Exhibit 10.4

 

COHU, INC.

SEVERANCE AGREEMENT

 

THIS SEVERANCE AGREEMENT (the “Agreement”) is made and entered into as of
September 8, 2020 by and between Luis A. Müller (“Executive”) and Cohu, Inc., a
Delaware corporation (the “Company”).

 

WHEREAS, although the Company anticipates the continuation of a mutually
rewarding employment relationship with Executive, the Compensation Committee
(the “Committee”) of the Board of Directors of the Company (the “Board”)
believes that it is in the best interests of the Company and its stockholders to
provide Executive with certain assurances in the event of the occurrence of a
Qualifying Termination of Executive’s employment with the Company;

 

WHEREAS, the Committee anticipates that such assurances will provide Executive
with an incentive to continue employment and to motivate Executive to maximize
the value of the Company for the benefit of its stockholders; and

 

WHEREAS, certain capitalized terms used in this Agreement are defined in
Section 3.7 below;

 

NOW, THEREFORE, in consideration of the mutual covenants, promises and
obligations set forth herein, the parties agree as follows:

 

1.

Term.

 

This Agreement shall have a term commencing as of September 8, 2020 (the
“Effective Date”) and continuing until the third (3rd) anniversary thereof (the
“Initial Term”). The Initial Term shall be automatically extended for successive
two (2) year periods (each a “Renewal Term” and, together with the Initial Term
and each such Renewal Term, the “Term”), unless either party has delivered
written notice to the other party no later than six (6) months prior to the
completion of the then effective Term that this Agreement will not be extended.
For the avoidance of doubt, neither the lapse of this Agreement by its terms nor
non-renewal of this Agreement will by itself constitute termination of
employment nor grounds for resignation for Good Reason. Notwithstanding anything
herein to the contrary, if, during the then effective Term, Executive’s
employment with the Company has terminated as a result of a Qualifying
Termination or Executive has given written notice to the Company of an initial
event that would constitute Good Reason, this Agreement shall not terminate
until all payments and benefits, if any, have been provided to Executive in
accordance with this Agreement.

 

 

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2.

At-Will Employment.

 

Executive acknowledges and agrees that nothing in this Agreement shall be
construed to imply that Executive’s employment is guaranteed for any period of
time. Unless stated in a written agreement authorized by the Committee or the
Board and signed by an officer of the Company and Executive, Executive’s
employment is at-will, and either the Company or Executive may terminate the
employment relationship at any time with or without cause and with or without
notice.

 

3.

Termination of Employment.

 

3.1     Qualifying Termination. In the event of Executive’s Qualifying
Termination, Executive shall be entitled to receive the Accrued Amounts. In
addition, provided that Executive complies with the provisions of Section 5 and
executes a full general release of all claims, known or unknown, that Executive
may have against the Company, its affiliates and their respective officers and
directors in a form provided by the Company (the “Release”) which becomes
effective and irrevocable within sixty (60) days following the Termination Date
(such 60-day period, the “Release Execution Period”), Executive shall be
entitled to receive the following severance payments and benefits:

 

(a)     Base Salary Severance Benefit. An amount equal to 150% of Executive’s
Base Salary (disregarding any reduction in Base Salary that would constitute
Good Reason) shall be paid in cash in a single lump sum on the next regular
payroll date following the expiration of the Release Execution Period (but in no
event later than the lapsing of the Short-Term Deferral Period).

 

