions and offering expenses. In addition, for the nine months ended
February 28, 1997, $1.4 million was provided by the sale of stock to employees
through the Company's Employee Stock Purchase Plan and through the exercise of
stock options.
Using proceeds from the February 1997 stock offering, the Company paid off
$2.8 million of the outstanding balance on a $22.5 million unsecured revolving
line of credit maturing April 14, 1999. As of February 28, 1997, no amounts were
outstanding on this line of credit.
As of September 13, 1996, the Company had successfully negotiated an
amendment to its then existing $22.5 million unsecured credit facility, in which
its U.S. bank group provided the Company an additional $14.0 million in an
unsecured term loan to fund the remaining costs to construct the new corporate
headquarters and manufacturing facility in Chandler, Arizona. At February 28,
1997, no amounts were outstanding on the term loan.
On October 31, 1996, a wholly owned subsidiary of SpeedFam International,
Inc. entered into a (pounds) 950,000 ($1.5 million) Multi-Currency Revolving
Line of Credit. The credit facility was provided to support the operating and
working capital needs of the Company's British subsidiary. As of January 31,
1997, no amounts were outstanding on this line of credit.
The Company believes that current bank lines of credit, the term loan and
the funds provided by the recent sale of common stock will be sufficient to meet
the Company's capital requirements during the next 12 months.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" was
issued in March 1995 and is effective for fiscal years beginning after December
15, 1995. Management has reviewed the Statement and determined that its
provisions do not have a material effect upon the financial condition or results
of operations of the Company.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation Plans" was issued in October 1995. The Statement will be
effective for the Company's fiscal year 1997. As allowed by the new Statement,
the Company plans to continue to use Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" in accounting for its stock options.
Certain pro forma and other information will be disclosed in the annual
financial statements as if the Company had measured compensation costs in a
manner consistent with the new Statement. Management has reviewed the Statement
and determined that its provisions do not have a material effect upon the
financial condition or results of operations of the Company.
-12-
<PAGE>
Certain statements and information in this Form 10-Q constitute "forward-
looking statements" within the meaning of the federal securities laws. Such
forward-looking statements involve risks and uncertainties which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Factors that may affect the
Company's business and may therefore affect actual results include, among
others, the cyclical nature of the Company's business and the industries which
it serves, the Company's dependence on new product development and the effects
of rapid technological change in the semiconductor and disk media industries,
including the effects of significant competition in these industries, the normal
fluctuations in the Company's quarterly operating results, including the effects
of the Far East Joint Venture's results of operations. This is only a summary of
some of the important factors that could cause actual results to vary. For a
more complete description of these and other factors, refer to "Certain Factors
Affecting the Company's Business" in the Company's Form 10-K/A filed with the
Securities and Exchange Commission. The Company undertakes no obligation to
update the information, including the forward-looking statements, in the Form
10-Q.
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<PAGE>
SpeedFam International, Inc.
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit - 10.1 Employment Agreement between the Registrant and
James N. Farley
Exhibit - 10.2 Employment Agreement between the Registrant and
Makoto Kouzuma
Exhibit - 10.3 Employment Agreement between the Registrant and
Roger K. Marach
Exhibit - 10.4 Employment Agreement between the Registrant and
Christopher E. Augur
Exhibit - 10.5 Employment Agreement between the Registrant and
Robert R. Smith
Exhibit - 11 Computation of Net Earnings Per Share
Exhibit - 27 Financial Data Schedule
(b) Reports on Form 8-K.
One report on Form 8-K was filed February 18, 1997 to disclose
that the Registrant had entered into an underwriting agreement.
Pursuant to the underwriting agreement, the Registrant and certain
shareholders of the Registrant proposed to sell 3,000,000 shares
of the Registrant's common stock and grant the underwriters an
over-allotment option to purchase up to 450,000 additional shares
solely from the Company.
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<PAGE>
SpeedFam International, Inc.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SpeedFam International, Inc.
/s/ Roger K. Marach
------------------------------------------
Date: April 14, 1997 By Roger K. Marach
Treasurer and Chief Financial Officer
(As Chief Accounting Officer and Duly
Authorized Officer of SpeedFam International,
Inc.)
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.1 Employment Agreement between the Registrant and James N. Farley
10.2 Employment Agreement between the Registrant and Makoto Kouzuma
10.3 Employment Agreement between the Registrant and Roger K. Marach
10.4 Employment Agreement between the Registrant and Christopher E. Augur
10.5 Employment Agreement between the Registrant and Robert R. Smith
11 Computation of Net Earnings Per Share
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.1
Employment Agreement
This Agreement is made and entered into this 18th day of March, 1997, by
and between SpeedFam International, Inc., an Illinois corporation (hereinafter
referred to as the "Company") and James N. Farley (hereinafter referred to as
the "Employee").
W i t n e s s e t h:
Whereas, the Company desires to retain the services of the Employee in the
capacities set forth herein, and the Employee desires to be employed by the
Company in such capacities;
Now Therefore, in consideration of the promises and mutual covenants herein
contained, the Company and the Employee hereby agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth and subject to the policies as published
in the Company's Employee Handbook, as from time to time amended.
2. Term. Subject to the provisions for earlier termination
hereinafter set forth in Section 12 of this Agreement, the term of
employment hereunder shall commence on the date hereof and end on the first
May 31st after the date hereof.
3. Automatic Extension. The term of employment of the Employee
hereunder shall automatically continue for additional one (1) year terms
upon the same terms and conditions contained herein unless either the
Company or the Employee shall notify the other at least six (6) months
prior to the expiration of the initial one (1) year term or any renewal
term of its or his intention to terminate the term of employment of the
Employee as of the end of the initial one (1) year term or any such renewal
term, as the case may be.
4. Compensation. The Company agrees to provide the Employee with
the following compensation for all services rendered under this Agreement:
4.1. Salary. During the term hereof, the Company shall pay
to the Employee a Base Annual Salary of Two Hundred Fifty Thousand
Dollars ($250,000), payable in accordance with the standard payroll
practices of the Company (including any salary-reduction contributions
to plans or programs maintained by the Company). Further, the Base
Annual Salary of the Employee shall be reviewed annually by the
Company and adjusted as appropriate.
4.2. Annual Incentive Opportunity. During the term of this
Agreement, the Employee shall participate in the annual incentive plan
maintained by the Company for its executives.
<PAGE>
4.3. Long-term Incentive Opportunity. During the term of
this Agreement, the Employee shall participate in any long-term
incentive plan maintained by the Company, including, but not limited
to, stock options, performance shares, restricted stock and long-term
cash incentive plans, in a manner consistent with other executives of
the Company, as determined by the Board.
4.4. Other Benefits. To the extent the Employee is eligible
under the appropriate laws, the Employee shall be entitled to
participate in and receive benefits under any and all pension, profit-
sharing, health, disability and insurance plans, if any, which the
Company may maintain. The Employee shall also receive an allowance of
Thirteen Thousand Seven Hundred Fifty-Four Dollars ($13,754) annually
for automobile expenses.
4.5. Health Care Insurance Beyond Termination. Following the
termination of Employee's employment with the Company, to the extent
the Employee or his spouse shall no longer qualify to participate
under the Company's health insurance plan, the Company shall pay for
private health care insurance policies, with coverage comparable to
the health insurance coverage provided from time to time to officers
of the Company, for the Employee and his spouse for their lifetimes.
5. Duties. The Employee shall, subject to election and removal by
the Board of the Company in their sole discretion, serve as Chairman of the
Board and Chief Executive Officer of the Company. As such, the Employee's
duties and responsibilities shall include, but shall not be limited to,
overseeing all corporate functions and directing the organization to assure
the attainment of agreed upon sales and profit goals and maximum return on
invested capital. Subject to the approval of the Board of the Company, the
Chairman/Chief Executive Officer is responsible for the formulation of
current and long-range plans and objectives, and represents the
organization in relations with its customers and the business and non-
business communities. The Employee shall also be responsible for the
performance of such other duties and responsibilities as may be prescribed
from time to time by the Board of the Company.
6. Extent of Service. The Employee shall devote the Employee's full
business time, attention, and energies to the business of the Company and
its Affiliates and shall not, during the term of this Agreement, be engaged
in any other business activity, whether or not such activity is pursued for
gain, profit, or other pecuniary advantage, unless written approval is
first secured from the Board of the Company. The foregoing to the contrary
notwithstanding, the Employee may continue his present service as a member
of the board of directors of Lovejoy, Inc., of Downers Grove, Illinois, and
Extrude Hone Corporation, of Irving, Pennsylvania.
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<PAGE>
7. Working Facilities. The Employee shall be furnished with office
space, furnishings, secretarial support and such other facilities and
services which are reasonably necessary for the performance of the
Employee's duties.
8. Expenses. The Company will reimburse the Employee for all
reasonable business expenses which are incurred by the Employee in the
promoting of the interests of the Company upon presentation by the Employee
from time to time (at least monthly) of an itemized account of such
expenses containing such detail as may reasonably be required by the Board
of the Company.
9. Vacation. The Employee shall be entitled to paid vacation in
accordance with Company policy. All vacation time shall be taken by the
Employee at such times as shall be mutually agreed upon by the Employee and
the Chief Executive Officer of the Company.
10. Disability. If, as a result of sickness or other disability,
the Employee is not able to perform the Employee's duties, this Section 10
shall apply as follows:
10.1. For the first ninety (90) consecutive days of sickness
or other disability the Company shall continue to pay the Employee
full Base Annual Salary (reduced by any payments from any short-term
disability plan which may be maintained by the Company), and shall
continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder.
10.2. If the disability or other sickness continues past
ninety (90) consecutive days, the Company, in its sole discretion, may
elect to place the Employee on Disability Leave of Absence. During
such period, the Company shall, for the remainder of the contract
term, or until the Employee returns from such Disability Leave of
Absence, continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder. Further, the Company shall pay to the
Employee, two-thirds (2/3) of the Employee's Base Annual Salary,
reduced by any payments for which the Employee is eligible from any
disability insurance programs maintained by the Company.
11. Death. If the Employee dies during the term of this Agreement,
the Company shall pay to the Employee's Beneficiary (or if there is no
named Beneficiary, the estate of the Employee), the compensation as set
forth in Section 4 of this Agreement, for the period up to the date of the
Employee's death. In no event shall the Company be obligated to pay to any
person any other compensation with respect to any period following the date
of the Employee's death.
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<PAGE>
12. Termination of Employment.
12.1. Termination for Cause. The Company may terminate the
Employee's employment under this Section of the Agreement for Cause.
Cause shall be defined as:
12.1.1. The Employee's failure or refusal to perform the
Employee's duties as provided for in this Agreement, occasioned
by reason other than sickness or other disability of the
Employee, which is not cured within ten (10) business days after
written notice from the Company specifying such failure or
refusal has been delivered to the Employee;
12.1.2. Commission by the Employee of any materially
fraudulent, dishonest or other act of misconduct in the
performance of the Employee's duties hereunder, other than at the
specific direction of the Board; or,
12.1.3. Conviction for any felony or crime involving
moral turpitude.
12.1.4. Following a Termination for Cause, the Company
shall pay to the Employee the Base Annual Salary provided in
Section 4.1 accrued up to the date of termination. In no event
shall the Company be obligated to pay any other compensation with
respect to any period before or after the date of such
termination.
12.2. Termination Following a Change of Control. If, during
a period of two (2) years following a Change of Control, the
employment of the Employee is terminated by the Company for any reason
other than Cause, or if the Employee is subject to Constructive
Termination, benefits shall be payable under this Section 12.2.
12.2.1. The Employee shall receive within thirty (30)
days of termination a single payment equal to two (2) times the
sum of (i) the Employee's highest Base Annual Salary during the
Employee's employment with the Company and (ii) the Employee's
highest target annual incentive award opportunity.
12.3. Other Termination at the Election of the Company. The
Company may elect to terminate the employment of the Employee for any
reason other than Cause or following a Change of Control, upon written
notice to the Employee, accompanied by payment in a lump sum of:
12.3.1. All compensation accrued up to the date of
termination;
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<PAGE>
12.3.2. An amount equal to one (1) times the Employee's
Base Annual Salary of record on the date of termination.
13. Restrictive Covenants.
13.1. Employee understands that the Company's business
involves the design, improvement, development, testing, manufacturing,
marketing and sale of products, and that this business requires
substantial investments in capital and substantial commitments of time
and effort by the Company's employees. The Employee further
understands that, as a result, certain of the Company's personnel,
including the Employee, acquire information with respect to customer
goodwill, trade secrets and Confidential Information, which, of itself
and apart from the Employee's abilities, could be of great value to a
competitor of the Company, potential competitors of the Company, and
to others.
13.2. The Employee further understands that employment with
the Company is conditioned upon the Company's being able to place
complete trust and confidence in the Employee and to rely on the
Employee's doing everything possible to avoid the disclosure or use of
Confidential Information to persons, corporations, organizations and
others outside the Company, which may become known to, or subject to
the control of the Employee during the term of employment hereunder.
The Employee also understands that competition in the manufacture,
sale, and development of products is not local in nature or scope, but
involves various corporations, organizations and others located within
the United States and throughout the world.
13.3. In recognition of these circumstances and for the
purpose of inducing the Company to employ the Employee (or continue
the employment of the Employee with appropriate compensation reviews)
to repose trust and confidence in the Employee, and to make
Confidential Information available to the Employee, the Employee
agrees that the following restrictive covenants are necessary and
proper for the protection of the Company.
