Exhibit 10.1

 

NANOMETRICS INCORPORATED

August 9, 2017

Timothy J. Stultz, Ph.D.

1550 Buckeye Drive

Milpitas, CA 95035

 

RE: Transition and Consulting Agreement

Dear Tim:

As you know, you have notified the Board of Directors (the “Board”) of your
plans to retire from your positions as President and Chief Executive Officer of
Nanometrics Incorporated (the “Company”) and thereby terminate your employment
with the Company, but have agreed to stay on until a successor CEO has been
named.  This letter sets forth the terms of the transition and consulting
agreement (the “Agreement”) that the Company is offering to you in connection
with your retirement and employment transition.

1.Retirement and Resignation.  Your employment with the Company will continue
through the date on which the Company appoints a successor CEO, or such earlier
date as the Company may determine in its sole discretion, which will become your
retirement and employment termination date (the “Retirement Date”).  The
Retirement Date will be determined by the Company based on the recruiting
process for the successor CEO, and you will be notified of the actual Retirement
Date prior to such date.

2.Transition Period.  From the date you sign this Agreement until the Retirement
Date (the “Transition Period”), you will remain the Company’s President and CEO,
on the following terms:

(a)Transition Period Duties.  You will report to the Board and will make
yourself available to perform your assigned duties and responsibilities, and to
transition these duties and responsibilities, as reasonably requested by the
Board and in a manner consistent with the Company’s policies and procedures.

(b)Transition Period Salary and Bonus.  During the Transition Period, you will
continue to be paid a base salary at the rate of $41,666.66 per month (which is
equivalent to $500,000 per year), which base salary shall be paid according to
the Company’s regular payroll practices (the “Base Salary”).  You also will
continue to remain eligible to earn (i) an annual bonus for Fiscal Year 2017 in
accordance with the performance goals previously established and communicated to
you under the terms of the Company’s Executive Performance Bonus Program, as
approved by the Board (the “Bonus Plan”), with a target bonus of $500,000 for
such Fiscal Year, and (ii) an annual bonus for Fiscal Year 2018 under the Bonus
Plan fixed at $500,000, which, in each case, will be subject to standard
deductions and withholdings and (except as set forth below) prorated for any
partial employment during the year in which the Retirement Date

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 2

 

 

occurs.  As an additional benefit under this Agreement, in the event that the
Retirement Date occurs prior to December 31, 2017, and provided that your
employment has not terminated for Cause (as defined below): (i) the Company will
continue to pay your Base Salary in the form of severance payments, subject to
standard deductions and withholdings, from the Retirement Date through December
31, 2017; and (ii) notwithstanding your employment termination prior to the end
of Fiscal Year 2017, which would otherwise reduce your eligibility for a bonus
to a prorated bonus amount, you will remain eligible to receive, without
proration, your full year annual bonus for 2017, as determined in accordance
with the performance goals previously established and communicated to you
pursuant to the terms and conditions of the Bonus Plan, and such bonus amount,
if awarded, will be paid to you on or before March 15, 2018, as an additional
severance payment and subject to standard deductions and withholdings.   In
addition, in the event the Retirement Date has not occurred by January 31, 2018,
the Company shall discuss with you and consider in good faith what if any
additional compensation should become payable to you with respect to Fiscal Year
2018 in light of the anticipated duration and responsibilities of your continued
service as CEO in that Fiscal Year.  

(c)Transition Period Benefits.  During the Transition Period, you will:
(a) remain eligible to participate in Company benefit plans, including basic
health coverage and the Executive Health Care Plan, pursuant to the terms and
conditions of those plans as they may be amended from time to time, as
applicable to all plan participants; (b) receive a car allowance in the amount
of $1,200 per month (prorated for any partial months of employment service),
subject to any applicable taxes; and (c) be eligible for a 401(k) match pursuant
to the Company’s 401(k) policy as applicable to executive employees.  For the
avoidance of doubt, during the Transition Period you will not be eligible for
any other benefits other than as set forth in this paragraph, including without
limitation, any enhanced benefits with respect to a change in control as may be
set forth in any Company policy, plan or agreement, including but not limited to
the Severance Agreement (as defined in Paragraph 8 below).

(d)Equity Awards.  The unvested restricted stock units (“RSUs”) and performance
stock units (“PSUs”) held by you as of the date hereof are set forth on Exhibit
A hereto.  Vesting of your outstanding RSUs and PSUs (collectively, the “Equity
Awards”) will continue during the Transition Period and so long as you continue
to serve as a director or as a consultant to the Company pursuant to Paragraphs
6 and 7 below, and during such period you will continue to be treated as a
Service Provider under the Equity Award documents.  Your Equity Awards will
continue to be governed by the terms of the applicable Equity Award documents;
provided that upon a Change in Control as defined in the Severance Agreement (a
“Change in Control”), your Equity Awards will vest in full.