(b)     Health Care Benefit. Payment by the Company of the premiums required to
continue Executive’s group health care coverage for the same level of health
coverage and benefits as in effect for Executive on the day immediately
preceding the Termination Date for a period of eighteen (18) months following
the Termination Date (the “Premium Payment Period”) under the applicable
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”), provided that Executive elects to continue and remains
eligible for these benefits under COBRA and does not become eligible for health
coverage through another employer during this period. Notwithstanding the
foregoing, if the Company determines, in its reasonable discretion, that the
payment of the premiums would result in a violation of the nondiscrimination
rules of Section 105(h)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”) or any statute or regulation of similar effect (including but not
limited to the 2010 Patient Protection and Affordable Care Act, as amended by
the 2010 Health Care and Education Reconciliation Act), then, in lieu of paying
such premiums, the Company, in its sole discretion, may elect to instead pay
Executive on the first day of each month during the Premium Payment Period, a
fully taxable cash payment (the “Special Separation Payment”) equal to the
premiums for that month, grossed up to cover all applicable withholdings, so
that the net benefit to Executive equals the monthly premiums, for the remainder
of the Premium Payment Period. The Special Separation Payments will cease should
Executive elect to cease, or become ineligible for, continued health care
coverage under COBRA.

 

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(c)     Equity Award Treatment. The treatment of any outstanding equity award
held by Executive shall be determined in accordance with the terms of the
applicable equity incentive plan and the applicable equity award agreement.

 

3.2     Non-Qualifying Termination. In the event of Executive’s Non-Qualifying
Termination, Executive shall be entitled to receive only the Accrued Amounts.
However, in the event that Executive’s employment terminates due to Executive’s
death, and subject to execution by Executive’s personal representative on behalf
of Executive’s estate of a Release which becomes effective and irrevocable
during the Release Execution Period, the Company shall pay to the Executive’s
estate a Prorated Bonus for the year in which the Executive dies in a single
lump sum as soon as reasonably practicable following the expiration of the
Release Execution Period (but in no event later than the lapsing of the
Short-Term Deferral Period).

 

3.3     Notice of Termination. Any termination of Executive’s employment
hereunder by the Company or by Executive during the Term (other than termination
on account of Executive’s death) shall be communicated by written notice of
termination (“Notice of Termination”) to the other party hereto in accordance
with Section 10.7. The Notice of Termination shall specify:

 

(a)     the facts and circumstances claimed to provide a basis for termination
of Executive’s employment; and

 

(b)     the applicable Termination Date.

 

3.4     Resignation of All Other Positions. The termination of Executive’s
employment for any reason will be deemed to constitute, without further required
action by Executive, voluntary resignation by Executive, effective on the
Termination Date, from all positions that Executive holds as an officer or
member of the board of directors (or a committee thereof) of the Company or any
of its affiliates. At the Board’s request, Executive will execute any documents
reasonably necessary to reflect such resignation.

 

3.5     Mitigation. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement and, except as
provided in Section 3.1(b) (providing for health care continuation benefits
under COBRA), any amounts payable pursuant to this Section 3 shall not be
reduced by compensation Executive earns on account of employment with another
employer.

 

3.6     Section 280G.

 

(a)     If any payments and other benefits provided for in this Agreement or
otherwise (collectively, the “Payments”) would, either separately or in the
aggregate, constitute “parachute payments” within the meaning of Section 280G of
the Code and, but for this Section 3.6, would be subject to the excise tax
imposed by Section 4999 of the Code, then the Payments will be payable to
Executive either in full or in such lesser amounts as would result, after taking
into account the applicable federal, state and local income taxes and the excise
tax imposed by Section 4999, in Executive’s receipt on an after-tax basis of the
greatest amount of Payments. If a reduction in Payments is required pursuant to
this Section 3.6, Payments shall be reduced in the following order:
(i) reduction or elimination of cash severance benefits that are subject to
Section 409A of the Code; (ii) reduction or elimination of cash severance
benefits that are not subject to Section 409A of the Code; (iii) cancellation or
reduction of accelerated vesting of equity awards that are not stock options or
stock appreciation rights; (iv) cancellation or reduction of accelerated vesting
of stock options and stock appreciation rights; and (v) reduction or elimination
of other Payments. Any reduction of cash severance benefits or other cash
Payments shall be made in reverse chronological order such that the cash payment
owed on the latest date following the occurrence of the event triggering such
excise tax will be the first cash payment to be reduced. Any reduction of
accelerated vesting of equity award compensation shall be made in the reverse
order of the date of grant so that the accelerated vesting of the most recently
granted equity award will be reduced first. In no event shall Executive have any
discretion with respect to the ordering of payment or benefits reductions.
Executive will be solely responsible for the payment of all personal tax
liability incurred as a result of the payments and benefits received under this
Agreement, and Executive will not be reimbursed by the Company for any such tax
liability.