13.4. Subject to Section 13.6 below, the Employee will
promptly disclose and assign to the Company, without the right to any
form of compensation therefore, every invention that the Employee,
individually or jointly with others, during the term of the Employee's
employment with the Company and for a period of one (1) year following
termination of such employment for any reason, may discover, invent,
conceive or originate, relating in any way to the present or
contemplated scope of the Company's business with regard to any of its
clients, customers or vendors or to any Product, Technology, process,
or device dealt in, used or under development or manufacture by the
Company for itself or others or that results from or may be suggested
by any work the Employee may do for the Company or at the Company's
request. The Employee will fully cooperate with the Company in
applying for and securing in the name of the Company or its designee
patents or copyrights with respect to
-5-
<PAGE>
said Inventions in each country in which the Company may desire to
secure patent or copyright protection. The Employee will promptly
execute all proper documents presented to the Employee for signature
by the Company to enable the Company or its designee to secure such
patent or copyright protection and to transfer legal title therein,
together with any patents or copyrights that may be issued thereon or
in connection therewith, to the Company or its designee. The Employee
will give such true information and testimony as may be requested of
the Employee by the Company relative to any of said Inventions.
13.5. Subject to Section 13.6 below, the Company shall have
the exclusive right to use in its business, and to make, use and sell
products, processes, and/or services arising out of any Invention,
whether or not patentable, which is assignable by the Employee to the
Company pursuant to Section 13.4 above.
13.6. Pursuant to Section 2(3) of the Illinois Employee
Patent Act, the Employee is hereby notified that Sections 13.4 and
13.5 above do not apply to an Invention for which no equipment,
supplies, facility, technology, confidential information, or trade
secret information of the Company was used and which was developed
entirely on the Employee's own time, unless:
13.6.1. The Invention was related:
13.6.1.1. To the business of the Company; or
13.6.1.2. To the Company's actual or demonstrably
anticipated research or development;
or;
13.6.2. The Invention results from any work performed by
the Employee for the Company.
13.7. The Employee agrees that all financial data, customer
lists, plans, contracts, agreements, literature, manuals, catalogues,
brochures, books, records, computer files or applications, maps,
correspondence, and other materials furnished or made available to the
Employee by the Company or an Affiliate, or any of its clients, or
created, prepared or secured through the efforts of the Employee,
relating to the business conducted by the Company or an Affiliate,
whether or not containing any Confidential Information, are and shall
remain the property of the Company, and the Employee agrees to deliver
all such materials, including all copies thereof, to the Company upon
termination of the Employee's employment hereunder, or at any other
time at the Company's request.
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<PAGE>
13.8. Other than as expressly directed by the Company and in
the performance of duties to the Company or with the expressed
permission of the Company, the Employee shall never, during or
following the Employee's employment with the Company, directly or
indirectly, sell, use, disclose, lecture upon, or publish data of
information containing or relating to any Confidential Information or
Technology of the Company or its Affiliates or any Invention
assignable to the Company pursuant to the terms of Section 13.4 above.
13.9. During the term of the Employee's employment with the
Company and for a period of two (2) years after the termination
thereof, the Employee agrees that the Employee will not:
13.9.1. Own or have any interest, directly or
indirectly, in or act as an officer, director, agent, employee,
or consultant of, or assist in any way or in any capacity, any
person, firm, association, partnership, corporation or other
entity which sells or provides products or services in
competition with the Company or its Affiliates anywhere within
the world where any Confidential Information acquired by the
Employee would reasonably be considered advantageous to such
other competing entity, or
13.9.2. Directly or indirectly entice, induce or in any
manner influence any person who is, or shall be, in the service
of the Company or its Affiliates to leave such service for the
purpose of engaging in business or being employed by or
associated with any person, firm, association, partnership,
corporation or other entity which sells or provides products or
services in competition with the Company or its Affiliates
anywhere in the world.
If any court shall finally hold that the time, territory or any
other provision of this Section 13.9 constitutes an unreasonable
restriction against the Employee, the Employee agrees that the
provisions hereof shall not be rendered null and void, but shall
apply as to such time, territory, and other extent as such court
may determine to be a reasonable restriction under the
circumstances involved.
13.10. The Employee understands that if there is a breach by
the Employee of any duty to the Company with respect to any
Confidential Information or Invention, the Company may suffer
irreparable injury and may not have adequate remedy at law. As a
result, the Employee agrees that if a breach of this Agreement occurs,
the Company may, in addition to any other remedies available to it,
bring an action or actions for injunction, specific performance, or
both, and have entered into a temporary restraining order, preliminary
or permanent injunction, or other action compelling specific
performance.
-7-
<PAGE>
14. Definitions.
14.1. "Affiliate" means any entity in which the Company, or
any entity which owns, directly or indirectly, a majority ownership
interest in the Company, owns, directly or indirectly, at least a
twenty percent (20%) interest in such entity.
14.2. "Base Annual Salary" means the annualized value of the
Employee's salary, based on the most recent pay period.
14.3. "Board" means the Board of Directors of the Company.
14.4. "Change in Duties" means:
14.4.1. A significant reduction in the nature or scope
of the Employee's authority or duties from those immediately
prior to the date on which a Change of Control occurs;
14.4.2. A material reduction in the Employee's Base
Annual Salary;
14.4.3. Exclusion from any incentive program from which
the Employee was previously eligible, or which other executives
with comparable duties participate in;
14.4.4. A change in location of the Employee's principal
place of employment by more than fifty (50) miles;
14.5. "Change of Control" means:
14.5.1. Any "person", including a "group" as determined
in accordance with Section 13(d)(3) of the Exchange Act, other
than James N. Farley, his spouse, descendants, or any Trust for
the benefit of James N. Farley, his spouse or descendants, who
is, or becomes, the beneficial owner of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, other than by
reason of any redemption of stock resulting from the death of
James N. Farley or his spouse;
14.5.2. As a result of, or in connection with, any
tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction") the
persons who constituted the Board of the Company prior to the
Transaction shall cease to constitute a majority of the Board of
the Company or any successor to the Company.
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<PAGE>
14.5.3. The Company is merged or consolidated with
another corporation and as a result of the merger or
consolidation, less than seventy percent (70%) of the outstanding
voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of the
Company;
14.5.4. A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding voting securities; or,
14.5.5. The Company transfers substantially all of its
assets to another corporation of which the Company owns less than
fifty percent (50%) of the outstanding voting securities.
14.6. "Code" means the Internal Revenue Code of 1986, as from
time to time amended.
14.7. "Company" means SpeedFam International, Inc., an
Illinois corporation.
14.8. "Confidential Information" means any and all Technology
and/or information which:
14.8.1. Is provided to the Employee by the Company;
14.8.2. Is created, developed, or otherwise generated by
or on behalf of the Company;
14.8.3. Concerns or relates to any aspect of the
Company's business; or
14.8.4. Is, for any reason, identified by the Company as
confidential.
14.8.5. Notwithstanding the foregoing provisions of this
Section 14.8, Confidential Information shall not include such
information which the Employee can show, clearly and
convincingly:
14.8.5.1. Is publicly and openly known and in the
public domain;
14.8.5.2. Becomes publicly and openly known and in
the public domain through no fault of the Employee; or
14.8.5.3. Is in the Employee's possession and
documented prior to this Agreement, lawfully obtained from a
source other than from
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<PAGE>
the Company, and not subject to any obligation of
confidentiality or restricted use.
14.9. "Constructive Termination" means the voluntary
termination of employment by the Employee following a Change in Duties
following a Change of Control.
14.10. "Exchange Act" means the Securities Exchange Act of
1934, as from to time amended.
14.11. "Invention" means any new or useful art, discovery, or
improvement (including any technologies, tests, programs, products,
concepts, ideas, apparatus, equipment, machinery, processes, methods,
formulae, designs or techniques), whether or not related to a Product
and whether or not patentable, and all the know-how related thereto.
14.12. "Product" means any product or service which is, or
may in the reasonable future, be manufactured, sold, designed,
developed, considered by, or of interest to the Company or an
Affiliate (including, but not limited to, any product or service
involving CMP planarization technology, such as CMP-V tools or any
free-abrasive machining, lapping, polishing and grinding).
14.13. "Technology" means prototypes, models, concepts,
inventions, circuit designs, drawings, hardware, technological
developments and improvements, methods, techniques, systems,
documentation, data, works of authorship, products, and related
information whether or not patentable, copyrightable, and whether or
not presently used or used in the future.
14.14. "Voting Securities" mean any securities which
ordinarily possess the power to vote in the election of directors
without the happening of any precondition or contingency.
15. Miscellaneous.
15.1. This Agreement supersedes all prior agreements and
understandings by and between the Employee and the Company and any of
its Affiliates or their respective directors, officers, shareholders,
employees, attorneys, agents, or representatives, including any
Severance Agreement, Employment Letter, Employment Terms, Non-
Disclosure Agreement and/or Employment Agreement and constitutes the
entire agreement between the parties, respecting the subject matter
hereof and there are no representations, warranties or other
commitments other than those expressed herein.
15.2. The Employee represents and warrants to the Company
that the Employee is not a party to or bound by, and the employment of
the Employee by the Company or the Employee's disclosure of any
information to the
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<PAGE>
Company or its use of such information will not violate or breach any
employment, retainer, consulting, license, non-competition, non-
disclosure, trade secrets or other agreement between the Employee and
any other person, partnership, corporation, joint venture, association
or other entity.
15.3. No modification or amendment of, or waiver under, this
Agreement shall be valid unless signed in writing and signed by the
Employee and an appropriate officer of the Company, pursuant to
expressed authority of the Board.
15.4. The Employee agrees to indemnify the Company and its
Affiliates against, and to hold the Company and its Affiliates
harmless from, any and all claims, lawsuits, losses, damages,
expenses, costs and liabilities, including, without limitation, court
costs and attorney's fees, which the Company or any of its Affiliates
may sustain as a result of, or in connection with, either directly or
indirectly, the Employee's breach or violation of any of the
provisions of this Agreement.
15.5. The Employee hereby agrees that if the Employee
violates any provision of this Agreement, the Company will be
entitled, if it so elects, to institute and prosecute proceedings at
law or in equity to obtain damages with respect to such violation or
to enforce the specific performance of this Agreement by the Employee
or to enjoin the Employee from engaging in any activity in violation
hereof.
15.6. The waiver by either party to this Agreement of a
breach of any provision of this Agreement by the other shall not
operate or be construed as a waiver of any subsequent breach.
15.7. Any communication which may be required under this
Agreement shall be deemed to have been properly given when delivered
personally at the address set forth below for the intended party
during normal business hours, when sent by facsimile or other
electronic transmission to the respective facsimile transmission
numbers of the parties set forth below with telephone confirmation of
receipt, or when sent by U.S. registered or certified mail, return
receipt requested, postage prepaid as follows:
If to the Company: SpeedFam International, Inc.
7406 West Detroit
Chandler, AZ 85226
United States of America
Attention: Chief Executive Officer
Facsimile: 602-961-2171
Confirm: 602-961-1600
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<PAGE>
If to the Employee: James N. Farley
3622 E. Marlette Ave.
Paradise Valley, AZ 85253
Facsimile:(602) 508-8878
Confirm:__________________
Notices shall be given to such other addressee or address, or both, or
by way of such other facsimile transmission number, as a particular
party may from time to time request by written notice to the other
party to the Agreement. Each notice, request, demand, approval or
other communication which is sent in accordance with this Section
shall be deemed to be delivered, given and received for all purposes
of this Agreement as of two (2) business days after the date of
deposit thereof for mailing in a duly constituted U.S. post office or
branch thereof, one (1) business day after deposit with a recognized
overnight courier service or upon written confirmation of receipt of
any facsimile transmission. Notice given to a party hereto by any
other method shall only be deemed to be delivered, given and received
when actually received in writing by such party.
15.8. This Agreement shall inure to the benefit of and be
binding upon the Company and the Employee and their respective heirs,
personal representatives, successors and assigns.
15.9. All claims, disputes and other matters in question
arising out of, or relating to this Agreement, or the breach thereof,
shall be decided by arbitration, pursuant to the rules established by
the American Arbitration Association for the arbitration of such
disputes, and such arbitration shall occur in Chandler, Arizona.
15.10. This Agreement may be signed in multiple counterparts
which when taken together shall constitute the entire Agreement.
15.11. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois.
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<PAGE>
In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year first above written.
SpeedFam International, Inc. an Illinois
Corporation
By /s/ Makoto Kouzuma
--------------------------------------
Title President/Coo
--------------------------------
Employee
/s/ James N. Farley
-----------------------------------------
James N. Farley
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<PAGE>
EXHIBIT 10.2
Employment Agreement
This Agreement is made and entered into this 21st day of January, 1997, by
and between SpeedFam International, Inc., an Illinois corporation (hereinafter
referred to as the "Company") and Makoto Kouzuma (hereinafter referred to as the
"Employee").
W i t n e s s e t h:
Whereas, the Company desires to retain the services of the Employee in the
capacities set forth herein, and the Employee desires to be employed by the
Company in such capacities;
Now Therefore, in consideration of the promises and mutual covenants herein
contained, the Company and the Employee hereby agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth and subject to the policies as published
in the Company's Employee Handbook, as from time to time amended.
2. Term. Subject to the provisions for earlier termination
hereinafter set forth in Section 12 of this Agreement, the term of
employment hereunder shall commence on the date hereof and end on the first
May 31st after the date hereof.
3. Automatic Extension. The term of employment of the Employee
hereunder shall automatically continue for additional one (1) year terms
upon the same terms and conditions contained herein unless either the
Company or the Employee shall notify the other at least six (6) months
prior to the expiration of the initial one (1) year term or any renewal
term of its or his intention to terminate the term of employment of the
Employee as of the end of the initial one (1) year term or any such renewal
term, as the case may be.
4. Compensation. The Company agrees to provide the Employee with
the following compensation for all services rendered under this Agreement:
4.1. Salary. During the term hereof, the Company shall pay
to the Employee a Base Annual Salary of Two Hundred Fifty Thousand
Dollars ($250,000), payable in accordance with the standard payroll
practices of the Company (including any salary-reduction contributions
to plans or programs maintained by the Company). Further, the Base
Annual Salary of the Employee shall be reviewed annually by the
Company and adjusted as appropriate.
4.2. Annual Incentive Opportunity. During the term of this
Agreement, the Employee shall participate in the annual incentive plan
maintained by the Company for its executives.