(e)Employment Termination.  Nothing in this Agreement alters your employment at
will status.  Either you or the Company may terminate your employment at any
time during the Transition Period, with or without Cause (as defined below),
upon notice to the other.  If the Company terminates your employment without
Cause, then you will remain eligible to be retained by the Company as a
consultant (as defined and described in Paragraph 7 below), provided that you
satisfy all conditions set forth in Paragraph 7 below for such engagement.  If
prior to the Retirement Date you resign your employment or the Company
terminates your employment for Cause, then you will not be entitled to be
retained as a consultant as set forth below.  For purposes of this Agreement,
“Cause” for termination will mean any one or more of

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 3

 

 

the following:  (i) your willful gross misconduct; (ii) your unjustifiable
neglect of your duties (as determined in the good faith judgment of the Board);
(iii) your acting in any manner that has a direct, substantial and adverse
effect on the Company or its reputation; (iv) your repeated material failure or
repeated refusal to comply with reasonable written policies, standards and
regulations established by the Company from time to time which failure, if
curable, is not cured to the reasonable satisfaction of the Board during the
thirty (30) day period following written notice of such failure from the
Company; (v) any tortious act, unlawful act or malfeasance which causes or
reasonably could cause (for example, if it became publicly known) material harm
to the Company’s standing, condition or reputation; (vi) any material breach by
you of the provisions of any confidential information agreement with the Company
or other material improper disclosure of the Company’s confidential or
proprietary information; (vii) your theft, dishonesty, or falsification of any
Company records; (viii) your being found liable in any Securities and Exchange
Commission or other civil or criminal securities law action or entering any
cease and desist order with respect to such action (regardless of whether or not
you admit or deny liability); or (ix) you (A) obstructing or impeding; (B)
endeavoring to influence, obstruct or impede, or (C) failing to materially
cooperate with, any investigation authorized by the Board or any governmental or
self-regulatory entity (an “Investigation”). However, your failure to waive
attorney-client privilege relating to communications with your own attorney in
connection with an Investigation will not constitute “Cause.”  

3.Accrued Salary.  On the Retirement Date, the Company will pay you all accrued
salary earned by you through the Retirement Date, less standard payroll
deductions and withholdings.  You will receive this payment when your employment
ends regardless of whether you enter into this Agreement.  You acknowledge and
agree that, consistent with our policy and practice of non-accrual of vacation
time for executives, as of the Retirement Date you will not have any accrued but
unused vacation or paid time off for which you are entitled to payment.

4.Expense Reimbursement.  You agree that, within thirty (30) days of the
Retirement Date, you will submit your documented expense reimbursement statement
reflecting all business expenses you incurred through the Retirement Date, if
any, for which you seek reimbursement.  The Company will reimburse you promptly
for such expenses pursuant to its regular business practice.

5.Health Insurance Benefits After the Retirement Date.  Your participation in
the Company’s employee benefit plans will continue in the same manner as in
effect on the date hereof through the Retirement Date and then terminate on the
Retirement Date, except to the extent such benefits continue to be available to
you as a member of the Company’s Board pursuant to Paragraph 6 below.  To the
extent provided by the federal COBRA law or, if applicable, state insurance laws
(collectively, “COBRA”), and by the Company’s current group health insurance
policies, you will be eligible to continue your group health insurance benefits
at your own expense after the Retirement Date.  You will be provided with a
separate notice describing your rights and obligations under COBRA laws on or
after the Retirement Date.  

6.Board Position.  You may continue to serve as a member of the Board, so long
as you have been nominated and elected to the Board, in accordance with the
Company’s by-laws and applicable law, and on the following terms:

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 4

 

 

(a)Board Status.  For the duration of your Board membership, you will serve as a
non-executive member of the Board who is not an independent
member.  Accordingly, you will not serve on any committees of the Board.  

(b)Compensation.  During any period of your Board membership when you are not an
employee, you will be eligible to receive cash and equity compensation for
serving as a member of the Board on the same basis as other non-employee
directors of the Company at such time (the “Director Compensation”).  For
avoidance of doubt, you shall not be provided with any Director Compensation
during any period that you are an employee, and the Director Compensation will
be prorated from the period of time between the Retirement Date and the date of
the Company’s next annual meeting following the Retirement Date, provided you
remain a member of the Board during such time.  The Company will not withhold
any amount for taxes, social security or other payroll deductions from the
Director Compensation.  The Company will report the Director Compensation on an
IRS Form 1099.  You acknowledge that you will be entirely responsible for
payment of any taxes that may be due on the Director Compensation.  You will not
be eligible for any other cash compensation, including without limitation any
bonus or incentive payments, for your service as a member of the Board.