 

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(b)     All calculations and determinations under this Section 3.6 shall be made
by an independent accounting firm or independent tax counsel appointed by the
Company (the “Tax Counsel”) whose determinations shall be conclusive and binding
on the Company and Executive for all purposes. For purposes of making the
calculations and determinations required by this Section 3.6, the Tax Counsel
may rely on reasonable, good faith assumptions and approximations concerning the
application of Section 280G and Section 4999 of the Code. The Company and
Executive shall furnish the Tax Counsel with such information and documents as
the Tax Counsel may reasonably request in order to make its determinations under
this Section 3.6. The Company shall bear all costs the Tax Counsel may
reasonably incur in connection with its services hereunder. The Company will
have no liability to Executive for the determinations of the Tax Counsel.

 

3.7     Definitions of Certain Terms. Certain capitalized terms not otherwise
defined by this Agreement shall have the following meanings:

 

(a)     “Accrued Amounts” mean, collectively:

 

 

(i)

any accrued but unpaid Base Salary prorated to the Termination Date and accrued
but unused vacation, both of which shall be paid on the Termination Date in
accordance with the Company’s customary payroll procedures;

 

 

(ii)

reimbursement of unreimbursed business expenses properly incurred by Executive,
which shall be subject to, and paid in accordance with, the Company’s expense
reimbursement policy; and

 

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(iii)

such employee benefits (including equity compensation), if any, to which
Executive may be entitled under the Company’s employee benefit plans as of the
Termination Date.

 

(b)     “Base Salary” means Executive’s annual base salary at the rate in effect
immediately prior to the Termination Date (disregarding any reduction in Base
Salary that would constitute Good Reason).

 

(c)     “Cause” means:

 

 

(i)

Executive’s willful and continued failure to perform the duties and
responsibilities of his/her position (other than as a result of Executive’s
illness or injury) after there has been delivered to Executive a written demand
for performance from the Board which describes the basis for the Board’s belief
that Executive has not substantially performed his/her duties and provides
Executive with thirty (30) days to take corrective action;

 

 

(ii)

Any material act of personal dishonesty taken by Executive in connection with
his/her responsibilities as an employee of the Company with the intention that
such action may result in the substantial personal enrichment of Executive;

 

 

(iii)

Executive’s conviction of, or plea of nolo contendere to, a felony that the
Board reasonably believes has had or will have a material detrimental effect on
the Company’s reputation or business;

 

 

(iv)

A willful breach of any fiduciary duty owed to the Company by Executive that the
Board reasonably believes has had, or will have, a material detrimental effect
on the Company’s reputation or business;

 

 

(v)

Executive being found liable in any Securities and Exchange Commission or other
civil or criminal securities law action (regardless of whether or not Executive
admits or denies liability), which the Board determines, in its reasonable
discretion, has had, or will have, a material detrimental effect on the
Company’s reputation or business;

 

 

(vi)

Executive entering any cease and desist order with respect to any action which
would bar Executive from service as an executive officer or member of a board of
directors of any publicly-traded company (regardless of whether or not Executive
admits or denies liability);

 

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(vii)

Executive (A) obstructing or impeding; (B) endeavoring to obstruct or impede, or
(C) failing to materially cooperate with, any investigation authorized by the
Board or any governmental or self-regulatory entity. However, Executive’s
failure to waive attorney-client privilege relating to communications with
Executive’s own attorney in connection with any such investigation will not
constitute “Cause”;

 

 

(viii)