<PAGE>
4.3. Long-term Incentive Opportunity. During the term of
this Agreement, the Employee shall participate in any long-term
incentive plan maintained by the Company, including, but not limited
to, stock options, performance shares, restricted stock and long-term
cash incentive plans, in a manner consistent with other executives of
the Company, as determined by the Board.
4.4. Other Benefits. To the extent the Employee is eligible
under the appropriate laws, the Employee shall be entitled to
participate in and receive benefits under any and all pension, profit-
sharing, health, disability and insurance plans, if any, which the
Company may maintain. The Employee shall also receive an allowance of
Thirteen Thousand Seven Hundred Fifty-Four Dollars ($13,754) annually
for automobile expenses.
5. Duties. The Employee shall, subject to election and removal by
the Board of the Company in their sole discretion, serve as Chief Operating
Officer and President of the Company. As such, the Employee's duties and
responsibilities shall include, but shall not be limited to, directing the
world-wide organization to insure the attainment of sales and profit goals
and to participate with the Chairman/Chief Executive Officer in formulation
of current and long-range plans, objectives and policies which he is
expected to attain. The Employee shall also be responsible for the
performance of such other duties and responsibilities as may be prescribed
from time to time by the Board of the Company.
6. Extent of Service. The Employee shall devote the Employee's full
business time, attention, and energies to the business of the Company and
its Affiliates, including SpeedFam Co., Ltd. (Japan), and shall not, during
the term of this Agreement, be engaged in any other business activity,
whether or not such activity is pursued for gain, profit, or other
pecuniary advantage, unless written approval is first secured from the
Board of the Company.
7. Working Facilities. The Employee shall be furnished with office
space, furnishings, secretarial support and such other facilities and
services which are reasonably necessary for the performance of the
Employee's duties.
8. Expenses. The Company will reimburse the Employee for all
reasonable business expenses which are incurred by the Employee in the
promoting of the interests of the Company upon presentation by the Employee
from time to time (at least monthly) of an itemized account of such
expenses containing such detail as may reasonably be required by the Board
of the Company.
9. Vacation. The Employee shall be entitled to paid vacation in
accordance with Company policy. All vacation time shall be taken by the
Employee at such times as shall be mutually agreed upon by the Employee and
the Chief Executive Officer of the Company.
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10. Disability. If, as a result of sickness or other disability,
the Employee is not able to perform the Employee's duties, this Section 10
shall apply as follows:
10.1. For the first ninety (90) consecutive days of sickness
or other disability the Company shall continue to pay the Employee
full Base Annual Salary (reduced by any payments from any short-term
disability plan which may be maintained by the Company), and shall
continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder.
10.2. If the disability or other sickness continues past
ninety (90) consecutive days, the Company, in its sole discretion, may
elect to place the Employee on Disability Leave of Absence. During
such period, the Company shall, for the remainder of the contract
term, or until the Employee returns from such Disability Leave of
Absence, continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder. Further, the Company shall pay to the
Employee, two-thirds (2/3) of the Employee's Base Annual Salary,
reduced by any payments for which the Employee is eligible from any
disability insurance programs maintained by the Company.
11. Death. If the Employee dies during the term of this Agreement,
the Company shall pay to the Employee's Beneficiary (or if there is no
named Beneficiary, the estate of the Employee), the compensation as set
forth in Section 4 of this Agreement, for the period up to the date of the
Employee's death. In no event shall the Company be obligated to pay to any
person any other compensation with respect to any period following the date
of the Employee's death.
12. Termination of Employment.
12.1. Termination for Cause. The Company may terminate the
Employee's employment under this Section of the Agreement for Cause.
Cause shall be defined as:
12.1.1. The Employee's failure or refusal to perform the
Employee's duties as provided for in this Agreement, occasioned
by reason other than sickness or other disability of the
Employee, which is not cured within ten (10) business days after
written notice from the Company specifying such failure or
refusal has been delivered to the Employee;
12.1.2. Commission by the Employee of any materially
fraudulent, dishonest or other act of misconduct in the
performance of the Employee's duties hereunder, other than at the
specific direction of the Board; or,
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12.1.3. Conviction for any felony or crime involving
moral turpitude.
12.1.4. Following a Termination for Cause, the Company
shall pay to the Employee the Base Annual Salary provided in
Section 4.1 accrued up to the date of termination. In no event
shall the Company be obligated to pay any other compensation with
respect to any period before or after the date of such
termination.
12.2. Termination Following a Change of Control. If, during
a period of two (2) years following a Change of Control, the
employment of the Employee is terminated by the Company for any reason
other than Cause, or if the Employee is subject to Constructive
Termination, benefits shall be payable under this Section 12.2.
12.2.1. The Employee shall receive within thirty (30)
days of termination a single payment equal to two (2) times the
sum of (i) the Employee's highest Base Annual Salary during the
Employee's employment with the Company and (ii) the Employee's
highest target annual incentive award opportunity.
12.3. Other Termination at the Election of the Company. The
Company may elect to terminate the employment of the Employee for any
reason other than Cause or following a Change of Control, upon written
notice to the Employee, accompanied by payment in a lump sum of:
12.3.1. All compensation accrued up to the date of
termination;
12.3.2. An amount equal to one (1) times the Employee's
Base Annual Salary of record on the date of termination.
13. Restrictive Covenants.
13.1. Employee understands that the Company's business
involves the design, improvement, development, testing, manufacturing,
marketing and sale of products, and that this business requires
substantial investments in capital and substantial commitments of time
and effort by the Company's employees. The Employee further
understands that, as a result, certain of the Company's personnel,
including the Employee, acquire information with respect to customer
goodwill, trade secrets and Confidential Information, which, of itself
and apart from the Employee's abilities, could be of great value to a
competitor of the Company, potential competitors of the Company, and
to others.
13.2. The Employee further understands that employment with
the Company is conditioned upon the Company's being able to place
complete trust and confidence in the Employee and to rely on the
Employee's doing everything
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<PAGE>
possible to avoid the disclosure or use of Confidential Information to
persons, corporations, organizations and others outside the Company,
which may become known to, or subject to the control of the Employee
during the term of employment hereunder. The Employee also understands
that competition in the manufacture, sale, and development of products
is not local in nature or scope, but involves various corporations,
organizations and others located within the United States and
throughout the world.
13.3. In recognition of these circumstances and for the
purpose of inducing the Company to employ the Employee (or continue
the employment of the Employee with appropriate compensation reviews)
to repose trust and confidence in the Employee, and to make
Confidential Information available to the Employee, the Employee
agrees that the following restrictive covenants are necessary and
proper for the protection of the Company.
13.4. Subject to Section 13.6 below, the Employee will
promptly disclose and assign to the Company, without the right to any
form of compensation therefore, every invention that the Employee,
individually or jointly with others, during the term of the Employee's
employment with the Company and for a period of one (1) year following
termination of such employment for any reason, may discover, invent,
conceive or originate, relating in any way to the present or
contemplated scope of the Company's business with regard to any of its
clients, customers or vendors or to any Product, Technology, process,
or device dealt in, used or under development or manufacture by the
Company for itself or others or that results from or may be suggested
by any work the Employee may do for the Company or at the Company's
request. The Employee will fully cooperate with the Company in
applying for and securing in the name of the Company or its designee
patents or copyrights with respect to said Inventions in each country
in which the Company may desire to secure patent or copyright
protection. The Employee will promptly execute all proper documents
presented to the Employee for signature by the Company to enable the
Company or its designee to secure such patent or copyright protection
and to transfer legal title therein, together with any patents or
copyrights that may be issued thereon or in connection therewith, to
the Company or its designee. The Employee will give such true
information and testimony as may be requested of the Employee by the
Company relative to any of said Inventions.
13.5. Subject to Section 13.6 below, the Company shall have
the exclusive right to use in its business, and to make, use and sell
products, processes, and/or services arising out of any Invention,
whether or not patentable, which is assignable by the Employee to the
Company pursuant to Section 13.4 above.
13.6. Pursuant to Section 2(3) of the Illinois Employee
Patent Act, the Employee is hereby notified that Sections 13.4 and
13.5 above do not apply to an Invention for which no equipment,
supplies, facility, technology, confidential
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<PAGE>
information, or trade secret information of the Company was used and
which was developed entirely on the Employee's own time, unless:
13.6.1. The Invention was related:
13.6.1.1. To the business of the Company; or
13.6.1.2. To the Company's actual or demonstrably
anticipated research or development;
or;
13.6.2. The Invention results from any work performed by
the Employee for the Company.
13.7. The Employee agrees that all financial data, customer
lists, plans, contracts, agreements, literature, manuals, catalogues,
brochures, books, records, computer files or applications, maps,
correspondence, and other materials furnished or made available to the
Employee by the Company or an Affiliate, or any of its clients, or
created, prepared or secured through the efforts of the Employee,
relating to the business conducted by the Company or an Affiliate,
whether or not containing any Confidential Information, are and shall
remain the property of the Company, and the Employee agrees to deliver
all such materials, including all copies thereof, to the Company upon
termination of the Employee's employment hereunder, or at any other
time at the Company's request.
13.8. Other than as expressly directed by the Company and in
the performance of duties to the Company or with the expressed
permission of the Company, the Employee shall never, during or
following the Employee's employment with the Company, directly or
indirectly, sell, use, disclose, lecture upon, or publish data of
information containing or relating to any Confidential Information or
Technology of the Company or its Affiliates or any Invention
assignable to the Company pursuant to the terms of Section 13.4 above.
13.9. During the term of the Employee's employment with the
Company and for a period of two (2) years after the termination
thereof, the Employee agrees that the Employee will not:
13.9.1. Own or have any interest, directly or
indirectly, in or act as an officer, director, agent, employee,
or consultant of, or assist in any way or in any capacity, any
person, firm, association, partnership, corporation or other
entity which sells or provides products or services in
competition with the Company or its Affiliates anywhere within
the world where any Confidential Information acquired by the
Employee would reasonably be considered advantageous to such
other competing entity, or
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<PAGE>
13.9.2. Directly or indirectly entice, induce or in any
manner influence any person who is, or shall be, in the service
of the Company or its Affiliates to leave such service for the
purpose of engaging in business or being employed by or
associated with any person, firm, association, partnership,
corporation or other entity which sells or provides products or
services in competition with the Company or its Affiliates
anywhere in the world.
If any court shall finally hold that the time, territory or any
other provision of this Section 13.9 constitutes an unreasonable
restriction against the Employee, the Employee agrees that the
provisions hereof shall not be rendered null and void, but shall
apply as to such time, territory, and other extent as such court
may determine to be a reasonable restriction under the
circumstances involved.
13.10. The Employee understands that if there is a breach by
the Employee of any duty to the Company with respect to any
Confidential Information or Invention, the Company may suffer
irreparable injury and may not have adequate remedy at law. As a
result, the Employee agrees that if a breach of this Agreement occurs,
the Company may, in addition to any other remedies available to it,
bring an action or actions for injunction, specific performance, or
both, and have entered into a temporary restraining order, preliminary
or permanent injunction, or other action compelling specific
performance.
14. Definitions.
14.1. "Affiliate" means any entity in which the Company, or
any entity which owns, directly or indirectly, a majority ownership
interest in the Company, owns, directly or indirectly, at least a
twenty percent (20%) interest in such entity.
14.2. "Base Annual Salary" means the annualized value of the
Employee's salary, based on the most recent pay period.
14.3. "Board" means the Board of Directors of the Company.
14.4. "Change in Duties" means:
14.4.1. A significant reduction in the nature or scope
of the Employee's authority or duties from those immediately
prior to the date on which a Change of Control occurs;
14.4.2. A material reduction in the Employee's Base
Annual Salary;
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14.4.3. Exclusion from any incentive program from which
the Employee was previously eligible, or which other executives
with comparable duties participate in;
14.4.4. A change in location of the Employee's principal
place of employment by more than fifty (50) miles;
14.5. "Change of Control" means:
14.5.1. Any "person", including a "group" as determined
in accordance with Section 13(d)(3) of the Exchange Act, other
than James N. Farley, his spouse, descendants, or any Trust for
the benefit of James N. Farley, his spouse or descendants, who
is, or becomes, the beneficial owner of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, other than by
reason of any redemption of stock resulting from the death of
James N. Farley or his spouse;
14.5.2. As a result of, or in connection with, any
tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction") the
persons who constituted the Board of the Company prior to the
Transaction shall cease to constitute a majority of the Board of
the Company or any successor to the Company.
14.5.3. The Company is merged or consolidated with
another corporation and as a result of the merger or
consolidation, less than seventy percent (70%) of the outstanding
voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of the
Company;
14.5.4. A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding voting securities; or,
14.5.5. The Company transfers substantially all of its
assets to another corporation of which the Company owns less than
fifty percent (50%) of the outstanding voting securities.
14.6. "Code" means the Internal Revenue Code of 1986, as from
time to time amended.
14.7. "Company" means SpeedFam International, Inc., an
Illinois corporation.
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14.8. "Confidential Information" means any and all Technology
and/or information which:
14.8.1. Is provided to the Employee by the Company;
14.8.2. Is created, developed, or otherwise generated by
or on behalf of the Company;
14.8.3. Concerns or relates to any aspect of the
Company's business; or
14.8.4. Is, for any reason, identified by the Company as
confidential.
14.8.5. Notwithstanding the foregoing provisions of this
Section 14.8, Confidential Information shall not include such
information which the Employee can show, clearly and
convincingly:
14.8.5.1. Is publicly and openly known and in the
public domain;
14.8.5.2. Becomes publicly and openly known and in
the public domain through no fault of the Employee; or
14.8.5.3. Is in the Employee's possession and
documented prior to this Agreement, lawfully obtained from a
source other than from the Company, and not subject to any
obligation of confidentiality or restricted use.
14.9. "Constructive Termination" means the voluntary
termination of employment by the Employee following a Change in Duties
following a Change of Control.
14.10. "Exchange Act" means the Securities Exchange Act of
1934, as from to time amended.