(c)Benefits.  You will be eligible to participate in the Company’s basic health
coverage and Executive Health Care Plan on the same terms and conditions as
other non-executive members of the Board, pursuant to the terms and conditions
of those plans and subject to possible changes from time to time.  You will not
be eligible to participate in any other Company benefit plans or receive any
fringe or other benefits.

(d)Equity Awards.  Vesting of your outstanding Equity Awards will continue
during your service as a member of the Board; provided, however, that except
with respect to any tranches of PSUs scheduled to vest in February 2018, which
shall vest (if at all) in accordance with their terms, the vesting schedule of
the PSUs shall be converted to a time-based schedule, such that each tranche
shall vest on its Vesting Date (as defined in the documentation evidencing such
PSUs) at the target level so long as you continue to be a member of the Board or
a consultant on that date, without regard to any achievement of performance
criteria above or below such level.  Your Equity Awards will otherwise continue
to be governed by the terms of the applicable Equity Award documents; provided
that upon a Change in Control, your Equity Awards will vest in full.  Your
service as a member of the Board or consultant pursuant to this Agreement will
constitute Continuous Status as a Service Provider under the Company’s 2005
Equity Incentive Plan, as amended (the “2005 Plan”).

7.Consulting Agreement After Retirement.  If you timely return this
fully-executed Agreement to the Company, allow it to become effective, and on or
within twenty-one (21) days after the Retirement Date execute and return to the
Company the Retirement Date Release attached hereto as Exhibit B, and allow the
releases contained in the Retirement Date Release to become effective, the
Company will retain you as a consultant under the terms specified below.

(a)Consulting Period.  The consulting relationship will be deemed to have
commenced on the Retirement Date and will continue until March 31, 2020, unless
terminated earlier pursuant to Paragraph 7(i) below or extended by agreement of
you and the Company (the

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 5

 

 

“Consulting Period”).  Any agreement to extend the Consulting Period after the
initial period must be set forth in writing signed by you and a duly authorized
officer or director of the Company.

(b)Consulting Services.  You agree to provide consulting services to the Company
in any area of your expertise, including but not limited to, assisting in the
transition of your job duties, supporting the new president or CEO of the
Company and being available to provide advice as needed, and completing other
assignments as requested (the “Consulting Services”) by the CEO.  During the
Consulting Period, you will report directly to the CEO.  You agree to exercise
the highest degree of professionalism and utilize your expertise and creative
talents in performing these services.  You agree to make yourself available to
perform such Consulting Services throughout the Consulting Period, up to a
maximum of 50 hours per quarter, at times mutually agreed between you and the
CEO.  You will not be required to report to the Company’s offices during the
Consulting Period, except as specifically requested by the Company for a matter
that could not reasonably be accomplished otherwise.  When providing such
services, you shall abide by the Company’s policies and procedures.

(c)Independent Contractor Relationship.  Your relationship with the Company
during the Consulting Period will be that of an independent contractor, and
nothing in this Agreement is intended to, or should be construed to, create a
partnership, agency, joint venture or employment relationship after the
Retirement Date.  You will not be entitled to any of the benefits that the
Company may make available to its employees, including but not limited to, group
health or life insurance, profit-sharing or retirement benefits, and you
acknowledge and agree that your relationship with the Company during the
Consulting Period will not be subject to the Fair Labor Standards Act or other
laws or regulations governing employment relationships.

(d)Consulting Fees.  During any period of time during the Consulting Period when
you are not a member of the Board, and provided that you remain in compliance
with this Agreement, you will receive consulting fees (“Consulting Fees”) in the
amount of $4,166.66 per month (equivalent to $50,000 annually).  For the
avoidance of doubt, for any time during the Consulting Period that you also are
serving as a member of the Board, you will not receive additional compensation
beyond the Director Compensation for the Consulting Services.  Because you will
be providing the Consulting Services as an independent contractor, the Company
will not withhold any amount for taxes, social security or other payroll
deductions from the Consulting Fees.  The Company will report the Consulting
Fees on an IRS Form 1099.  You acknowledge that you will be entirely responsible
for payment of any taxes that may be due on the Consulting Fees.  The Consulting
Fees will be paid on the last business day of each respective calendar month of
service during the Consulting Period (pro-rated for any partial months of
service).  During the Consulting Period you will not be eligible for any other
cash compensation as a consultant (other than reimbursement of reasonable
business expenses pursuant to the Company’s regular business practice),
including without limitation any bonus or incentive payments, for the Consulting
Services.