Executive’s disqualification or bar by any governmental or self-regulatory
authority from serving in the capacity in which Executive is then employed by
the Company, if (A) the disqualification or bar continues for more than thirty
(30) days, and (B) during the initial thirty (30) day period (“Initial Bar
Period”) the Company uses its commercially reasonable efforts to cause the
disqualification or bar to be lifted. During the Initial Bar Period, the Board
may have Executive serve in his/her then-current capacity with the Company to
whatever extent legally permissible or Executive will be placed on paid
administrative leave, at the discretion of the Board. If the bar is not lifted
within or immediately following the Initial Bar Period, Executive’s employment
shall terminate for Cause;

 

 

(ix)

any material failure by Executive to comply with the Company’s written policies
or rules, as they may be in effect from time to time during the Term, if such
failure has caused, or will cause, material reputational or financial harm to
the Company; or

 

 

(x)

Executive’s material breach of this Agreement or the Company’s Confidentiality
and Inventions Agreement.

 

For purposes of this provision, no act or failure to act on the part of
Executive shall be considered “willful” unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that Executive’s
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interests of the Company.

 

(d)     “Change in Control Agreement” means the Change in Control Agreement
between Executive and the Company, dated as of September 8, 2020 and as amended
from time to time.

 

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(e)     “Good Reason” means the occurrence of any of the following, in each case
during the Term without Executive’s written consent:

 

 

(i)

a material reduction in Executive’s Base Salary, other than a general reduction
in Base Salary that affects all similarly situated executives in substantially
the same proportions;

 

 

(ii)

a material reduction in Executive’s Target Bonus opportunity;

 

 

(iii)

a material reduction in Executive’s overall responsibilities, authority or scope
of duties (other than temporarily while Executive is physically or mentally
incapacitated or as required by applicable law);

 

 

(iv)

any material breach by the Company of any material provision of this Agreement;

 

 

(v)

the Company’s failure to nominate Executive for election to the Board and to use
its best efforts to have him elected and re-elected, as applicable;

 

 

(vi)

a material change in the geographic location at which Executive must perform
his/her services; provided that in no instance will the relocation of Executive
to a facility or a location that increases Executive’s commute by fifty (50)
miles or less be deemed material for purposes of this Agreement.

 

Before Executive may resign for Good Reason, (A) Executive must provide the
Company with written notice within ninety (90) days of the initial event that
Executive believes constitutes “Good Reason” specifically identifying the facts
and circumstances claimed to constitute the grounds for Executive’s resignation
for Good Reason and the proposed termination date (which will be the date thirty
(30) days after the giving of written notice hereunder by Executive to the
Company), and (B) the Company must have an opportunity within thirty (30) days
following delivery of such notice to cure the Good Reason condition, provided
that the Company may waive such cure period by giving written notice to
Executive that it does not intend to cure such condition. The failure by
Executive to include in the notice any fact or circumstance that contributes to
a showing of Good Reason will not waive any right of Executive under the
Agreement or preclude Executive from asserting such fact or circumstance in
enforcing Executive’s rights under the Agreement. Notwithstanding the foregoing,
if Executive is determined to have a disability, and if Company offers Executive
the opportunity to remain employed in a different capacity that accommodates
Executive’s disability, with different duties and compensation structure in lieu
of termination, such change in responsibilities and compensation shall not
constitute Good Reason.

 

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(f)     “Non-Qualifying Termination” means any termination of Executive’s
employment with the Company which is not a Qualifying Termination.

 

(g)     “Notice Period” means a period of thirty (30) days commencing on the
date of delivery of a Notice of Termination.

 

(h)     “Prorated Bonus” means an amount equal to a prorated portion of
Executive’s Target Bonus (disregarding any reduction in Target Bonus that would
constitute Good Reason) for the fiscal year in which the date of Executive’s
death occurs. Such prorated portion shall be determined by multiplying the
foregoing Target Bonus by a fraction, the numerator of which is equal to the
number of days between the start of such fiscal year and the date of Executive’s
death and the denominator of which is equal to 365. The actual annual incentive
bonus for the fiscal year of Executive’s termination of employment due to death
shall be forfeited, and Executive’s estate shall not be entitled to any payment
thereof.