14.11. "Invention" means any new or useful art, discovery, or
improvement (including any technologies, tests, programs, products,
concepts, ideas, apparatus, equipment, machinery, processes, methods,
formulae, designs or techniques), whether or not related to a Product
and whether or not patentable, and all the know-how related thereto.
14.12. "Product" means any product or service which is, or
may in the reasonable future, be manufactured, sold, designed,
developed, considered by, or of interest to the Company or an
Affiliate (including, but not limited to, any product or service
involving CMP planarization technology, such as CMP-V tools or any
free-abrasive machining, lapping, polishing and grinding).
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<PAGE>
14.13. "Technology" means prototypes, models, concepts,
inventions, circuit designs, drawings, hardware, technological
developments and improvements, methods, techniques, systems,
documentation, data, works of authorship, products, and related
information whether or not patentable, copyrightable, and whether or
not presently used or used in the future.
14.14. "Voting Securities" mean any securities which
ordinarily possess the power to vote in the election of directors
without the happening of any precondition or contingency.
15. Miscellaneous.
15.1. This Agreement supersedes all prior agreements and
understandings by and between the Employee and the Company and any of
its Affiliates or their respective directors, officers, shareholders,
employees, attorneys, agents, or representatives, including any
Severance Agreement, Employment Letter, Employment Terms, Non-
Disclosure Agreement and/or Employment Agreement and constitutes the
entire agreement between the parties, respecting the subject matter
hereof and there are no representations, warranties or other
commitments other than those expressed herein.
15.2. The Employee represents and warrants to the Company
that the Employee is not a party to or bound by, and the employment of
the Employee by the Company or the Employee's disclosure of any
information to the Company or its use of such information will not
violate or breach any employment, retainer, consulting, license, non-
competition, non-disclosure, trade secrets or other agreement between
the Employee and any other person, partnership, corporation, joint
venture, association or other entity.
15.3. No modification or amendment of, or waiver under, this
Agreement shall be valid unless signed in writing and signed by the
Employee and an appropriate officer of the Company, pursuant to
expressed authority of the Board.
15.4. The Employee agrees to indemnify the Company and its
Affiliates against, and to hold the Company and its Affiliates
harmless from, any and all claims, lawsuits, losses, damages,
expenses, costs and liabilities, including, without limitation, court
costs and attorney's fees, which the Company or any of its Affiliates
may sustain as a result of, or in connection with, either directly or
indirectly, the Employee's breach or violation of any of the
provisions of this Agreement.
15.5. The Employee hereby agrees that if the Employee
violates any provision of this Agreement, the Company will be
entitled, if it so elects, to institute and prosecute proceedings at
law or in equity to obtain damages with respect to such violation or
to enforce the specific performance of this
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Agreement by the Employee or to enjoin the Employee from engaging in
any activity in violation hereof.
15.6. The waiver by either party to this Agreement of a
breach of any provision of this Agreement by the other shall not
operate or be construed as a waiver of any subsequent breach.
15.7. Any communication which may be required under this
Agreement shall be deemed to have been properly given when delivered
personally at the address set forth below for the intended party
during normal business hours, when sent by facsimile or other
electronic transmission to the respective facsimile transmission
numbers of the parties set forth below with telephone confirmation of
receipt, or when sent by U.S. registered or certified mail, return
receipt requested, postage prepaid as follows:
If to the Company: SpeedFam International, Inc.
7406 West Detroit
Chandler, AZ 85226
United States of America
Attention: Chief Executive Officer
Facsimile: 602-961-2171
Confirm: 602-961-1600
If to the Employee: 4-6-6 TAKAMORI U.S.A.:
ISEHARA - CITY -------
KANAGAWA - Pre. JAPAN 4621 E. Winston
Facsimile: 011-81-463-92-8881 Phoenix, AZ 85044
Confirm:_____________________ (602) 438-1982
Notices shall be given to such other addressee or address, or both, or
by way of such other facsimile transmission number, as a particular
party may from time to time request by written notice to the other
party to the Agreement. Each notice, request, demand, approval or
other communication which is sent in accordance with this Section
shall be deemed to be delivered, given and received for all purposes
of this Agreement as of two (2) business days after the date of
deposit thereof for mailing in a duly constituted U.S. post office or
branch thereof, one (1) business day after deposit with a recognized
overnight courier service or upon written confirmation of receipt of
any facsimile transmission. Notice given to a party hereto by any
other method shall only be deemed to be delivered, given and received
when actually received in writing by such party.
15.8. This Agreement shall inure to the benefit of and be
binding upon the Company and the Employee and their respective heirs,
personal representatives, successors and assigns.
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15.9. All claims, disputes and other matters in question
arising out of, or relating to this Agreement, or the breach thereof,
shall be decided by arbitration, pursuant to the rules established by
the American Arbitration Association for the arbitration of such
disputes, and such arbitration shall occur in Chandler, Arizona.
15.10. This Agreement may be signed in multiple counterparts
which when taken together shall constitute the entire Agreement.
15.11. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois.
In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year first above written.
SpeedFam International, Inc. an Illinois
Corporation
By /s/ James N. Farley
-------------------------------------
Title Chairman
-------------------------------
Employee
/s/ Makoto Kouzuma
----------------------------------------
Makoto Kouzuma
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EXHIBIT 10.3
Employment Agreement
This Agreement is made and entered into this 21st day of March, 1997, by
and between SpeedFam International, Inc., an Illinois corporation (hereinafter
referred to as the "Company") and Roger K. Marach (hereinafter referred to as
the "Employee").
W i t n e s s e t h:
Whereas, the Company desires to retain the services of the Employee in the
capacities set forth herein, and the Employee desires to be employed by the
Company in such capacities;
Now Therefore, in consideration of the promises and mutual covenants herein
contained, the Company and the Employee hereby agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth and subject to the policies as published
in the Company's Employee Handbook, as from time to time amended.
2. Term. Subject to the provisions for earlier termination
hereinafter set forth in Section 12 of this Agreement, the term of
employment hereunder shall commence on the date hereof and end on the first
May 31st after the date hereof.
3. Automatic Extension. The term of employment of the Employee
hereunder shall automatically continue for additional one (1) year terms
upon the same terms and conditions contained herein unless either the
Company or the Employee shall notify the other at least six (6) months
prior to the expiration of the initial one (1) year term or any renewal
term of its or his intention to terminate the term of employment of the
Employee as of the end of the initial one (1) year term or any such renewal
term, as the case may be.
4. Compensation. The Company agrees to provide the Employee with
the following compensation for all services rendered under this Agreement:
4.1. Salary. During the term hereof, the Company shall pay
to the Employee a Base Annual Salary of One Hundred Fifty-Five
Thousand Dollars ($155,000), payable in accordance with the standard
payroll practices of the Company (including any salary-reduction
contributions to plans or programs maintained by the Company).
Further, the Base Annual Salary of the Employee shall be reviewed
annually by the Company and adjusted as appropriate.
<PAGE>
4.2. Annual Incentive Opportunity. During the term of this
Agreement, the Employee shall participate in the annual incentive plan
maintained by the Company for its executives.
4.3. Long-term Incentive Opportunity. During the term of
this Agreement, the Employee shall participate in any long-term
incentive plan maintained by the Company, including, but not limited
to, stock options, performance shares, restricted stock and long-term
cash incentive plans, in a manner consistent with other executives of
the Company, as determined by the Board.
4.4. Other Benefits. To the extent the Employee is eligible
under the appropriate laws, the Employee shall be entitled to
participate in and receive benefits under any and all pension, profit-
sharing, health, disability and insurance plans, if any, which the
Company may maintain. The Employee shall also receive an allowance of
Six Thousand Eight Hundred Thirty-Eight Dollars ($6,838) annually for
automobile expenses.
5. Duties. The Employee shall, subject to election and removal by
the Board of the Company in their sole discretion, serve as Treasurer/Chief
Financial Officer of the Company. As such, the Employee's duties and
responsibilities shall include, but shall not be limited to, overseeing the
financial functions of the organization, including its financial plans and
policies, accounting practices and procedures, and the communication of
financial information to the financial community. The Employee shall also
be responsible for the performance of such other duties and
responsibilities as may be prescribed from time to time by the
President/Chief Operating Officer or the Board of the Company.
6. Extent of Service. The Employee shall devote the Employee's full
business time, attention, and energies to the business of the Company and
its Affiliates and shall not, during the term of this Agreement, be engaged
in any other business activity, whether or not such activity is pursued for
gain, profit, or other pecuniary advantage, unless written approval is
first secured from the Board of the Company.
7. Working Facilities. The Employee shall be furnished with office
space, furnishings, secretarial support and such other facilities and
services which are reasonably necessary for the performance of the
Employee's duties.
8. Expenses. The Company will reimburse the Employee for all
reasonable business expenses which are incurred by the Employee in the
promoting of the interests of the Company upon presentation by the Employee
from time to time (at least monthly) of an itemized account of such
expenses containing such detail as may reasonably be required by the Board
of the Company.
9. Vacation. The Employee shall be entitled to paid vacation in
accordance with Company policy. All vacation time shall be taken by the
Employee at such times
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as shall be mutually agreed upon by the Employee and the Chief Executive
Officer of the Company.
10. Disability. If, as a result of sickness or other disability,
the Employee is not able to perform the Employee's duties, this Section 10
shall apply as follows:
10.1. For the first ninety (90) consecutive days of sickness
or other disability the Company shall continue to pay the Employee
full Base Annual Salary (reduced by any payments from any short-term
disability plan which may be maintained by the Company), and shall
continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder.
10.2. If the disability or other sickness continues past
ninety (90) consecutive days, the Company, in its sole discretion, may
elect to place the Employee on Disability Leave of Absence. During
such period, the Company shall, for the remainder of the contract
term, or until the Employee returns from such Disability Leave of
Absence, continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder. Further, the Company shall pay to the
Employee, two-thirds (2/3) of the Employee's Base Annual Salary,
reduced by any payments for which the Employee is eligible from any
disability insurance programs maintained by the Company.
11. Death. If the Employee dies during the term of this Agreement,
the Company shall pay to the Employee's Beneficiary (or if there is no
named Beneficiary, the estate of the Employee), the compensation as set
forth in Section 4 of this Agreement, for the period up to the date of the
Employee's death. In no event shall the Company be obligated to pay to any
person any other compensation with respect to any period following the date
of the Employee's death.
12. Termination of Employment.
12.1. Termination for Cause. The Company may terminate the
Employee's employment under this Section of the Agreement for Cause.
Cause shall be defined as:
12.1.1. The Employee's failure or refusal to perform the
Employee's duties as provided for in this Agreement, occasioned
by reason other than sickness or other disability of the
Employee, which is not cured within ten (10) business days after
written notice from the Company specifying such failure or
refusal has been delivered to the Employee;
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12.1.2. Commission by the Employee of any materially
fraudulent, dishonest or other act of misconduct in the
performance of the Employee's duties hereunder, other than at the
specific direction of the Board; or,
12.1.3. Conviction for any felony or crime involving
moral turpitude.
12.1.4. Following a Termination for Cause, the Company
shall pay to the Employee the Base Annual Salary provided in
Section 4.1 accrued up to the date of termination. In no event
shall the Company be obligated to pay any other compensation with
respect to any period before or after the date of such
termination.
12.2. Termination Following a Change of Control. If, during
a period of two (2) years following a Change of Control, the
employment of the Employee is terminated by the Company for any reason
other than Cause, or if the Employee is subject to Constructive
Termination, benefits shall be payable under this Section 12.2.
12.2.1. The Employee shall receive within thirty (30)
days of termination a single payment equal to two (2) times the
sum of (i) the Employee's highest Base Annual Salary during the
Employee's employment with the Company and (ii) the Employee's
highest target annual incentive award opportunity.
12.3. Other Termination at the Election of the Company. The
Company may elect to terminate the employment of the Employee for any
reason other than Cause or following a Change of Control, upon written
notice to the Employee, accompanied by payment in a lump sum of:
12.3.1. All compensation accrued up to the date of
termination;
12.3.2. An amount equal to one (1) times the Employee's
Base Annual Salary of record on the date of termination.
13. Restrictive Covenants.
13.1. Employee understands that the Company's business
involves the design, improvement, development, testing, manufacturing,
marketing and sale of products, and that this business requires
substantial investments in capital and substantial commitments of time
and effort by the Company's employees. The Employee further
understands that, as a result, certain of the Company's personnel,
including the Employee, acquire information with respect to customer
goodwill, trade secrets and Confidential Information, which, of itself
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and apart from the Employee's abilities, could be of great value to a
competitor of the Company, potential competitors of the Company, and
to others.
13.2. The Employee further understands that employment with
the Company is conditioned upon the Company's being able to place
complete trust and confidence in the Employee and to rely on the
Employee's doing everything possible to avoid the disclosure or use of
Confidential Information to persons, corporations, organizations and
others outside the Company, which may become known to, or subject to
the control of the Employee during the term of employment hereunder.
The Employee also understands that competition in the manufacture,
sale, and development of products is not local in nature or scope, but
involves various corporations, organizations and others located within
the United States and throughout the world.
13.3. In recognition of these circumstances and for the
purpose of inducing the Company to employ the Employee (or continue
the employment of the Employee with appropriate compensation reviews)
to repose trust and confidence in the Employee, and to make
Confidential Information available to the Employee, the Employee
agrees that the following restrictive covenants are necessary and
proper for the protection of the Company.
13.4. Subject to Section 13.6 below, the Employee will
promptly disclose and assign to the Company, without the right to any
form of compensation therefore, every invention that the Employee,
individually or jointly with others, during the term of the Employee's
employment with the Company and for a period of one (1) year following
termination of such employment for any reason, may discover, invent,
conceive or originate, relating in any way to the present or
contemplated scope of the Company's business with regard to any of its
clients, customers or vendors or to any Product, Technology, process,
or device dealt in, used or under development or manufacture by the
Company for itself or others or that results from or may be suggested
by any work the Employee may do for the Company or at the Company's
request. The Employee will fully cooperate with the Company in
applying for and securing in the name of the Company or its designee
patents or copyrights with respect to said Inventions in each country
in which the Company may desire to secure patent or copyright
protection. The Employee will promptly execute all proper documents
presented to the Employee for signature by the Company to enable the
Company or its designee to secure such patent or copyright protection
and to transfer legal title therein, together with any patents or
copyrights that may be issued thereon or in connection therewith, to
the Company or its designee. The Employee will give such true
information and testimony as may be requested of the Employee by the
Company relative to any of said Inventions.
