Exhibit 10.1

 

Executive Succession Agreement

 

This Executive Succession Agreement (the “Agreement”), dated November 5, 2004,
is between CREDENCE SYSTEMS CORPORATION (the “Company”) and GRAHAM J. SIDDALL
(“Executive”).

 

I. POSITION AND RESPONSIBILITIES

 

A. Term and Positions. Executive shall remain employed with the Company until
December 31, 2007 (the “Term”). Until January 1, 2005, Executive shall continue
serving in the capacity of Chief Executive Officer on a full-time basis.
Effective January 1, 2005, Executive shall cease serving as Chief Executive
Officer but shall remain employed with the Company in the position of Executive
Chairman on a part-time basis. If Executive resigns as Chairman of the Company’s
Board of Directors and resigns from his membership on the Board of Directors
during the Term, or if Executive is required to resign or otherwise removed from
the Board during the Term, he shall remain employed by the Company for the
remainder of the Term, with the responsibilities set forth in Exhibit A to this
Agreement.

 

B. Duties. Executive shall perform such duties and responsibilities as are
normally related to his assigned positions in accordance with the standards of
the industry and any additional duties now or hereafter assigned to Executive by
the Company and its Board of Directors. Executive shall abide by the rules,
regulations, and practices as adopted or modified from time to time in the
Company’s sole discretion.

 

C. Other Activities. Except upon the prior written consent of the Company,
Executive will not, during the Term, (i) accept any other employment, or (ii)
engage, directly or indirectly, in any other business activity (whether or not
pursued for pecuniary advantage) that might interfere with Executive’s duties
and responsibilities hereunder or create a conflict of interest with the
Company.

 

D. No Conflict. Executive represents and warrants that his execution of this
Agreement, his employment with the Company, and the performance of his proposed
duties under this Agreement shall not violate any obligations he may have to any
other employer, person or entity, including any obligations with respect to
proprietary or confidential information of any other person or entity.

 

II. COMPENSATION AND BENEFITS

 

A. Base Salary. In consideration of the services to be rendered under this
Agreement, the Company shall pay Executive an annual base salary of Four Hundred
and Thirty-Six Thousand Dollars ($436,000) (“Base Salary”). The Base Salary
shall be paid in accordance with the Company’s regularly established payroll
practice.

 

B. Bonus. For fiscal years 2005, Executive shall be eligible for an annual
target incentive bonus equal to One Hundred Percent (100%) of his then-current
Base

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Salary (“Target Bonus”). During fiscal year 2005, Executive shall receive the
percentage of his Target Bonus that equals the percentage of Target Bonus earned
by the Company’s Chief Executive Officer for the year, subject to a minimum
payment of Fifty Percent (50%) of his Target Bonus. After the end of fiscal year
2005, Executive shall cease to be eligible for any bonus compensation.

 

C. Merger Success Bonus. Executive shall be eligible to receive a one-time
lump-sum bonus of Four Hundred and Fifty Thousand Dollars ($450,000), which
shall be payable in cash or restricted stock at the Company’s election on May
28, 2005 (“Closing Date”) (the “Merger Success Bonus”). Except as specifically
provided herein, Executive must remain employed with the Company on the
scheduled payment date in order to be entitled to this bonus payment.

 

D. Benefits. Executive shall be eligible to participate in the benefits made
generally available by the Company to similarly-situated executives, subject to
the terms of the benefit plans established by the Company, and as may be amended
from time to time in the Company’s sole discretion. In the event that a
Company-approved reduction in Executive’s working hours causes Executive to
cease to be eligible for coverage under the Company’s health plans during the
Term, Executive may elect to convert his health coverage under COBRA and the
Company shall pay Executive’s COBRA premiums for the remainder of the Term.

 

E. Expenses. The Company shall reimburse Executive for reasonable business
expenses incurred in the performance of Executive’s duties hereunder in
accordance with the Company’s expense reimbursement guidelines.

 

III. AT-WILL EMPLOYMENT; TERMINATION BY COMPANY

 

A. At-Will Termination by Company. Executive’s employment with the Company shall
be “at-will” at all times. The Company may terminate Executive’s employment with
the Company at any time, without any advance notice, for any reason or no reason
at all, notwithstanding anything to the contrary contained in or arising from
any statements, policies or practices of the Company relating to the employment,
discipline or termination of its employees. Upon and after such termination, all
obligations of the Company under this Agreement shall cease, except as otherwise
provided herein.