 

(i)     “Qualifying Termination” means the occurrence of either (i) termination
by the Company of Executive’s employment with the Company for any reason other
than Cause or (ii) Executive’s resignation from employment with the Company for
Good Reason; provided, however that a Qualifying Termination shall not include
any termination of Executive’s employment which is (x) on account of Executive’s
death or disability, or (y) a result of Executive’s voluntary termination of
employment which is not a resignation for Good Reason.

 

(j)     “Severance Benefit Period” means a period of eighteen (18) months
following the Termination Date.

 

(k)     “Short-Term Deferral Period” means a period determined in accordance
with Treasury Regulation Section 1.409A-1(b)(4) beginning on the Termination
Date with respect to a Qualifying Termination of Executive and ending on the
15th day of the third month following the later of (i) the last day of the
calendar year or (ii) the last day of the Company’s taxable year in which, in
either case, the Termination Date occurs.

 

(l)     “Target Bonus” means the target amount of Executive’s annual incentive
bonus, assuming achievement of all Company performance goals and individual
performance goals at their target levels in accordance with the Company’s annual
bonus plan and as established by the Committee.

 

(m)     “Termination Date” means:

 

 

(i)

if the Company terminates Executive’s employment without Cause, the date
specified in the Notice of Termination, which shall be the day immediately
following completion of the Notice Period commencing on the date on which the
Notice of Termination is delivered to Executive; provided that the Company shall
have the option to relieve Executive of all job duties, positions and
responsibilities for all or any part of the Notice Period and provide Executive
with payment of Executive’s then current Base Salary in lieu of any portion of
the Notice Period for which Executive is so relieved of duty, which amount shall
be paid in a lump sum on Executive’s Termination Date, and, in such case, for
all purposes of this Agreement, Executive’s Termination Date shall be the date
on which such Notice of Termination is delivered; and

 

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(ii)

if Executive terminates his/her employment with or without Good Reason, the date
specified in Executive’s Notice of Termination, which shall be the day
immediately following completion of the Notice Period commencing on the date on
which the Notice of Termination is delivered to the Company; provided that the
Company may waive all or any part of the Notice Period by giving written notice
of such waiver to Executive and paying Executive’s then current Base Salary in
lieu of the portion of the Notice Period waived, which amount shall be paid in a
lump sum on Executive’s Termination Date, and, in such case, for all purposes of
this Agreement, Executive’s Termination Date shall be the date determined by the
Company.

 

Notwithstanding anything contained herein to the contrary, the Termination Date
shall not occur until the date on which Executive incurs a “separation from
service” within the meaning of Section 409A of the Code.

 

4.

Exclusive Remedy.

 

Except for any additional payments and benefits pursuant to the Change in
Control Agreement, the provisions of Section 3 of this Agreement are intended to
be and are exclusive and in lieu of any other rights or remedies to which
Executive may otherwise be entitled in the event of Executive’s Qualifying
Termination. In such circumstances, Executive shall be entitled to no benefits,
compensation or other payments or rights upon termination of employment other
than those benefits expressly set forth in Section 3.1. For the avoidance of
doubt, in the event Executive becomes entitled to receive benefits under the
Change in Control Agreement, if applicable, that agreement shall govern, and
Executive shall be paid benefits solely under that agreement and in lieu of any
benefits under this Agreement.

 

5.

Conditions to Receipt of Severance Benefits.

 

In addition to Executive’s Release becoming effective and irrevocable no later
than the expiration of the Release Execution Period, Executive’s entitlement to
the severance payments and benefits set forth in Section 3.1 shall be subject to
Executive’s compliance with all of the following:

 

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5.1     Confidentiality and Proprietary Rights. Executive is party to a certain
Confidentiality and Inventions Agreement dated July 28, 2005. Executive shall
continue to abide by his/her obligations under the Confidentiality and
Inventions Agreement, which is attached as Exhibit A hereto and incorporated
herein by reference.