(e)Equity Awards.  Vesting of your outstanding Equity Awards will continue
during the Consulting Period; provided, however, that except with respect to any
tranches of PSUs scheduled to vest in 2018, which shall vest (if at all) in
accordance with their

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 6

 

 

terms, the vesting schedule of the PSUs shall be converted to a time-based
schedule, such that each tranche shall vest on its Vesting Date (as defined in
the documentation evidencing such PSUs) at the target level so long as you
remain a consultant under this Agreement without regard to any achievement of
performance criteria above or below such level.  Your Equity Awards will
otherwise continue to be governed by the terms of the applicable Equity Award
documents; provided that upon a Change in Control, your Equity Awards will vest
in full.  Your service as a consultant during the Consulting Period under this
Agreement shall constitute Continuous Status as a Service Provider for purposes
of the 2005 Plan.

(f)Limitations on Authority.  You will have no responsibilities or authority as
a consultant to the Company other than as provided above.  You will have no
authority to bind the Company to any contractual obligations, whether written,
oral or implied, except with the written authorization of the CEO.  You agree
not to represent or purport to represent the Company in any manner whatsoever to
any third party unless authorized by the Company, in writing, to do so.

(g)Proprietary Information and Inventions.  You agree that, during the
Consulting Period and thereafter, you will not use or disclose any confidential
or proprietary information or materials of the Company, including any
confidential or proprietary information that you obtained or developed at any
time during your employment with the Company or as a member of the Board, and
any confidential or proprietary information that you obtain or develop in the
course of performing the Consulting Services.  Notwithstanding the foregoing,
pursuant to 18 U.S.C. Section 1833(b), you shall not be held criminally or
civilly liable under any Federal or State trade secret law for the disclosure of
a trade secret that:  (1) is made in confidence to a Federal, State, or local
government official, either directly or indirectly, or to an attorney, and
solely for the purpose of reporting or investigating a suspected violation of
law; or (2) is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal.  Any and all work product you
create in the course of performing the Consulting Services will be the sole and
exclusive property of the Company.  You hereby assign to the Company all right,
title, and interest in all inventions, techniques, processes, materials, and
other intellectual property developed in the course of performing the Consulting
Services.  You further acknowledge and reaffirm your continuing obligations
under your At-Will Employment, Confidential Information, Invention Assignment
and Arbitration Agreement signed and dated 8/27/07.

(h)Other Work Activities.  Throughout the Consulting Period, you retain the
right to engage in employment, consulting, or other work relationships in
addition to your work for the Company.  The Company will make reasonable
arrangements to enable you to perform your work for the Company at such times
and in such a manner so that it will not interfere with other activities in
which you may engage.  In order to protect the trade secrets and confidential
and proprietary information of the Company, you agree that, during the
Consulting Period, you will not obtain employment with or perform competitive
work for any business entity, or engage in any other work activity that is
competitive with the Company.  If you engage in such competitive activity
without the Company’s express written consent, or otherwise materially breach
this Agreement, then (in addition to any other rights and remedies available to
the Company at law, in equity or by contract), the Company’s obligation to pay
you Consulting Fees will cease immediately.

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 7

 

 

(i)Termination of Consulting Period.  The Consulting Period will terminate upon
a Change in Control, at which time any unvested Equity Awards will vest in full.
Without waiving any other rights or remedies, the Company may terminate
immediately the Consulting Period and its corresponding obligation to pay you
Consulting Fees for Cause.  In addition, you may terminate the Consulting Period
at any time, for any reason, upon written notice to the Company.  Upon
termination of the Consulting Period upon a Change in Control, by the Company
for Cause or by you for any reason, the Company will pay only those Consulting
Fees earned and expenses incurred through and including the date on which the
termination of the Consulting Period becomes effective, and your obligations
under this Agreement will remain in full force and effect.

(j)Section 4999.  Notwithstanding anything to the contrary in this Agreement, if
you reasonably determine (which determination shall not be binding on the
Company for its tax reporting or accounting purposes or any other purpose)
that  the acceleration of the vesting of Equity Awards upon a Change in Control
would result in you being subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code, then the vesting of the Equity Awards shall be
accelerated only to the maximum extent that would not cause imposition of an
excise tax imposed by Section 4999 of the Code and such Equity Awards that have
not had their vesting accelerated because of this sentence shall continue to
vest in accordance with their normal vesting schedule and the Consulting Period
shall continue through the period of such vesting schedule; provided, however,
that such Equity Awards shall instead vest into the consideration received by
the stockholders of the Company in the Change in Control, as determined by the
Board.  To the extent required to be specified for purposes of Section 409A or
other tax purposes, the ordering of the Equity Award tranches to have
accelerated vesting upon a Change in Control shall be those tranches of Equity
Awards with the latest vesting dates first and continuing based on timing of
vesting dates until the tranches of Equity Awards with the earliest vesting
dates are accelerated.  To the extent that the vesting of all Equity Awards is
not accelerated upon a Change in Control pursuant to this paragraph, the
determination of the number of and the specific tranches of Equity Awards that
shall accelerate and those that shall maintain their normal vesting schedule in
order to not cause imposition on you of an excise tax imposed by Section 4999 of
the Code shall be determined pursuant to this paragraph by the Company’s
then-current accounting firm or another nationally-recognized accounting firm
designated by the Company, subject to your reasonable review of such
determination.