13.5. Subject to Section 13.6 below, the Company shall have
the exclusive right to use in its business, and to make, use and sell
products, processes, and/or services arising out of any Invention,
whether or not
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patentable, which is assignable by the Employee to the Company
pursuant to Section 13.4 above.
13.6. Pursuant to Section 2(3) of the Illinois Employee
Patent Act, the Employee is hereby notified that Sections 13.4 and
13.5 above do not apply to an Invention for which no equipment,
supplies, facility, technology, confidential information, or trade
secret information of the Company was used and which was developed
entirely on the Employee's own time, unless:
13.6.1. The Invention was related:
13.6.1.1. To the business of the Company; or
13.6.1.2. To the Company's actual or demonstrably
anticipated research or development;
or;
13.6.2. The Invention results from any work performed by
the Employee for the Company.
13.7. The Employee agrees that all financial data, customer
lists, plans, contracts, agreements, literature, manuals, catalogues,
brochures, books, records, computer files or applications, maps,
correspondence, and other materials furnished or made available to the
Employee by the Company or an Affiliate, or any of its clients, or
created, prepared or secured through the efforts of the Employee,
relating to the business conducted by the Company or an Affiliate,
whether or not containing any Confidential Information, are and shall
remain the property of the Company, and the Employee agrees to deliver
all such materials, including all copies thereof, to the Company upon
termination of the Employee's employment hereunder, or at any other
time at the Company's request.
13.8. Other than as expressly directed by the Company and in
the performance of duties to the Company or with the expressed
permission of the Company, the Employee shall never, during or
following the Employee's employment with the Company, directly or
indirectly, sell, use, disclose, lecture upon, or publish data of
information containing or relating to any Confidential Information or
Technology of the Company or its Affiliates or any Invention
assignable to the Company pursuant to the terms of Section 13.4 above.
13.9. During the term of the Employee's employment with the
Company and for a period of two (2) years after the termination
thereof, the Employee agrees that the Employee will not:
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13.9.1. Own or have any interest, directly or
indirectly, in or act as an officer, director, agent, employee,
or consultant of, or assist in any way or in any capacity, any
person, firm, association, partnership, corporation or other
entity which sells or provides products or services in
competition with the Company or its Affiliates anywhere within
the world where any Confidential Information acquired by the
Employee would reasonably be considered advantageous to such
other competing entity, or
13.9.2. Directly or indirectly entice, induce or in any
manner influence any person who is, or shall be, in the service
of the Company or its Affiliates to leave such service for the
purpose of engaging in business or being employed by or
associated with any person, firm, association, partnership,
corporation or other entity which sells or provides products or
services in competition with the Company or its Affiliates
anywhere in the world.
If any court shall finally hold that the time, territory or any
other provision of this Section 13.9 constitutes an unreasonable
restriction against the Employee, the Employee agrees that the
provisions hereof shall not be rendered null and void, but shall
apply as to such time, territory, and other extent as such court
may determine to be a reasonable restriction under the
circumstances involved.
13.10. The Employee understands that if there is a breach by
the Employee of any duty to the Company with respect to any
Confidential Information or Invention, the Company may suffer
irreparable injury and may not have adequate remedy at law. As a
result, the Employee agrees that if a breach of this Agreement occurs,
the Company may, in addition to any other remedies available to it,
bring an action or actions for injunction, specific performance, or
both, and have entered into a temporary restraining order, preliminary
or permanent injunction, or other action compelling specific
performance.
14. Definitions.
14.1. "Affiliate" means any entity in which the Company, or
any entity which owns, directly or indirectly, a majority ownership
interest in the Company, owns, directly or indirectly, at least a
twenty percent (20%) interest in such entity.
14.2. "Base Annual Salary" means the annualized value of the
Employee's salary, based on the most recent pay period.
14.3. "Board" means the Board of Directors of the Company.
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14.4. "Change in Duties" means:
14.4.1. A significant reduction in the nature or scope
of the Employee's authority or duties from those immediately
prior to the date on which a Change of Control occurs;
14.4.2. A material reduction in the Employee's Base
Annual Salary;
14.4.3. Exclusion from any incentive program from which
the Employee was previously eligible, or which other executives
with comparable duties participate in;
14.4.4. A change in location of the Employee's principal
place of employment by more than fifty (50) miles;
14.5. "Change of Control" means:
14.5.1. Any "person", including a "group" as determined
in accordance with Section 13(d)(3) of the Exchange Act, other
than James N. Farley, his spouse, descendants, or any Trust for
the benefit of James N. Farley, his spouse or descendants, who
is, or becomes, the beneficial owner of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, other than by
reason of any redemption of stock resulting from the death of
James N. Farley or his spouse;
14.5.2. As a result of, or in connection with, any
tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction") the
persons who constituted the Board of the Company prior to the
Transaction shall cease to constitute a majority of the Board of
the Company or any successor to the Company.
14.5.3. The Company is merged or consolidated with
another corporation and as a result of the merger or
consolidation, less than seventy percent (70%) of the outstanding
voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of the
Company;
14.5.4. A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding voting securities; or,
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14.5.5. The Company transfers substantially all of its
assets to another corporation of which the Company owns less than
fifty percent (50%) of the outstanding voting securities.
14.6. "Code" means the Internal Revenue Code of 1986, as from
time to time amended.
14.7. "Company" means SpeedFam International, Inc., an
Illinois corporation.
14.8. "Confidential Information" means any and all Technology
and/or information which:
14.8.1. Is provided to the Employee by the Company;
14.8.2. Is created, developed, or otherwise generated by
or on behalf of the Company;
14.8.3. Concerns or relates to any aspect of the
Company's business; or
14.8.4. Is, for any reason, identified by the Company as
confidential.
14.8.5. Notwithstanding the foregoing provisions of this
Section 14.8, Confidential Information shall not include such
information which the Employee can show, clearly and
convincingly:
14.8.5.1. Is publicly and openly known and in the
public domain;
14.8.5.2. Becomes publicly and openly known and in
the public domain through no fault of the Employee; or
14.8.5.3. Is in the Employee's possession and
documented prior to this Agreement, lawfully obtained from a
source other than from the Company, and not subject to any
obligation of confidentiality or restricted use.
14.9. "Constructive Termination" means the voluntary
termination of employment by the Employee following a Change in Duties
following a Change of Control.
14.10. "Exchange Act" means the Securities Exchange Act of
1934, as from to time amended.
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14.11. "Invention" means any new or useful art, discovery, or
improvement (including any technologies, tests, programs, products,
concepts, ideas, apparatus, equipment, machinery, processes, methods,
formulae, designs or techniques), whether or not related to a Product
and whether or not patentable, and all the know-how related thereto.
14.12. "Product" means any product or service which is, or
may in the reasonable future, be manufactured, sold, designed,
developed, considered by, or of interest to the Company or an
Affiliate (including, but not limited to, any product or service
involving CMP planarization technology, such as CMP-V tools or any
free-abrasive machining, lapping, polishing and grinding).
14.13. "Technology" means prototypes, models, concepts,
inventions, circuit designs, drawings, hardware, technological
developments and improvements, methods, techniques, systems,
documentation, data, works of authorship, products, and related
information whether or not patentable, copyrightable, and whether or
not presently used or used in the future.
14.14. "Voting Securities" mean any securities which
ordinarily possess the power to vote in the election of directors
without the happening of any precondition or contingency.
15. Miscellaneous.
15.1. This Agreement supersedes all prior agreements and
understandings by and between the Employee and the Company and any of
its Affiliates or their respective directors, officers, shareholders,
employees, attorneys, agents, or representatives, including any
Severance Agreement, Employment Letter, Employment Terms, Non-
Disclosure Agreement and/or Employment Agreement and constitutes the
entire agreement between the parties, respecting the subject matter
hereof and there are no representations, warranties or other
commitments other than those expressed herein.
15.2. The Employee represents and warrants to the Company
that the Employee is not a party to or bound by, and the employment of
the Employee by the Company or the Employee's disclosure of any
information to the Company or its use of such information will not
violate or breach any employment, retainer, consulting, license, non-
competition, non-disclosure, trade secrets or other agreement between
the Employee and any other person, partnership, corporation, joint
venture, association or other entity.
15.3. No modification or amendment of, or waiver under, this
Agreement shall be valid unless signed in writing and signed by the
Employee and an appropriate officer of the Company, pursuant to
expressed authority of the Board.
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15.4. The Employee agrees to indemnify the Company and its
Affiliates against, and to hold the Company and its Affiliates
harmless from, any and all claims, lawsuits, losses, damages,
expenses, costs and liabilities, including, without limitation, court
costs and attorney's fees, which the Company or any of its Affiliates
may sustain as a result of, or in connection with, either directly or
indirectly, the Employee's breach or violation of any of the
provisions of this Agreement.
15.5. The Employee hereby agrees that if the Employee
violates any provision of this Agreement, the Company will be
entitled, if it so elects, to institute and prosecute proceedings at
law or in equity to obtain damages with respect to such violation or
to enforce the specific performance of this Agreement by the Employee
or to enjoin the Employee from engaging in any activity in violation
hereof.
15.6. The waiver by either party to this Agreement of a
breach of any provision of this Agreement by the other shall not
operate or be construed as a waiver of any subsequent breach.
15.7. Any communication which may be required under this
Agreement shall be deemed to have been properly given when delivered
personally at the address set forth below for the intended party
during normal business hours, when sent by facsimile or other
electronic transmission to the respective facsimile transmission
numbers of the parties set forth below with telephone confirmation of
receipt, or when sent by U.S. registered or certified mail, return
receipt requested, postage prepaid as follows:
If to the Company: SpeedFam International, Inc.
7406 West Detroit
Chandler, AZ 85226
United States of America
Attention: Chief Executive Officer
Facsimile: 602-961-2171
Confirm: 602-961-1600
If to the Employee: Roger K. Marach
2309 E. La Junta Rd.
Scottsdale, AZ 85255
(602) 585-2316
Facsimile: (602) 585-2379
Confirm: ____________________
Notices shall be given to such other addressee or address, or both, or
by way of such other facsimile transmission number, as a particular
party may from time to time request by written notice to the other
party to the Agreement. Each notice, request, demand, approval or
other communication which is sent in
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accordance with this Section shall be deemed to be delivered, given
and received for all purposes of this Agreement as of two (2) business
days after the date of deposit thereof for mailing in a duly
constituted U.S. post office or branch thereof, one (1) business day
after deposit with a recognized overnight courier service or upon
written confirmation of receipt of any facsimile transmission. Notice
given to a party hereto by any other method shall only be deemed to be
delivered, given and received when actually received in writing by
such party.
15.8. This Agreement shall inure to the benefit of and be
binding upon the Company and the Employee and their respective heirs,
personal representatives, successors and assigns.
15.9. All claims, disputes and other matters in question
arising out of, or relating to this Agreement, or the breach thereof,
shall be decided by arbitration, pursuant to the rules established by
the American Arbitration Association for the arbitration of such
disputes, and such arbitration shall occur in Chandler, Arizona.
15.10. This Agreement may be signed in multiple counterparts
which when taken together shall constitute the entire Agreement.
15.11. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois.
In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year first above written.
SpeedFam International, Inc. an Illinois
Corporation
By /s/ Makoto Kouzuma
--------------------------------------
Title President/COO
--------------------------------
Employee
/s/ Roger K. Marach
-----------------------------------------
Roger K. Marach
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EXHIBIT 10.4
Employment Agreement
This Agreement is made and entered into this 19th day of March, 1997, by
and between SpeedFam International, Inc., an Illinois corporation (hereinafter
referred to as the "Company") and Christopher E. Augur (hereinafter referred to
as the "Employee").
W i t n e s s e t h:
Whereas, the Company desires to retain the services of the Employee in the
capacities set forth herein, and the Employee desires to be employed by the
Company in such capacities;
Now Therefore, in consideration of the promises and mutual covenants herein
contained, the Company and the Employee hereby agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth and subject to the policies as published
in the Company's Employee Handbook, as from time to time amended.
2. Term. Subject to the provisions for earlier termination
hereinafter set forth in Section 12 of this Agreement, the term of
employment hereunder shall commence on the date hereof and end on the first
May 31st after the date hereof.
3. Automatic Extension. The term of employment of the Employee
hereunder shall automatically continue for additional one (1) year terms
upon the same terms and conditions contained herein unless either the
Company or the Employee shall notify the other at least six (6) months
prior to the expiration of the initial one (1) year term or any renewal
term of its or his intention to terminate the term of employment of the
Employee as of the end of the initial one (1) year term or any such renewal
term, as the case may be.
4. Compensation. The Company agrees to provide the Employee with
the following compensation for all services rendered under this Agreement:
4.1. Salary. During the term hereof, the Company shall pay
to the Employee a Base Annual Salary of One Hundred Seventy-Five
Thousand Dollars ($175,000), payable in accordance with the standard
payroll practices of the Company (including any salary-reduction
contributions to plans or programs maintained by the Company).
Further, the Base Annual Salary of the Employee shall be reviewed
annually by the Company and adjusted as appropriate.
<PAGE>
4.2. Annual Incentive Opportunity. During the term of this
Agreement, the Employee shall participate in the annual incentive plan
maintained by the Company for its executives.
4.3. Long-term Incentive Opportunity. During the term of
this Agreement, the Employee shall participate in any long-term
incentive plan maintained by the Company, including, but not limited
to, stock options, performance shares, restricted stock and long-term
cash incentive plans, in a manner consistent with other executives of
the Company, as determined by the Board.