 

B. Separation Benefits. Except in situations where the employment of Executive
is terminated For Cause or By Disability, Executive will be eligible to receive
the following Separation Benefits if his employment is terminated prior to the
end of the Term:

 

1. continued payment of Executive’s Base Salary for the remainder of the Term
(the “Salary Continuation Period”), less applicable withholdings, and payment of
any bonus to which Executive would otherwise be entitled under Section II. B.
hereof, less applicable withholdings;

 

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2. the Merger Success Bonus, if not previously paid to Executive;

 

3. continued vesting of Executive’s stock options until the earlier of (a) the
end of the Salary Continuation Period or (b) the date Executive begins other
employment, and a period of twelve (12) months thereafter to exercise such
vested options;

 

4. if Executive elects to continue his medical coverage under COBRA, the Company
shall pay the premiums for Executive’s COBRA coverage until the earlier of (a)
the end of the Salary Continuation Period or (b) the date Executive becomes
covered under another employer’s health plan; and

 

5. continued payment of the premiums required to maintain Executive’s coverage
under his Company-provided life insurance policy until the end of the Salary
Continuation Period.

 

Notwithstanding the foregoing, if Executive begins other employment during the
Salary Continuation Period, all vesting of Executive’s stock options shall cease
and Executive shall receive an accelerated lump-sum payment of the remaining
payments for the Salary Continuation Period, in lieu of salary continuation.
Executive shall not be eligible to participate in the Company’s deferred
compensation, 401K, or employee stock purchase plans during the Salary
Continuation Period.

 

Executive’s eligibility for the foregoing Separation Benefits is conditioned on
(a) Executive remaining available during the Salary Continuation Period to
consult with the Company regarding matters for which he previously had
responsibility as a Company executive; (b) Executive having first signed a
release agreement in the form attached as Exhibit A, and (c) Executive’s
agreement not to compete with the Company, or its successors or assigns, during
the Salary Continuation Period. If Executive engages in any business activity
competitive with the Company or its successors or assigns during the Salary
Continuation Period, all Separation Benefits immediately shall cease.

 

IV. OTHER TERMINATIONS BY COMPANY

 

A. Termination for Cause. For purposes of this Agreement, “For Cause” shall
mean: (i) Executive commits a crime involving dishonesty, breach of trust, or
physical harm to any person; (ii) Executive willfully engages in conduct that is
in bad faith and materially injurious to the Company, including but not limited
to, misappropriation of trade secrets, fraud or embezzlement; (iii) Executive
commits a material breach of this Agreement, which breach is not cured within
twenty days after written notice to Executive from the Company; (iv) Executive
willfully refuses to implement or follow a lawful policy or directive of the
Company, which breach is not cured within twenty days after written notice to
Executive from the Company; or (v) Executive engages in misfeasance or
malfeasance demonstrated by a pattern of failure to perform job duties
diligently and professionally. The Company may terminate Executive’s employment
For Cause at any time, without any advance notice. The

 

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Company shall pay to Executive all compensation to which Executive is entitled
up through the date of termination, subject to any other rights or remedies of
the Company under law; and thereafter all obligations of the Company under this
Agreement shall cease.

 

B. By Disability. If Executive becomes eligible for the Company’s long term
disability benefits or if, in the sole opinion of the Company, Executive is
unable to carry out the responsibilities and functions of the position held by
Executive by reason of any physical or mental impairment for more than ninety
consecutive days or more than one hundred and twenty days in any twelve-month
period, then, to the extent permitted by law, the Company may terminate
Executive’s employment. The Company shall pay to Executive all compensation to
which Executive is entitled up through the date of termination, and thereafter
all obligations of the Company under this Agreement shall cease. Nothing in this
Section shall affect Executive’s rights under any disability plan in which
Executive is a participant.

 

V. TERMINATION BY EXECUTIVE

 

Executive may terminate his employment with the Company at any time for any
reason or no reason at all, upon four (4) weeks’ advance written notice. During
such notice period Executive shall continue to diligently perform all of his
duties hereunder. The Company shall have the option, in its sole discretion, to
make Executive’s termination effective at any time prior to the end of such
notice period as long as the Company pays Executive all compensation to which
Executive is entitled up through the last day of the four (4) week notice
period. Thereafter all obligations of the Company shall cease.

 

VI. TERMINATION OBLIGATIONS

 

A. Return of Property. Executive agrees that all property (including without
limitation all equipment, tangible proprietary information, documents, records,
notes, contracts and computer-generated materials) furnished to or created or
prepared by Executive incident to Executive’s employment belongs to the Company
and shall be promptly returned to the Company upon termination of Executive’s
employment.

 

B. Resignation and Cooperation. Upon termination of Executive’s employment,
Executive shall be deemed to have resigned from all offices and directorships
then held with the Company. Following any termination of employment, Executive
shall cooperate with the Company in the winding up of pending work on behalf of
the Company and the orderly transfer of work to other employees. Executive shall
also cooperate with the Company in the defense of any action brought by any
third party against the Company that relates to Executive’s employment by the
Company.