8.No Other Compensation or Benefits.  You agree and acknowledge that you are not
entitled to any severance benefits in connection with your employment
resignation, whether pursuant to that certain General Severance Benefits and
Change in Control Severance Benefits Agreement between you and the Company,
dated May 19, 2015 (the “Severance Agreement”), or otherwise.  By executing this
Agreement, you hereby further agree and acknowledge that any such compensation
or benefits are extinguished, including without limitation that you are no
longer eligible for and you waive all rights you may have to benefits under the
Severance Agreement.  You further agree and acknowledge that the consideration
provided in this Agreement is in lieu of (or in satisfaction of) and supersedes
any other compensation or benefits that you may be entitled to receive from the
Company or its predecessors or affiliates under any other agreement or promise
(including but not limited to any wages, severance benefits, bonuses, incentive
pay, equity, or other compensation or benefits) other than benefits that had
vested as of the date of this Agreement.  You further acknowledge that, except
as expressly provided in this

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 8

 

 

Agreement, you have not earned and will not receive from the Company any
additional fees, compensation, severance, or benefits on or after the Retirement
Date.  

9.Return of Company Property.  You agree to return to the Company, on the
Retirement Date or earlier if requested by the Company, all Company documents
(and all copies thereof) and other property of the Company in your possession or
control, including, but not limited to, Company files, notes, correspondence,
memoranda, notebooks, drawings, records, reports, lists, compilations of data,
proposals, agreements, drafts, minutes, studies, plans, forecasts, purchase
orders, financial and operational information, product and training information,
research and development information, sales and marketing information, personnel
and compensation information, vendor information, promotional literature and
instructions, product specifications and manufacturing information,
computer-recorded information, electronic information (including e-mail and
correspondence), other tangible property and equipment (including, but not
limited to, computer equipment, devices, PDAs, facsimile machines, and cellular
telephones), credit cards, entry cards, identification badges and keys; and any
materials of any kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof in whole or in
part).  You agree that you will make a diligent search to locate any such
documents, property and information prior to the Retirement Date.  In addition,
if you have used any personally owned computer, server, or e-mail system to
receive, store, review, prepare or transmit any Company confidential or
proprietary data, materials or information, then you agree to provide the
Company, on your Retirement Date (or earlier if requested by the Company), with
a computer-useable copy of all such information and then permanently delete and
expunge such Company confidential or proprietary information from those systems
without retaining any reproductions (in whole or in part); and you agree to
provide the Company access to your system as requested to verify that the
necessary copying and/or deletion is done.  Your timely compliance with this
Paragraph 9 is a precondition to your receipt of the benefits under this
Agreement.  Notwithstanding the foregoing, you may retain Company property as
reasonably required in connection with your Board membership and all contact
information for persons you knew prior to joining the Company, and with whom you
developed a relationship during your employment with the Company.  In addition,
following the Retirement Date the Company may permit you to receive and/or use
certain documents and/or information reasonably necessary to perform the
Consulting Services, all of which you shall return to the Company by the last
day of the Consulting Period, or earlier upon the Company’s request, without
retaining any copies or embodiments (in whole or in part).

10.Cooperation and Assistance.  You agree to voluntarily cooperate fully with
the Company at the Company’s expense in connection with its actual or
contemplated defense, prosecution, or investigation of any claims or demands by
or against third parties, or other matters arising from events, acts, or
failures to act that occurred during the period of your employment by the
Company.  Such cooperation includes, without limitation, making yourself
available to the Company upon reasonable notice, without subpoena, to provide
complete, truthful and accurate information in witness interviews, depositions,
and trial testimony.

11.No Admissions.  Nothing contained in this Agreement shall be construed as an
admission by you or the Company of any liability, obligation, wrongdoing or
violation of law.

12.Release of Claims.

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 9

 

 

(a)General Release.  In exchange for the consideration provided to you under
this Agreement to which you would not otherwise be entitled, you hereby
generally and completely release the Company, and its parents, subsidiaries,
successors, predecessors, and affiliated entities, and each of such entities’
respective current and former directors, officers, employees, shareholders,
partners, agents, attorneys, predecessors, successors, insurers, affiliates, and
assigns (collectively, the “Released Parties”) of and from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to or on
the date you sign this Agreement (collectively, the “Released Claims”).

(b)Scope of Release.  The Released Claims include, but are not limited
to:  (i) all claims arising out of or in any way related to your employment with
the Company, or the decision to terminate such employment; (ii) all claims
related to your compensation or benefits from the Company, including salary,
bonuses, commissions, vacation pay, paid time off, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company; (iii) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(iv) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (v) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in Employment Act of
1967 (as amended) (the “ADEA”), the Fair Labor Standards Act, the Employee
Retirement Income Security Act of 1974, the Worker Adjustment and Retraining
Notification Act, the California Labor Code (as amended), and the California
Fair Employment and Housing Act (as amended).