4.4. Other Benefits. To the extent the Employee is eligible
under the appropriate laws, the Employee shall be entitled to
participate in and receive benefits under any and all pension, profit-
sharing, health, disability and insurance plans, if any, which the
Company may maintain. The Employee shall also receive an allowance of
Six Thousand Eight Hundred Thirty-Eight Dollars ($6,838) annually for
automobile expenses.
5. Duties. The Employee shall, subject to election and removal by
the Board of Directors of SpeedFam Corporation, an Illinois corporation and
subsidiary of the Company in their sole discretion, serve as President of
SpeedFam Corporation. As such, the Employee's duties and responsibilities
shall include, but shall not be limited to overseeing all corporate
functions and directing SpeedFam Corporation to ensure the attainment of
agreed-upon profit and operations goals. The President of SpeedFam
Corporation shall establish objectives, plans and budgets for SpeedFam
Corporation. The President of SpeedFam Corporation is accountable for
SpeedFam Corporation's profit and loss and for the attainment of
preestablished current and long-range objectives. The President of
SpeedFam Corporation shall report to the President/Chief Operating Officer
of the Company. The Employee shall also be responsible for the performance
of such other duties and responsibilities as may be prescribed from time to
time by the President/Chief Operating Officer of the Company or the Board
of Directors of SpeedFam Corporation.
6. Extent of Service. The Employee shall devote the Employee's full
business time, attention, and energies to the business of SpeedFam
Corporation and its Affiliates and shall not, during the term of this
Agreement, be engaged in any other business activity, whether or not such
activity is pursued for gain, profit, or other pecuniary advantage, unless
written approval is first secured from the Board of Directors of SpeedFam
Corporation.
7. Working Facilities. The Employee shall be furnished with office
space, furnishings, secretarial support and such other facilities and
services which are reasonably necessary for the performance of the
Employee's duties.
8. Expenses. The Company will reimburse the Employee for all
reasonable business expenses which are incurred by the Employee in the
promoting of the interests of the Company upon presentation by the Employee
from time to time (at
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least monthly) of an itemized account of such expenses containing such
detail as may reasonably be required by the Board of Directors of SpeedFam
Corporation.
9. Vacation. The Employee shall be entitled to paid vacation in
accordance with Company policy. All vacation time shall be taken by the
Employee at such times as shall be mutually agreed upon by the Employee and
the President/Chief Executive Officer of the Company.
10. Disability. If, as a result of sickness or other disability,
the Employee is not able to perform the Employee's duties, this Section 10
shall apply as follows:
10.1. For the first ninety (90) consecutive days of sickness
or other disability the Company shall continue to pay the Employee
full Base Annual Salary (reduced by any payments from any short-term
disability plan which may be maintained by the Company), and shall
continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder.
10.2. If the disability or other sickness continues past
ninety (90) consecutive days, the Company, in its sole discretion, may
elect to place the Employee on Disability Leave of Absence. During
such period, the Company shall, for the remainder of the contract
term, or until the Employee returns from such Disability Leave of
Absence, continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder. Further, the Company shall pay to the
Employee, two-thirds (2/3) of the Employee's Base Annual Salary,
reduced by any payments for which the Employee is eligible from any
disability insurance programs maintained by the Company.
11. Death. If the Employee dies during the term of this Agreement,
the Company shall pay to the Employee's Beneficiary (or if there is no
named Beneficiary, the estate of the Employee), the compensation as set
forth in Section 4 of this Agreement, for the period up to the date of the
Employee's death. In no event shall the Company be obligated to pay to any
person any other compensation with respect to any period following the date
of the Employee's death.
12. Termination of Employment.
12.1. Termination for Cause. The Company may terminate the
Employee's employment under this Section of the Agreement for Cause.
Cause shall be defined as:
12.1.1. The Employee's failure or refusal to perform the
Employee's duties as provided for in this Agreement, occasioned
by reason other than sickness or other disability of the
Employee, which is not cured within ten
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(10) business days after written notice from the Company
specifying such failure or refusal has been delivered to the
Employee;
12.1.2. Commission by the Employee of any materially
fraudulent, dishonest or other act of misconduct in the
performance of the Employee's duties hereunder, other than at the
specific direction of the Board; or,
12.1.3. Conviction for any felony or crime involving
moral turpitude.
12.1.4. Following a Termination for Cause, the Company
shall pay to the Employee the Base Annual Salary provided in
Section 4.1 accrued up to the date of termination. In no event
shall the Company be obligated to pay any other compensation with
respect to any period before or after the date of such
termination.
12.2. Termination Following a Change of Control. If, during
a period of two (2) years following a Change of Control, the
employment of the Employee is terminated by the Company for any reason
other than Cause, or if the Employee is subject to Constructive
Termination, benefits shall be payable under this Section 12.2.
12.2.1. The Employee shall receive within thirty (30)
days of termination a single payment equal to two (2) times the
sum of (i) the Employee's highest Base Annual Salary during the
Employee's employment with the Company and (ii) the Employee's
highest target annual incentive award opportunity.
12.3. Other Termination at the Election of the Company. The
Company may elect to terminate the employment of the Employee for any
reason other than Cause or following a Change of Control, upon written
notice to the Employee, accompanied by payment in a lump sum of:
12.3.1. All compensation accrued up to the date of
termination;
12.3.2. An amount equal to one (1) times the Employee's
Base Annual Salary of record on the date of termination.
13. Restrictive Covenants.
13.1. Employee understands that the Company's business
involves the design, improvement, development, testing, manufacturing,
marketing and sale of products, and that this business requires
substantial investments in capital and substantial commitments of time
and effort by the Company's employees. The Employee further
understands that, as a result, certain of the Company's personnel,
including the Employee, acquire information with respect to customer
goodwill, trade secrets and Confidential Information, which, of itself
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and apart from the Employee's abilities, could be of great value to a
competitor of the Company, potential competitors of the Company, and
to others.
13.2. The Employee further understands that employment with
the Company is conditioned upon the Company's being able to place
complete trust and confidence in the Employee and to rely on the
Employee's doing everything possible to avoid the disclosure or use of
Confidential Information to persons, corporations, organizations and
others outside the Company, which may become known to, or subject to
the control of the Employee during the term of employment hereunder.
The Employee also understands that competition in the manufacture,
sale, and development of products is not local in nature or scope, but
involves various corporations, organizations and others located within
the United States and throughout the world.
13.3. In recognition of these circumstances and for the
purpose of inducing the Company to employ the Employee (or continue
the employment of the Employee with appropriate compensation reviews)
to repose trust and confidence in the Employee, and to make
Confidential Information available to the Employee, the Employee
agrees that the following restrictive covenants are necessary and
proper for the protection of the Company.
13.4. Subject to Section 13.6 below, the Employee will
promptly disclose and assign to the Company, without the right to any
form of compensation therefore, every invention that the Employee,
individually or jointly with others, during the term of the Employee's
employment with the Company and for a period of one (1) year following
termination of such employment for any reason, may discover, invent,
conceive or originate, relating in any way to the present or
contemplated scope of the Company's business with regard to any of its
clients, customers or vendors or to any Product, Technology, process,
or device dealt in, used or under development or manufacture by the
Company for itself or others or that results from or may be suggested
by any work the Employee may do for the Company or at the Company's
request. The Employee will fully cooperate with the Company in
applying for and securing in the name of the Company or its designee
patents or copyrights with respect to said Inventions in each country
in which the Company may desire to secure patent or copyright
protection. The Employee will promptly execute all proper documents
presented to the Employee for signature by the Company to enable the
Company or its designee to secure such patent or copyright protection
and to transfer legal title therein, together with any patents or
copyrights that may be issued thereon or in connection therewith, to
the Company or its designee. The Employee will give such true
information and testimony as may be requested of the Employee by the
Company relative to any of said Inventions.
13.5. Subject to Section 13.6 below, the Company shall have
the exclusive right to use in its business, and to make, use and sell
products, processes, and/or services arising out of any Invention,
whether or not patentable, which is assignable by the Employee to the
Company pursuant to Section 13.4 above.
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13.6. Pursuant to Section 2(3) of the Illinois Employee
Patent Act, the Employee is hereby notified that Sections 13.4 and
13.5 above do not apply to an Invention for which no equipment,
supplies, facility, technology, confidential information, or trade
secret information of the Company was used and which was developed
entirely on the Employee's own time, unless:
13.6.1. The Invention was related:
13.6.1.1. To the business of the Company; or
13.6.1.2. To the Company's actual or demonstrably
anticipated research or development;
or;
13.6.2. The Invention results from any work performed by
the Employee for the Company.
13.7. The Employee agrees that all financial data, customer
lists, plans, contracts, agreements, literature, manuals, catalogues,
brochures, books, records, computer files or applications, maps,
correspondence, and other materials furnished or made available to the
Employee by the Company or an Affiliate, or any of its clients, or
created, prepared or secured through the efforts of the Employee,
relating to the business conducted by the Company or an Affiliate,
whether or not containing any Confidential Information, are and shall
remain the property of the Company, and the Employee agrees to deliver
all such materials, including all copies thereof, to the Company upon
termination of the Employee's employment hereunder, or at any other
time at the Company's request.
13.8. Other than as expressly directed by the Company and in
the performance of duties to the Company or with the expressed
permission of the Company, the Employee shall never, during or
following the Employee's employment with the Company, directly or
indirectly, sell, use, disclose, lecture upon, or publish data of
information containing or relating to any Confidential Information or
Technology of the Company or its Affiliates or any Invention
assignable to the Company pursuant to the terms of Section 13.4 above.
13.9. During the term of the Employee's employment with the
Company and for a period of two (2) years after the termination
thereof, the Employee agrees that the Employee will not:
13.9.1. Own or have any interest, directly or
indirectly, in or act as an officer, director, agent, employee,
or consultant of, or assist in any way or in any capacity, any
person, firm, association, partnership, corporation or other
entity which sells or provides products or services in
competition with the Company or its Affiliates anywhere within
the world
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where any Confidential Information acquired by the Employee would
reasonably be considered advantageous to such other competing
entity, or
13.9.2. Directly or indirectly entice, induce or in any
manner influence any person who is, or shall be, in the service
of the Company or its Affiliates to leave such service for the
purpose of engaging in business or being employed by or
associated with any person, firm, association, partnership,
corporation or other entity which sells or provides products or
services in competition with the Company or its Affiliates
anywhere in the world.
If any court shall finally hold that the time, territory or any
other provision of this Section 13.9 constitutes an unreasonable
restriction against the Employee, the Employee agrees that the
provisions hereof shall not be rendered null and void, but shall
apply as to such time, territory, and other extent as such court
may determine to be a reasonable restriction under the
circumstances involved.
13.10. The Employee understands that if there is a breach by
the Employee of any duty to the Company with respect to any
Confidential Information or Invention, the Company may suffer
irreparable injury and may not have adequate remedy at law. As a
result, the Employee agrees that if a breach of this Agreement occurs,
the Company may, in addition to any other remedies available to it,
bring an action or actions for injunction, specific performance, or
both, and have entered into a temporary restraining order, preliminary
or permanent injunction, or other action compelling specific
performance.
14. Definitions.
14.1. "Affiliate" means any entity in which the Company, or
any entity which owns, directly or indirectly, a majority ownership
interest in the Company, owns, directly or indirectly, at least a
twenty percent (20%) interest in such entity.
14.2. "Base Annual Salary" means the annualized value of the
Employee's salary, based on the most recent pay period.
14.3. "Board" means the Board of Directors of the Company.
14.4. "Change in Duties" means:
14.4.1. A significant reduction in the nature or scope
of the Employee's authority or duties from those immediately
prior to the date on which a Change of Control occurs;
14.4.2. A material reduction in the Employee's Base
Annual Salary;
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14.4.3. Exclusion from any incentive program from which
the Employee was previously eligible, or which other executives
with comparable duties participate in;
14.4.4. A change in location of the Employee's principal
place of employment by more than fifty (50) miles;
14.5. "Change of Control" means:
14.5.1. Any "person", including a "group" as determined
in accordance with Section 13(d)(3) of the Exchange Act, other
than James N. Farley, his spouse, descendants, or any Trust for
the benefit of James N. Farley, his spouse or descendants, who
is, or becomes, the beneficial owner of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, other than by
reason of any redemption of stock resulting from the death of
James N. Farley or his spouse;
14.5.2. As a result of, or in connection with, any
tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction") the
persons who constituted the Board of the Company prior to the
Transaction shall cease to constitute a majority of the Board of
the Company or any successor to the Company.
14.5.3. The Company is merged or consolidated with
another corporation and as a result of the merger or
consolidation, less than seventy percent (70%) of the outstanding
voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of the
Company;
14.5.4. A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding voting securities; or,
14.5.5. The Company transfers substantially all of its
assets to another corporation of which the Company owns less than
fifty percent (50%) of the outstanding voting securities.
14.6. "Code" means the Internal Revenue Code of 1986, as from
time to time amended.
14.7. "Company" means SpeedFam International, Inc., an
Illinois corporation.
14.8. "Confidential Information" means any and all Technology
and/or information which:
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14.8.1. Is provided to the Employee by the Company;
14.8.2. Is created, developed, or otherwise generated by
or on behalf of the Company;
14.8.3. Concerns or relates to any aspect of the
Company's business; or
14.8.4. Is, for any reason, identified by the Company as
confidential.
14.8.5. Notwithstanding the foregoing provisions of this
Section 14.8, Confidential Information shall not include such
information which the Employee can show, clearly and
convincingly:
14.8.5.1. Is publicly and openly known and in the
public domain;
14.8.5.2. Becomes publicly and openly known and in
the public domain through no fault of the Employee; or
14.8.5.3. Is in the Employee's possession and
documented prior to this Agreement, lawfully obtained from a
source other than from the Company, and not subject to any
obligation of confidentiality or restricted use.