 

5.2     Non-Solicitation of Employees. Executive agrees that during the
Severance Benefit Period, Executive will not, either directly or indirectly,
separately or in association with others, interfere with, impair, disrupt or
damage Company’s business by soliciting, encouraging or recruiting any of
Company’s employees or causing others to solicit or encourage any of Company’s
employees to discontinue their employment with Company.

 

5.3     Non-Disparagement. Executive agrees and covenants that Executive will
not at any time during the Severance Benefit Period make, publish or communicate
to any person or entity or in any public forum any defamatory or disparaging
remarks, comments or statements concerning the Company or its businesses, or any
of its employees, officers, and existing and prospective customers, suppliers,
investors and other associated third parties.

 

This Section 5.3 does not, in any way, restrict or impede Executive from
exercising protected rights to the extent that such rights cannot be waived by
agreement or from complying with any applicable law or regulation or a valid
order of a court of competent jurisdiction or an authorized government agency,
provided that such compliance does not exceed that required by the law,
regulation or order. Executive shall promptly provide written notice of any such
order to the chief legal officer of the Company.

 

5.4     Remedies. In the event of a breach or threatened breach by Executive of
the covenants contained in this Section 5, Executive hereby consents and agrees
that the Company shall be entitled to seek, in addition to other available
remedies, a temporary or permanent injunction or other equitable relief against
such breach or threatened breach from any court of competent jurisdiction,
without the necessity of showing any actual damages or that money damages would
not afford an adequate remedy, and without the necessity of posting any bond or
other security. The aforementioned equitable relief shall be in addition to, not
in lieu of, legal remedies, monetary damages or other available forms of relief.

 

5.5     Survival of Provisions. The provisions of this Section 5 shall survive
the termination or expiration of Executive’s employment with the Company and
shall be fully enforceable thereafter. If it is determined by a court of
competent jurisdiction in any state that any restriction in this Section 5 is
excessive in duration or scope or is unreasonable or unenforceable under the
laws of that state, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum
extent permitted by the law of that state.

 

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6.

Recoupment.

 

Notwithstanding any other provisions in this Agreement to the contrary, any
incentive-based compensation, or any other compensation, paid to Executive
pursuant to this Agreement or any other agreement or arrangement with the
Company which is subject to recovery under any law, government regulation or
stock exchange listing requirement, will be subject to such deductions and
recoupment as may be required to be made pursuant to such law, government
regulation or stock exchange listing requirement (or any policy adopted by the
Company pursuant to any such law, government regulation or stock exchange
listing requirement). Executive specifically authorizes the Company to withhold
from his/her future wages or amounts otherwise payable under this Agreement any
amounts that may become due under this provision. This Section 6 shall survive
the termination of this Agreement for a period equal to the greater of (a) three
(3) years and (b) such longer period required by the applicable law, government
regulation, order or stock exchange listing requirement.

 

7.

Successors.

 

7.1     Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
(a “Successor”) shall assume the Company’s obligations under this Agreement and
agree expressly to perform the Company’s obligations under this Agreement in the
same manner and to the same extent as the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this
Agreement, the term “Company” shall include any Successor which executes and
delivers the assumption agreement described in this Section 7.1 or which becomes
bound by the terms of this Agreement by operation of law.

 

7.2     Executive’s Successors. The terms of this Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

 

8.

Arbitration.

 

The Company and Executive each agree that any and all disputes arising out of
the terms of this Agreement, Executive’s employment by the Company, Executive’s
service as an officer or director of the Company, or Executive’s compensation
and benefits, their interpretation and any of the matters herein released, will
be subject to binding arbitration. In the event of a dispute, the parties (or
their legal representatives) will promptly confer to select a single arbitrator
mutually acceptable to both parties. If the parties cannot agree on an
arbitrator, then the moving party may file a demand for arbitration with the
American Arbitration Association (“AAA”) in San Diego County, California, who
will be selected and appointed consistent with the AAA-Employment Dispute
Resolution Rules, except that such arbitrator must have the qualifications set
forth in this paragraph. Any arbitration will be conducted in a manner
consistent with AAA National Rules for the Resolution of Employment Disputes,
supplemented by the California Rules of Civil Procedure. The parties further
agree that the prevailing party in any arbitration will be entitled to
injunctive relief in any court of competent jurisdiction to enforce the
arbitration award. The parties hereby agree to waive their right to have any
dispute between them resolved in a court of law by a judge or jury. This
paragraph will not prevent either party from seeking injunctive relief (or any
other provisional remedy) from any court having jurisdiction over the parties
and the subject matter of their dispute relating to Executive’s obligations
under Section 5 of this Agreement and the Company’s form of Confidentiality and
Inventions Agreement.