(c)Excluded Claims and Protected Rights. Notwithstanding the foregoing, the
following are not included in the Released Claims (the “Excluded
Claims”):  (i) any rights or claims for indemnification you may have pursuant to
any written indemnification agreement with the Company to which you are a party,
the charter, bylaws, or operating agreements of the Company, or under applicable
law; (ii) any rights which are not waivable as a matter of law; and (iii) any
claims for breach of this Agreement.  In addition, you understand that nothing
in this Agreement limits your ability to file a charge or complaint with the
Equal Employment Opportunity Commission, the National Labor Relations Board, the
Occupational Safety and Health Administration, the Securities and Exchange
Commission or any other federal, state or local governmental agency or
commission (“Government Agencies”).  You further understand this Agreement does
not limit your ability to communicate with any Government Agencies or otherwise
participate in any investigation or proceeding that may be conducted by any
Government Agency, including providing documents or other information, without
notice to the Company.  While this Agreement does not limit your right to
receive an award for information provided to the Securities and Exchange
Commission, you understand and agree that, to maximum extent permitted by law,
you are otherwise waiving any and all rights you may have to individual relief
based on any claims that you have released and any rights you have waived by
signing this Agreement.  You hereby represent and warrant that, other than the
Excluded Claims, you are not aware of any claims you have or might have against
any of the Released Parties that are not included in the Released Claims.

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 10

 

 

(d)ADEA Waiver.  You acknowledge that you are knowingly and voluntarily waiving
and releasing any rights you may have under the ADEA, and that the consideration
given for the waiver and release in this Paragraph 12(d) is in addition to
anything of value to which you are already entitled.  You further acknowledge
that you have been advised, as required by the ADEA, that:  (i) your waiver and
release do not apply to any rights or claims that may arise after the date that
you sign this Agreement; (ii) you should consult with an attorney prior to
signing this Agreement (although you may choose voluntarily not to do so);
(iii) you have twenty-one (21) days in which to consider this Agreement
(although you may choose voluntarily to sign it earlier); (iv) you have seven
(7) days following the date you sign this Agreement to revoke the Agreement (by
providing written notice of your revocation to the Board); and (v) this
Agreement will not be effective until the date upon which the revocation period
has expired, which will be the eighth day after the date that this Agreement is
signed by you provided that you do not revoke it.

(e)Waiver of Unknown Claims.  In giving the releases set forth in this
Agreement, which include claims which may be unknown to you at present, you
acknowledge that you have read and understand Section 1542 of the California
Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his or her favor at the
time of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”  You hereby expressly waive and
relinquish all rights and benefits under that section and any law or legal
principle of similar effect in any jurisdiction with respect to your release of
claims herein, including but not limited to the release of unknown and
unsuspected claims.

13.Representations.  You hereby represent that you have been paid all
compensation owed and for all hours worked, have received all the leave and
leave benefits and protections for which you are eligible pursuant to the
federal Family and Medical Leave Act, the California Family Rights Act, or any
other applicable law or Company policy, and you have not suffered any on-the-job
injury or illness for which you have not already filed a workers’ compensation
claim.

14.Section 409A.

(a)The payments and benefits provided under this Agreement are intended to be
exempt from, or comply with, the provisions of Section 409A of the Internal
Revenue Code of 1986, as amended and the regulations and other guidance
thereunder and any state law of similar effect (collectively “Section 409A”) and
this Agreement shall be interpreted accordingly.  Any payments and benefits
provided pursuant to this Agreement which constitute “deferred compensation”
within the meaning of the Treasury Regulations issued pursuant to Section 409A
that are paid or provided on termination of service shall not commence until you
have incurred a “separation from service,” as such term is defined in Section
409A (“Separation From Service”), unless the Company reasonably determines that
such amounts may be provided to you without causing you to incur the additional
20% tax under Section 409A.

(b)For purposes of Section 409A, your right to receive any installment payments
under this Agreement (whether severance payments, reimbursements or otherwise)
shall be treated as a right to receive a series of separate payments and,
accordingly, each

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 11

 

 

installment payment hereunder shall at all times be considered a separate and
distinct payment.  Notwithstanding any provision to the contrary in this
Agreement, if the Company (or, if applicable, the successor entity thereto)
determines that any payments upon your Separation From Service set forth herein
and/or under any other agreement with the Company constitute “deferred
compensation” under Section 409A and you are, on your Separation From Service, a
“specified employee” of the Company or any successor entity thereto, as such
term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the
extent necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of the payments upon your Separation
From Service shall be delayed until the earlier to occur of: (a) the date that
is six months and one day after your Separation From Service or (b) the date of
your death (such applicable date, the “Specified Employee Initial Payment
Date”).  On the Specified Employee Initial Payment Date, the Company (or the
successor entity thereto, as applicable) shall (A) pay you a lump sum amount
equal to the sum of the payments upon your Separation From Service that you
would otherwise have received through the Specified Employee Initial Payment
Date if the commencement of the payment of the severance benefits had not been
so delayed pursuant to this section and (B) commence paying the balance of the
severance benefits in accordance with the applicable payment schedules set forth
in this Agreement.