14.9. "Constructive Termination" means the voluntary
termination of employment by the Employee following a Change in Duties
following a Change of Control.
14.10. "Exchange Act" means the Securities Exchange Act of
1934, as from to time amended.
14.11. "Invention" means any new or useful art, discovery, or
improvement (including any technologies, tests, programs, products,
concepts, ideas, apparatus, equipment, machinery, processes, methods,
formulae, designs or techniques), whether or not related to a Product
and whether or not patentable, and all the know-how related thereto.
14.12. "Product" means any product or service which is, or
may in the reasonable future, be manufactured, sold, designed,
developed, considered by, or of interest to the Company or an
Affiliate (including, but not limited to, any product or service
involving CMP planarization technology, such as CMP-V tools or any
free-abrasive machining, lapping, polishing and grinding).
14.13. "Technology" means prototypes, models, concepts,
inventions, circuit designs, drawings, hardware, technological
developments and improvements, methods, techniques, systems,
documentation, data, works of authorship,
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products, and related information whether or not patentable,
copyrightable, and whether or not presently used or used in the
future.
14.14. "Voting Securities" mean any securities which
ordinarily possess the power to vote in the election of directors
without the happening of any precondition or contingency.
15. Miscellaneous.
15.1. This Agreement supersedes all prior agreements and
understandings by and between the Employee and the Company and any of
its Affiliates or their respective directors, officers, shareholders,
employees, attorneys, agents, or representatives, including any
Severance Agreement, Employment Letter, Employment Terms, Non-
Disclosure Agreement and/or Employment Agreement and constitutes the
entire agreement between the parties, respecting the subject matter
hereof and there are no representations, warranties or other
commitments other than those expressed herein.
15.2. The Employee represents and warrants to the Company
that the Employee is not a party to or bound by, and the employment of
the Employee by the Company or the Employee's disclosure of any
information to the Company or its use of such information will not
violate or breach any employment, retainer, consulting, license, non-
competition, non-disclosure, trade secrets or other agreement between
the Employee and any other person, partnership, corporation, joint
venture, association or other entity.
15.3. No modification or amendment of, or waiver under, this
Agreement shall be valid unless signed in writing and signed by the
Employee and an appropriate officer of the Company, pursuant to
expressed authority of the Board.
15.4. The Employee agrees to indemnify the Company and its
Affiliates against, and to hold the Company and its Affiliates
harmless from, any and all claims, lawsuits, losses, damages,
expenses, costs and liabilities, including, without limitation, court
costs and attorney's fees, which the Company or any of its Affiliates
may sustain as a result of, or in connection with, either directly or
indirectly, the Employee's breach or violation of any of the
provisions of this Agreement.
15.5. The Employee hereby agrees that if the Employee
violates any provision of this Agreement, the Company will be
entitled, if it so elects, to institute and prosecute proceedings at
law or in equity to obtain damages with respect to such violation or
to enforce the specific performance of this Agreement by the Employee
or to enjoin the Employee from engaging in any activity in violation
hereof.
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15.6. The waiver by either party to this Agreement of a
breach of any provision of this Agreement by the other shall not
operate or be construed as a waiver of any subsequent breach.
15.7. Any communication which may be required under this
Agreement shall be deemed to have been properly given when delivered
personally at the address set forth below for the intended party
during normal business hours, when sent by facsimile or other
electronic transmission to the respective facsimile transmission
numbers of the parties set forth below with telephone confirmation of
receipt, or when sent by U.S. registered or certified mail, return
receipt requested, postage prepaid as follows:
If to the Company: SpeedFam International, Inc.
7406 West Detroit
Chandler, AZ 85226
United States of America
Attention: Chief Executive Officer
Facsimile: 602-961-2171
Confirm: 602-961-1600
If to the Employee: Christopher E. Augur
10037 N. 56th St.
Paradise Valley, AZ 85253
Facsimile:
Confirm:
Notices shall be given to such other addressee or address, or both, or
by way of such other facsimile transmission number, as a particular
party may from time to time request by written notice to the other
party to the Agreement. Each notice, request, demand, approval or
other communication which is sent in accordance with this Section
shall be deemed to be delivered, given and received for all purposes
of this Agreement as of two (2) business days after the date of
deposit thereof for mailing in a duly constituted U.S. post office or
branch thereof, one (1) business day after deposit with a recognized
overnight courier service or upon written confirmation of receipt of
any facsimile transmission. Notice given to a party hereto by any
other method shall only be deemed to be delivered, given and received
when actually received in writing by such party.
15.8. This Agreement shall inure to the benefit of and be
binding upon the Company and the Employee and their respective heirs,
personal representatives, successors and assigns.
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15.9. All claims, disputes and other matters in question
arising out of, or relating to this Agreement, or the breach thereof,
shall be decided by arbitration, pursuant to the rules established by
the American Arbitration Association for the arbitration of such
disputes, and such arbitration shall occur in Chandler, Arizona.
15.10. This Agreement may be signed in multiple counterparts
which when taken together shall constitute the entire Agreement.
15.11. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois.
In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year first above written.
SpeedFam International, Inc. an Illinois
Corporation
By /s/ Makoto Kouzuma
--------------------------------------
Title President/COO
--------------------------------
Employee
/s/ Christopher E. Augur
-----------------------------------------
Christopher E. Augur
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EXHIBIT 10.5
Employment Agreement
This Agreement is made and entered into this 21st day of March, 1997, by
and between SpeedFam International, Inc., an Illinois corporation (hereinafter
referred to as the "Company") and Robert R. Smith (hereinafter referred to as
the "Employee").
W i t n e s s e t h:
Whereas, the Company desires to retain the services of the Employee in the
capacities set forth herein, and the Employee desires to be employed by the
Company in such capacities;
Now Therefore, in consideration of the promises and mutual covenants herein
contained, the Company and the Employee hereby agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth and subject to the policies as published
in the Company's Employee Handbook, as from time to time amended.
2. Term. Subject to the provisions for earlier termination
hereinafter set forth in Section 12 of this Agreement, the term of
employment hereunder shall commence on the date hereof and end on the first
May 31st after the date hereof.
3. Automatic Extension. The term of employment of the Employee
hereunder shall automatically continue for additional one (1) year terms
upon the same terms and conditions contained herein unless either the
Company or the Employee shall notify the other at least six (6) months
prior to the expiration of the initial one (1) year term or any renewal
term of its or his intention to terminate the term of employment of the
Employee as of the end of the initial one (1) year term or any such renewal
term, as the case may be.
4. Compensation. The Company agrees to provide the Employee with
the following compensation for all services rendered under this Agreement:
4.1. Salary. During the term hereof, the Company shall pay
to the Employee a Base Annual Salary of Ninety-Six Thousand Seven
Hundred Twenty Nine (96,729) British Pounds Sterling, payable in
accordance with the standard payroll practices of the Company
(including any salary-reduction contributions to plans or programs
maintained by the Company). Further, the Base Annual Salary of the
Employee shall be reviewed annually by the Company and adjusted as
appropriate.
<PAGE>
4.2. Annual Incentive Opportunity. During the term of this
Agreement, the Employee shall participate in the annual incentive plan
maintained by the Company for its executives.
4.3. Long-term Incentive Opportunity. During the term of
this Agreement, the Employee shall participate in any long-term
incentive plan maintained by the Company, including, but not limited
to, stock options, performance shares, restricted stock and long-term
cash incentive plans, in a manner consistent with other executives of
the Company, as determined by the Board.
4.4. Other Benefits. To the extent the Employee is eligible
under the appropriate laws, the Employee shall be entitled to
participate in and receive benefits under any and all pension, profit-
sharing, health, disability and insurance plans, if any, which the
Company may maintain. The Employee shall also receive an allowance of
Eighteen Thousand Seven Hundred Twenty-Two (18,722) British Pounds
Sterling annually for automobile expenses.
5. Duties. The Employee shall, subject to election and removal by
the Board of Directors of SpeedFam Limited, a United Kingdom corporation
and subsidiary of the Company in their sole discretion, serve as Managing
Director of SpeedFam Limited. As such, the Employee's duties and
responsibilities shall include, but shall not be limited to, establishing
objectives, plans and budgets for the European operations of the Company.
The Managing Director will be accountable for meeting preestablished profit
and loss goals and the attainment of current and long-range objectives.
The Managing Director shall report to the President/Chief Operating Officer
of the Company. The Employee shall also be responsible for the performance
of such other duties and responsibilities as may be prescribed from time to
time by the President/Chief Operating Officer of the Company or the Board
Directors of SpeedFam Limited.
6. Extent of Service. The Employee shall devote the Employee's full
business time, attention, and energies to the business of SpeedFam Limited
and its Affiliates and shall not, during the term of this Agreement, be
engaged in any other business activity, whether or not such activity is
pursued for gain, profit, or other pecuniary advantage, unless written
approval is first secured from the Board of Directors of SpeedFam Limited.
7. Working Facilities. The Employee shall be furnished with office
space, furnishings, secretarial support and such other facilities and
services which are reasonably necessary for the performance of the
Employee's duties.
8. Expenses. The Company will reimburse the Employee for all
reasonable business expenses which are incurred by the Employee in the
promoting of the interests of the Company upon presentation by the Employee
from time to time (at
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least monthly) of an itemized account of such expenses containing such
detail as may reasonably be required by the Board of Directors of SpeedFam
Limited.
9. Vacation. The Employee shall be entitled to paid vacation in
accordance with Company policy. All vacation time shall be taken by the
Employee at such times as shall be mutually agreed upon by the Employee and
the President/Chief Executive Officer of the Company.
10. Disability. If, as a result of sickness or other disability,
the Employee is not able to perform the Employee's duties, this Section 10
shall apply as follows:
10.1. For the first ninety (90) consecutive days of sickness
or other disability the Company shall continue to pay the Employee
full Base Annual Salary (reduced by any payments from any short-term
disability plan which may be maintained by the Company), and shall
continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder.
10.2. If the disability or other sickness continues past
ninety (90) consecutive days, the Company, in its sole discretion, may
elect to place the Employee on Disability Leave of Absence. During
such period, the Company shall, for the remainder of the contract
term, or until the Employee returns from such Disability Leave of
Absence, continue to pay premiums on then existing group life, health,
disability and other insurance plans with respect to which the
Employee participates, provided the Employee remains eligible to
participate thereunder. Further, the Company shall pay to the
Employee, two-thirds (2/3) of the Employee's Base Annual Salary,
reduced by any payments for which the Employee is eligible from any
disability insurance programs maintained by the Company.
11. Death. If the Employee dies during the term of this Agreement,
the Company shall pay to the Employee's Beneficiary (or if there is no
named Beneficiary, the estate of the Employee), the compensation as set
forth in Section 4 of this Agreement, for the period up to the date of the
Employee's death. In no event shall the Company be obligated to pay to any
person any other compensation with respect to any period following the date
of the Employee's death.
12. Termination of Employment.
12.1. Termination for Cause. The Company may terminate the
Employee's employment under this Section of the Agreement for Cause.
Cause shall be defined as:
12.1.1. The Employee's failure or refusal to perform the
Employee's duties as provided for in this Agreement, occasioned
by reason other than
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sickness or other disability of the Employee, which is not cured
within ten (10) business days after written notice from the
Company specifying such failure or refusal has been delivered to
the Employee;
12.1.2. Commission by the Employee of any materially
fraudulent, dishonest or other act of misconduct in the
performance of the Employee's duties hereunder, other than at the
specific direction of the Board; or,
12.1.3. Conviction for any felony or crime involving
moral turpitude.
12.1.4. Following a Termination for Cause, the Company
shall pay to the Employee the Base Annual Salary provided in
Section 4.1 accrued up to the date of termination. In no event
shall the Company be obligated to pay any other compensation with
respect to any period before or after the date of such
termination.
12.2. Termination Following a Change of Control. If, during
a period of two (2) years following a Change of Control, the
employment of the Employee is terminated by the Company for any reason
other than Cause, or if the Employee is subject to Constructive
Termination, benefits shall be payable under this Section 12.2.
12.2.1. The Employee shall receive within thirty (30)
days of termination a single payment equal to two (2) times the
sum of (i) the Employee's highest Base Annual Salary during the
Employee's employment with the Company and (ii) the Employee's
highest target annual incentive award opportunity.
12.3. Other Termination at the Election of the Company. The
Company may elect to terminate the employment of the Employee for any
reason other than Cause or following a Change of Control, upon written
notice to the Employee, accompanied by payment in a lump sum of:
12.3.1. All compensation accrued up to the date of
termination;
12.3.2. An amount equal to one (1) times the Employee's
Base Annual Salary of record on the date of termination.
13. Restrictive Covenants.
13.1. Employee understands that the Company's business
involves the design, improvement, development, testing, manufacturing,
marketing and sale of products, and that this business requires
substantial investments in capital and substantial commitments of time
and effort by the Company's employees. The
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Employee further understands that, as a result, certain of the
Company's personnel, including the Employee, acquire information with
respect to customer goodwill, trade secrets and Confidential
Information, which, of itself and apart from the Employee's abilities,
could be of great value to a competitor of the Company, potential
competitors of the Company, and to others.
13.2. The Employee further understands that employment with
the Company is conditioned upon the Company's being able to place
complete trust and confidence in the Employee and to rely on the
Employee's doing everything possible to avoid the disclosure or use of
Confidential Information to persons, corporations, organizations and
others outside the Company, which may become known to, or subject to
the control of the Employee during the term of employment hereunder.
The Employee also understands that competition in the manufacture,
sale, and development of products is not local in nature or scope, but
involves various corporations, organizations and others located within
the United States and throughout the world.
13.3. In recognition of these circumstances and for the
purpose of inducing the Company to employ the Employee (or continue
the employment of the Employee with appropriate compensation reviews)
to repose trust and confidence in the Employee, and to make
Confidential Information available to the Employee, the Employee
agrees that the following restrictive covenants are necessary and
proper for the protection of the Company.