 

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9.

Section 409A.

 

9.1     General Compliance. The Company intends that all payments and benefits
provided under this Agreement will be exempt from, or comply with, the
requirements of Section 409A of the Code (“Section 409A”) so that none of the
payments and benefits will be subject to the additional tax imposed by
Section 409A, and this Agreement shall be construed and administered in
accordance with such intent. Notwithstanding any other provision of this
Agreement, payments provided under this Agreement may only be made upon an event
and in a manner that complies with Section 409A or an applicable exemption. Any
payments under this Agreement that may be excluded from Section 409A either as
separation pay due to an involuntary separation from service described in
Treasury Regulation Section 1.409A-1(b)(9)(iii) or as a short-term deferral
described in Treasury Regulation Section 1.409A-1(b)(4) shall be excluded from
Section 409A to the maximum extent possible. For purposes of Section 409A, each
installment payment provided under this Agreement shall be treated as a separate
payment. Any payments to be made under this Agreement upon a termination of
employment shall only be made upon a “separation from service” under Section
409A. The Company reserves the right to amend this Agreement as it considers
necessary or advisable, in its sole discretion and without the consent of
Executive or any other individual, to comply with any provision required to
avoid the imposition of the additional tax imposed under Section 409A or to
otherwise avoid income recognition under Section 409A prior to the actual
payment of any benefits or imposition of any additional tax. Notwithstanding the
foregoing, the Company makes no representations that the payments and benefits
provided under this Agreement comply with Section 409A, and in no event shall
the Company be liable for all or any portion of any taxes, penalties, interest
or other expenses that may be incurred by Executive on account of non-compliance
with Section 409A.

 

9.2     Specified Employees. Notwithstanding any other provision of this
Agreement, if any payment or benefit provided to Executive in connection with
Executive’s termination of employment is determined to constitute “nonqualified
deferred compensation” within the meaning of Section 409A and Executive is
determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i),
then such payment or benefit shall not be paid until the first payroll date to
occur following the six-month anniversary of the Termination Date (the
“Specified Employee Delay”) or, if earlier, on Executive’s death. The aggregate
of any payments that would otherwise have been paid during the Specified
Employee Delay shall be paid to Executive in a lump sum on completion of the
Specified Employee Delay and thereafter, any remaining payments shall be paid
without delay in accordance with their original schedule.

 

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9.3     Reimbursements. To the extent required by Section 409A, each
reimbursement or in-kind benefit provided under this Agreement shall be provided
in accordance with the following:

 

(a)     the amount of expenses eligible for reimbursement, or in-kind benefits
provided, during each calendar year cannot affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(b)     any reimbursement of an eligible expense shall be paid to Executive on
or before the last day of the calendar year following the calendar year in which
the expense was incurred; and

 

(c)     any right to reimbursements or in-kind benefits under this Agreement
shall not be subject to liquidation or exchange for another benefit.

 

10.

General Provisions.

 

10.1     Modification and Waiver. No provision of this Agreement may be amended
or modified unless such amendment or modification is agreed to in writing by
Executive and the Compensation Committee of the Board of Directors of the
Company. No waiver by either of the parties of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by the
other party hereto shall be deemed a waiver of any similar or dissimilar
provision or condition at the same or any prior or subsequent time, nor shall
the failure of or delay by either of the parties in exercising any right, power
or privilege hereunder operate as a waiver thereof to preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege.