(c)With respect to reimbursements or in-kind benefits provided to you hereunder
(or otherwise) that are not exempt from Section 409A, the following rules shall
apply: (i) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during any one of your taxable years shall not affect the
expenses eligible for reimbursement, or in-kind benefit to be provided in any
other taxable year, (ii) in the case of any reimbursements of eligible expenses,
reimbursement shall be made on or before the last day of your taxable year
following the taxable year in which the expense was incurred, (iii) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit.  If payments or benefits hereunder are subject to
the execution of a valid release and the release revocation period could cross
two years, amounts will be paid or provided in the second of the two years, to
the extent necessary to avoid adverse tax treatment under Section 409A.

15.Indemnification and Insurance.   Your service during the Transition Period
and Board service shall each constitute service for which indemnification and
advancement of expenses is provided under the Indemnity Agreement dated as of
February 20, 2013, which shall remain in full force and effect, and you shall be
indemnified for your service during the Consulting Period to the maximum extent
permitted by law, the Company’s Certificate of Incorporation or Bylaws.  With
respect to your service during the Transition Period and your Board service, you
shall have coverage under a director’s and officer’s liability insurance policy
in amounts no less than and on terms no less favorable than those as provided to
other members of the Board and senior executive officers of the Company.  

16.Miscellaneous.  This Agreement, including its exhibits and together with your
signed At-Will Employment, Confidential Information, Invention Assignment and
Arbitration Agreement, constitutes the complete, final and exclusive embodiment
of the entire agreement between you and the Company with regard to its subject
matter.  It is entered into without reliance on any promise or representation,
written or oral, other than those expressly contained herein, and it supersedes
any other such promises, warranties or representations.  This Agreement may not
be modified or amended except in a written agreement signed by both you

 

 

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 12

 

 

and a duly authorized officer of the Company.  This Agreement will bind the
heirs, personal representatives, successors and assigns of both you and the
Company, and inure to the benefit of both you and the Company, and their heirs,
successors and assigns.  This Agreement shall not be terminated by the voluntary
or involuntary dissolution of the Company or by any merger or consolidation
where the Company is not the surviving corporation, or upon any transfer of all
or substantially all of the Company’s stock or assets.  In the event of such
merger, consolidation or transfer, the provisions of this Agreement shall be
binding upon and shall inure to the benefit of the surviving corporation or
corporation to which such stock or assets of the Company shall be
transferred.  As used in this Agreement, “Company” shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid.  If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other
provision of this Agreement and the provision in question shall be deemed
modified so as to be rendered enforceable in a manner consistent with the intent
of the parties, insofar as possible under applicable law.  Any ambiguity in this
Agreement shall not be construed against either party as the drafter.  Any
waiver of a breach of this Agreement, or rights hereunder, shall be in writing
and shall not be deemed to be a waiver of any successive breach or rights
hereunder.  This Agreement shall be deemed to have been entered into, and shall
be construed and enforced, in accordance with the laws of the State of
California without regard to conflicts of law principles.  This Agreement may be
executed in counterparts, each of which shall be deemed to be part of one
original, and facsimile and electronic signatures shall be equivalent to
original signatures.

If this Agreement is acceptable to you, please sign below on or within 21 days
after the date of this Agreement, and send me the fully signed Agreement.  If
you do not sign and return it to the Company within the aforementioned
timeframe, the Company’s offer to enter into this Agreement will expire.

Sincerely,

Nanometrics Incorporated

By:/s/ Janet Taylor

Janet Taylor

General Counsel

 

Understood and Agreed:

/s/ Timothy J. Stultz
Timothy J. Stultz

 

Date: 8-9-17___________________

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit A

Unvested RSUs and PSUs Held by You

As of August 9, 2017

 

Grant Date

Number of Shares

RSUs

2/8/2017

26,500

2/22/2016

30,000

2/24/2015

13,333

PSUs

2/8/2017

26,500

2/22/2016

30,000

3/18/2015

13,333

 

 

--------------------------------------------------------------------------------

 

Exhibit B

 

Retirement Date Release

 

(To be signed and returned on or within twenty-one (21) days after the
Retirement Date.)