13.4. Subject to Section 13.6 below, the Employee will
promptly disclose and assign to the Company, without the right to any
form of compensation therefore, every invention that the Employee,
individually or jointly with others, during the term of the Employee's
employment with the Company and for a period of one (1) year following
termination of such employment for any reason, may discover, invent,
conceive or originate, relating in any way to the present or
contemplated scope of the Company's business with regard to any of its
clients, customers or vendors or to any Product, Technology, process,
or device dealt in, used or under development or manufacture by the
Company for itself or others or that results from or may be suggested
by any work the Employee may do for the Company or at the Company's
request. The Employee will fully cooperate with the Company in
applying for and securing in the name of the Company or its designee
patents or copyrights with respect to said Inventions in each country
in which the Company may desire to secure patent or copyright
protection. The Employee will promptly execute all proper documents
presented to the Employee for signature by the Company to enable the
Company or its designee to secure such patent or copyright protection
and to transfer legal title therein, together with any patents or
copyrights that may be issued thereon or in connection therewith, to
the Company or its designee. The Employee will give such true
information and testimony as may be requested of the Employee by the
Company relative to any of said Inventions.
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13.5. Subject to Section 13.6 below, the Company shall have
the exclusive right to use in its business, and to make, use and sell
products, processes, and/or services arising out of any Invention,
whether or not patentable, which is assignable by the Employee to the
Company pursuant to Section 13.4 above.
13.6. Pursuant to Section 2(3) of the Illinois Employee
Patent Act, the Employee is hereby notified that Sections 13.4 and
13.5 above do not apply to an Invention for which no equipment,
supplies, facility, technology, confidential information, or trade
secret information of the Company was used and which was developed
entirely on the Employee's own time, unless:
13.6.1. The Invention was related:
13.6.1.1. To the business of the Company; or
13.6.1.2. To the Company's actual or demonstrably
anticipated research or development;
or;
13.6.2. The Invention results from any work performed by
the Employee for the Company.
13.7. The Employee agrees that all financial data, customer
lists, plans, contracts, agreements, literature, manuals, catalogues,
brochures, books, records, computer files or applications, maps,
correspondence, and other materials furnished or made available to the
Employee by the Company or an Affiliate, or any of its clients, or
created, prepared or secured through the efforts of the Employee,
relating to the business conducted by the Company or an Affiliate,
whether or not containing any Confidential Information, are and shall
remain the property of the Company, and the Employee agrees to deliver
all such materials, including all copies thereof, to the Company upon
termination of the Employee's employment hereunder, or at any other
time at the Company's request.
13.8. Other than as expressly directed by the Company and in
the performance of duties to the Company or with the expressed
permission of the Company, the Employee shall never, during or
following the Employee's employment with the Company, directly or
indirectly, sell, use, disclose, lecture upon, or publish data of
information containing or relating to any Confidential Information or
Technology of the Company or its Affiliates or any Invention
assignable to the Company pursuant to the terms of Section 13.4 above.
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13.9. During the term of the Employee's employment with the
Company and for a period of two (2) years after the termination
thereof, the Employee agrees that the Employee will not:
13.9.1. Own or have any interest, directly or
indirectly, in or act as an officer, director, agent, employee,
or consultant of, or assist in any way or in any capacity, any
person, firm, association, partnership, corporation or other
entity which sells or provides products or services in
competition with the Company or its Affiliates anywhere within
the world where any Confidential Information acquired by the
Employee would reasonably be considered advantageous to such
other competing entity, or
13.9.2. Directly or indirectly entice, induce or in any
manner influence any person who is, or shall be, in the service
of the Company or its Affiliates to leave such service for the
purpose of engaging in business or being employed by or
associated with any person, firm, association, partnership,
corporation or other entity which sells or provides products or
services in competition with the Company or its Affiliates
anywhere in the world.
If any court shall finally hold that the time, territory or any
other provision of this Section 13.9 constitutes an unreasonable
restriction against the Employee, the Employee agrees that the
provisions hereof shall not be rendered null and void, but shall
apply as to such time, territory, and other extent as such court
may determine to be a reasonable restriction under the
circumstances involved.
13.10. The Employee understands that if there is a breach by
the Employee of any duty to the Company with respect to any
Confidential Information or Invention, the Company may suffer
irreparable injury and may not have adequate remedy at law. As a
result, the Employee agrees that if a breach of this Agreement occurs,
the Company may, in addition to any other remedies available to it,
bring an action or actions for injunction, specific performance, or
both, and have entered into a temporary restraining order, preliminary
or permanent injunction, or other action compelling specific
performance.
14. Definitions.
14.1. "Affiliate" means any entity in which the Company, or
any entity which owns, directly or indirectly, a majority ownership
interest in the Company, owns, directly or indirectly, at least a
twenty percent (20%) interest in such entity.
14.2. "Base Annual Salary" means the annualized value of the
Employee's salary, based on the most recent pay period.
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14.3. "Board" means the Board of Directors of the Company.
14.4. "Change in Duties" means:
14.4.1. A significant reduction in the nature or scope
of the Employee's authority or duties from those immediately
prior to the date on which a Change of Control occurs;
14.4.2. A material reduction in the Employee's Base
Annual Salary;
14.4.3. Exclusion from any incentive program from which
the Employee was previously eligible, or which other executives
with comparable duties participate in;
14.4.4. A change in location of the Employee's principal
place of employment by more than fifty (50) miles;
14.5. "Change of Control" means:
14.5.1. Any "person", including a "group" as determined
in accordance with Section 13(d)(3) of the Exchange Act, other
than James N. Farley, his spouse, descendants, or any Trust for
the benefit of James N. Farley, his spouse or descendants, who
is, or becomes, the beneficial owner of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, other than by
reason of any redemption of stock resulting from the death of
James N. Farley or his spouse;
14.5.2. As a result of, or in connection with, any
tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction") the
persons who constituted the Board of the Company prior to the
Transaction shall cease to constitute a majority of the Board of
the Company or any successor to the Company.
14.5.3. The Company is merged or consolidated with
another corporation and as a result of the merger or
consolidation, less than seventy percent (70%) of the outstanding
voting securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of the
Company;
14.5.4. A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company's then outstanding voting securities; or,
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<PAGE>
14.5.5. The Company transfers substantially all of its
assets to another corporation of which the Company owns less than
fifty percent (50%) of the outstanding voting securities.
14.6. "Code" means the Internal Revenue Code of 1986, as from
time to time amended.
14.7. "Company" means SpeedFam International, Inc., an
Illinois corporation.
14.8. "Confidential Information" means any and all Technology
and/or information which:
14.8.1. Is provided to the Employee by the Company;
14.8.2. Is created, developed, or otherwise generated by
or on behalf of the Company;
14.8.3. Concerns or relates to any aspect of the
Company's business; or
14.8.4. Is, for any reason, identified by the Company as
confidential.
14.8.5. Notwithstanding the foregoing provisions of this
Section 14.8, Confidential Information shall not include such
information which the Employee can show, clearly and
convincingly:
14.8.5.1. Is publicly and openly known and in the
public domain;
14.8.5.2. Becomes publicly and openly known and in
the public domain through no fault of the Employee; or
14.8.5.3. Is in the Employee's possession and
documented prior to this Agreement, lawfully obtained from a
source other than from the Company, and not subject to any
obligation of confidentiality or restricted use.
14.9. "Constructive Termination" means the voluntary
termination of employment by the Employee following a Change in Duties
following a Change of Control.
14.10. "Exchange Act" means the Securities Exchange Act of
1934, as from to time amended.
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<PAGE>
14.11. "Invention" means any new or useful art, discovery, or
improvement (including any technologies, tests, programs, products,
concepts, ideas, apparatus, equipment, machinery, processes, methods,
formulae, designs or techniques), whether or not related to a Product
and whether or not patentable, and all the know-how related thereto.
14.12. "Product" means any product or service which is, or
may in the reasonable future, be manufactured, sold, designed,
developed, considered by, or of interest to the Company or an
Affiliate (including, but not limited to, any product or service
involving CMP planarization technology, such as CMP-V tools or any
free-abrasive machining, lapping, polishing and grinding).
14.13. "Technology" means prototypes, models, concepts,
inventions, circuit designs, drawings, hardware, technological
developments and improvements, methods, techniques, systems,
documentation, data, works of authorship, products, and related
information whether or not patentable, copyrightable, and whether or
not presently used or used in the future.
14.14. "Voting Securities" mean any securities which
ordinarily possess the power to vote in the election of directors
without the happening of any precondition or contingency.
15. Miscellaneous.
15.1. This Agreement supersedes all prior agreements and
understandings by and between the Employee and the Company and any of
its Affiliates or their respective directors, officers, shareholders,
employees, attorneys, agents, or representatives, including any
Severance Agreement, Employment Letter, Employment Terms, Non-
Disclosure Agreement and/or Employment Agreement and constitutes the
entire agreement between the parties, respecting the subject matter
hereof and there are no representations, warranties or other
commitments other than those expressed herein.
15.2. The Employee represents and warrants to the Company
that the Employee is not a party to or bound by, and the employment of
the Employee by the Company or the Employee's disclosure of any
information to the Company or its use of such information will not
violate or breach any employment, retainer, consulting, license, non-
competition, non-disclosure, trade secrets or other agreement between
the Employee and any other person, partnership, corporation, joint
venture, association or other entity.
15.3. No modification or amendment of, or waiver under, this
Agreement shall be valid unless signed in writing and signed by the
Employee and an appropriate officer of the Company, pursuant to
expressed authority of the Board.
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<PAGE>
15.4. The Employee agrees to indemnify the Company and its
Affiliates against, and to hold the Company and its Affiliates
harmless from, any and all claims, lawsuits, losses, damages,
expenses, costs and liabilities, including, without limitation, court
costs and attorney's fees, which the Company or any of its Affiliates
may sustain as a result of, or in connection with, either directly or
indirectly, the Employee's breach or violation of any of the
provisions of this Agreement.
15.5. The Employee hereby agrees that if the Employee
violates any provision of this Agreement, the Company will be
entitled, if it so elects, to institute and prosecute proceedings at
law or in equity to obtain damages with respect to such violation or
to enforce the specific performance of this Agreement by the Employee
or to enjoin the Employee from engaging in any activity in violation
hereof.
15.6. The waiver by either party to this Agreement of a
breach of any provision of this Agreement by the other shall not
operate or be construed as a waiver of any subsequent breach.
15.7. Any communication which may be required under this
Agreement shall be deemed to have been properly given when delivered
personally at the address set forth below for the intended party
during normal business hours, when sent by facsimile or other
electronic transmission to the respective facsimile transmission
numbers of the parties set forth below with telephone confirmation of
receipt, or when sent by U.S. registered or certified mail, return
receipt requested, postage prepaid as follows:
If to the Company: SpeedFam Limited
c/o SpeedFam International, Inc.
7406 West Detroit
Chandler, AZ 85226
United States of America
Attention: Chief Executive Officer
Facsimile: 602-961-2171
Confirm: 602-961-1600
If to the Employee: Robert Smith
34 Bullmore Grove
Kennilworth
Warwickshire CV8 2QT, England
Facsimile: __________________
Confirm: ___________________
Notices shall be given to such other addressee or address, or both, or
by way of such other facsimile transmission number, as a particular
party may from time to time request by written notice to the other
party to the Agreement. Each
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<PAGE>
notice, request, demand, approval or other communication which is sent
in accordance with this Section shall be deemed to be delivered, given
and received for all purposes of this Agreement as of two (2) business
days after the date of deposit thereof for mailing in a duly
constituted U.S. post office or branch thereof, one (1) business day
after deposit with a recognized overnight courier service or upon
written confirmation of receipt of any facsimile transmission. Notice
given to a party hereto by any other method shall only be deemed to be
delivered, given and received when actually received in writing by
such party.
15.8. This Agreement shall inure to the benefit of and be
binding upon the Company and the Employee and their respective heirs,
personal representatives, successors and assigns.
15.9. All claims, disputes and other matters in question
arising out of, or relating to this Agreement, or the breach thereof,
shall be decided by arbitration, pursuant to the rules established by
the American Arbitration Association for the arbitration of such
disputes, and such arbitration shall occur in Chandler, Arizona.
15.10. This Agreement may be signed in multiple counterparts
which when taken together shall constitute the entire Agreement.
15.11. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois.
In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year first above written.
SpeedFam International, Inc. an Illinois
Corporation
By /s/ Makoto Kouzuma
-------------------------------------
Title President/COO
-------------------------------
Employee
/s/ R.R. Smith
----------------------------------------
Robert R. Smith
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<PAGE>
Exhibit 11
SPEEDFAM INTERNATIONAL, INC.
COMPUTATION OF NET EARNINGS PER SHARE
THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
(dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 29, February 28, February 29,
------------ ------------ ------------ ------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Earnings $ 4,909 $ 4,360 $13,730 $6,689
======= ======= ======= ======
Weighted average shares:
Common shares outstanding 10,957 10,397 10,694 8,978
Common equivalent shares issuable upon
exercise of employee stock options using
the treasury stock method 844 814 769 812
------- ------- ------- ------
Shares used in net earnings per share 11,801 11,211 11,463 9,790
======= ======= ======= ======
Net earnings per share $ 0.42 $ 0.39 $ 1.20 $ 0.68
======= ======= ======= ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 77,366
<SECURITIES> 0
<RECEIVABLES> 41,768
<ALLOWANCES> 0
<INVENTORY> 33,362
<CURRENT-ASSETS> 157,609
<PP&E> 18,682
<DEPRECIATION> 0
<TOTAL-ASSETS> 201,455
<CURRENT-LIABILITIES> 49,901
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 150,630
<TOTAL-LIABILITY-AND-EQUITY> 201,455
<SALES> 115,202
<TOTAL-REVENUES> 124,127
<CGS> 75,465
<TOTAL-COSTS> 110,727
<OTHER-EXPENSES> 216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185
<INCOME-PRETAX> 12,999
<INCOME-TAX> 5,053
<INCOME-CONTINUING> 7,946
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,730
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 0
</TABLE>