 

10.2     Unfunded Obligation. Any amounts payable to Executive pursuant to this
Agreement are unfunded obligations. The Company shall not be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any
account shall not create or constitute a trust or fiduciary relationship between
the Board or the Company and Executive, or otherwise create any vested or
beneficial interest in Executive or Executive’s creditors in any assets of the
Company.

 

10.3     Attorneys’ Fees. Each party will bear its own attorneys’ fees in any
dispute unless a statutory section at issue, if any, authorizes the award of
attorneys’ fees to the prevailing party.

 

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10.4     Severability. In the event any provision of this Agreement is found to
be unenforceable by an arbitrator or court of competent jurisdiction, such
provision shall be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent
permitted by law. If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.

 

10.5     Interpretation; Construction. The headings set forth in this Agreement
are for convenience only and shall not be used in interpreting this Agreement.
This Agreement has been drafted by legal counsel representing the Company, but
Executive has participated in the negotiation of its terms. Furthermore,
Executive acknowledges that Executive has had an opportunity to review and
revise the Agreement and have it reviewed by legal counsel, if desired, and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.

 

10.6     Governing Law: Jurisdiction and Venue. This Agreement, for all
purposes, shall be construed in accordance with the laws of the State of
California without regard to its conflicts of law principles. Other than as
required pursuant to Section 8, any action or proceeding by either of the
parties to enforce this Agreement shall be brought only in a state or federal
court located in the State of California, County of San Diego. For purposes of
litigating any dispute that arises directly or indirectly from the relationship
of the parties pursuant to this Agreement that is not subject to arbitration
pursuant to Section 8, the parties hereby irrevocably submit to the exclusive
jurisdiction of such courts and waive the defense of inconvenient forum to the
maintenance of any such action or proceeding in such venue.

 

10.7     Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be delivered as follows with notice deemed given as indicated:
(a) by personal delivery when delivered personally; (b) by overnight courier
upon written verification of receipt; (c) by telecopy or facsimile transmission
upon acknowledgment of receipt of electronic transmission; or (d) by certified
or registered mail, return receipt requested, upon verification of receipt.
Notice shall be sent to the address as either party may specify in writing.

 

10.8     Withholding. The Company shall have the right to withhold from any
amount payable hereunder any Federal, state and local taxes in order for the
Company to satisfy any withholding tax obligation it may have under any
applicable law or regulation.

 

10.9     Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

 

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11.

Entire Agreement.

 

This Agreement supersedes the agreement dated December 28, 2014 (the “Prior
Agreement”), and such Prior Agreement is null and void. Unless specifically
provided by Section 4 of this Agreement or otherwise provided herein, this
Agreement contains all of the understandings and representations between
Executive and the Company pertaining to the subject matter hereof and supersedes
all prior and contemporaneous understandings, agreements, representations and
warranties, both written and oral, with respect to such subject matter. The
parties mutually agree that the Agreement can be specifically enforced in court
and can be cited as evidence in legal proceedings alleging breach of the
Agreement.

 

12.

Acknowledgment of Full Understanding.

 

EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS FULLY READ, UNDERSTANDS AND
VOLUNTARILY ENTERS INTO THIS AGREEMENT. EXECUTIVE ACKNOWLEDGES AND AGREES THAT
HE/SHE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF
HIS/HER CHOICE BEFORE SIGNING THIS AGREEMENT.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

EXECUTIVE

 

 

 

 

 

Dated: 09/08/2020               

By: /s/ Luis A. Müller

 

 

Name: 

Luis A. Müller

 

 

Address:

12367 Crosthwaite Circle

 

    Poway, CA 92064                     COMPANY             Cohu, Inc.          
  Dated: 09/08/2020                By: /s/ Steven J. Bilodeau     Name: Steven
J. Bilodeau     Title: Chair, Compensation Committee             Address: 12367
Crosthwaite Circle       Poway, CA 92064  

              

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EXHIBIT A

 

 

 

Cohu, Inc.

 

Confidentiality and Inventions Agreement

 

 

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