 

In consideration for the benefits provided to me by Nanometrics Incorporated
(the “Company”) pursuant to the terms of the transition and consulting agreement
between me and the Company dated August 9, 2017 (the “Agreement”) which I would
otherwise not be entitled to receive, I hereby release Company, and its parents,
subsidiaries, successors, predecessors, and affiliated entities, and each of
such entities’ current or former officers, directors, agents, servants,
employees, partners, representatives, shareholders, attorneys, employee benefit
plans, successors, and assigns (collectively, the “Released Parties”), of and
from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, arising out of or in any way related to any agreements, events,
acts or conduct at any time prior to and including the date I sign this
Retirement Date Release (the “Release”) (collectively, the “Released
Claims”).  The Released Claims include, but are not limited to:  (i) all claims
arising out of or in any way related to my employment with the Company, or the
termination of that employment; (ii) all claims related to compensation or
benefits from the Company, including salary, bonuses, commissions, vacation,
paid time off, expense reimbursements, severance pay, fringe benefits, stock,
stock options, or any other ownership, equity, or profits interests in the
Company; (iii) all claims for breach of contract, wrongful termination, and
breach of the implied covenant of good faith and fair dealing; (iv) all tort
claims, including claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (v) all federal, state, and local
statutory claims, including claims for discrimination, harassment, retaliation,
attorneys’ fees, or other claims arising under the federal Civil Rights Act of
1964 (as amended), the federal Americans with Disabilities Act of 1990, the
federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”),
the Fair Labor Standards Act, the Employee Retirement Income Security Act of
1974, the Worker Adjustment and Retraining Notification Act, the California
Labor Code (as amended), and the California Fair Employment and Housing Act (as
amended).

 

The following are not included in the Released Claims (the “Excluded
Claims”):  (i) any rights or claims for indemnification I may have pursuant to
any written indemnification agreement with the Company to which I am a party or
under applicable law; (ii) any rights which cannot be waived as a matter of law;
(iii) any rights I have to file or pursue a claim for workers’ compensation or
unemployment insurance; and (iv) any claims for breach of this Agreement.  In
addition, I understand that nothing in this Agreement limits my ability to file
a charge or complaint with the Equal Employment Opportunity Commission, the
National Labor Relations Board, the Occupational Safety and Health
Administration, the Securities and Exchange Commission or any other federal,
state or local governmental agency or commission (“Government Agencies”).  I
further understand this Agreement does not limit my ability to communicate with
any Government Agencies or otherwise participate in any investigation or
proceeding that may be conducted by any Government Agency, including providing
documents or other information, without notice to the Company.  While this
Agreement does not limit my

 

--------------------------------------------------------------------------------

August 9, 2017
Timothy J, Stultz, Ph.D.

Page 2

 

 

right to receive an award for information provided to the Securities and
Exchange Commission, I understand and agree that, to maximum extent permitted by
law, I am otherwise waiving any and all rights I may have to individual relief
based on any claims that I have released and any rights I have waived by signing
this Agreement.  I represent and warrant that, other than the Excluded Claims, I
am not aware of any claims I have or might have against any of the Released
Parties that are not included in the Released Claims.

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA (“the “Release ADEA Waiver”), and that the
consideration given for the Release ADEA Waiver is in addition to anything of
value to which I am already entitled.  I further acknowledge that I have been
advised by this writing, as required by the ADEA, that:  (a) my waiver and
release does not apply to any rights or claims that may arise after the date I
sign this Release; (b) I should consult with an attorney prior to signing this
Release (although I may voluntarily decide not to do so); (c) I have twenty-one
(21) days to consider this Release (although I may choose voluntarily to sign
this Release sooner); (d) I have seven (7) days following the date I sign this
Release to revoke it (in a written revocation sent to and received by the
Company’s Board of Directors); and (e) this Release will not be effective until
the date upon which the revocation period has expired, unexercised, which will
be the eighth day after I sign it.

 

In giving the general release herein, which includes claims which may be unknown
to me at present, I acknowledge that I have read and understand Section 1542 of
the California Civil Code, which reads as follows:  “A general release does not
extend to claims which the creditor does not know or suspect to exist in his or
her favor at the time of executing the release, which if known by him or her
must have materially affected his or her settlement with the debtor.”  I hereby
expressly waive and relinquish all rights and benefits under that section and
any law or legal principle of similar effect in any other jurisdiction of with
respect to my release of claims contained herein, including but not limited to
the release of unknown and unsuspected claims.

I hereby confirm that I have been paid all salary and other compensation owed to
me for my services to the Company through the Retirement Date; I have received
all leave and leave-related benefits to which I was entitled during my
employment with the Company, pursuant to the federal Family and Medical Leave
Act, the California Family Rights Act, or any other applicable law or Company
policy; and I have not suffered any workplace injury or illness for which I have
not already filed a claim.

 

 

By:

Timothy J. Stultz

 

Date:

B-2