 

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VII. INVENTIONS AND PROPRIETARY INFORMATION; PROHIBITION ON THIRD PARTY
INFORMATION

 

A. Proprietary Information Agreement. Executive acknowledges that he has signed
and remains bound by the terms of the Company’s Proprietary Information and
Inventions Agreement, which is attached as Exhibit B (“Proprietary Information
Agreement”).

 

B. Non-Solicitation. Executive acknowledges that because of Executive’s position
in the Company, Executive will have access to material intellectual property and
confidential information. During the term of Executive’s employment and for two
years thereafter, in addition to Executive’s other obligations hereunder or
under the Proprietary Information Agreement, Executive shall not, for Executive
or any third party, directly or indirectly (a) divert or attempt to divert from
the Company any business of any kind, including without limitation the
solicitation of or interference with any of its customers, clients, members,
business partners or suppliers, or (b) solicit or otherwise induce any person
employed by the Company to terminate his employment.

 

C. Non Disclosure of Third Party Information. Executive represents and warrants
and covenants that Executive shall not disclose to the Company, or use, or
induce the Company to use, any proprietary information or trade secrets of
others at any time, including but not limited to any proprietary information or
trade secrets of any former employer, if any; and Executive acknowledges and
agrees that any violation of this provision shall be grounds for Executive’s
immediate termination and could subject Executive to substantial civil
liabilities and criminal penalties. Executive further specifically and expressly
acknowledges that no officer or other employee or representative of the Company
has requested or instructed Executive to disclose or use any such third party
proprietary information or trade secrets.

 

VIII. ARBITRATION

 

Executive agrees to sign and be bound by the terms of the Company’s Arbitration
Agreement, which is attached as Exhibit C.

 

IX. AMENDMENTS; WAIVERS; REMEDIES

 

This Agreement may not be amended or waived except by a writing signed by
Executive and by a duly authorized representative of the Company other than
Executive. Failure to exercise any right under this Agreement shall not
constitute a waiver of such right. Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified for a party herein shall be cumulative and in addition to all other
rights and remedies of the party hereunder or under applicable law.

 

X. ASSIGNMENT; BINDING EFFECT

 

A. Assignment. The performance of Executive is personal hereunder, and Executive
agrees that Executive shall have no right to assign and shall not assign or

 

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purport to assign any rights or obligations under this Agreement. This Agreement
may be assigned or transferred by the Company; and nothing in this Agreement
shall prevent the consolidation, merger or sale of the Company or a sale of any
or all or substantially all of its assets.

 

B. Binding Effect. Subject to the foregoing restriction on assignment by
Executive, this Agreement shall inure to the benefit of and be binding upon each
of the parties; the affiliates, officers, directors, agents, successors and
assigns of the Company; and the heirs, devisees, spouses, legal representatives
and successors of Executive.

 

XI. NOTICES

 

All notices or other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if delivered: (a) by
hand; (b) by a nationally recognized overnight courier service; or (c) by United
States first class registered or certified mail, return receipt requested, to
the principal address of the other party, as set forth below. The date of notice
shall be deemed to be the earlier of (i) actual receipt of notice by any
permitted means, or (ii) five business days following dispatch by overnight
delivery service or the United States Mail. Executive shall be obligated to
notify the Company in writing of any change in Executive’s address. Notice of
change of address shall be effective only when done in accordance with this
paragraph.

 

Company’s Notice Address:

 

Credence Systems Corporation

1421 California Circle

Milpitas, CA 95035

Attn: General Counsel

 

Executive’s Notice Address:

 

4 Lassen Court

 

Menlo Park, CA 94025

 

XII. SEVERABILITY

 

If any provision of this Agreement shall be held by a court or arbitrator to be
invalid, unenforceable, or void, such provision shall be enforced to the fullest
extent permitted by law, and the remainder of this Agreement shall remain in
full force and effect. In the event that the time period or scope of any
provision is declared by a court or arbitrator of competent jurisdiction to
exceed the maximum time period or scope that such court or arbitrator deems
enforceable, then such court or arbitrator shall reduce the time period or scope
to the maximum time period or scope permitted by law.

 

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XIII. TAXES

 

All amounts paid under this Agreement (including without limitation Base Salary,
Bonus, or Separation Benefits) shall be paid less all applicable state and
federal tax withholdings and any other withholdings required by any applicable
jurisdiction.

 

XIV. GOVERNING LAW

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of California.

 

XV. INTERPRETATION

 

This Agreement shall be construed as a whole, according to its fair meaning, and
not in favor of or against any party. Sections and section headings contained in
this Agreement are for reference purposes only, and shall not affect in any
manner the meaning or interpretation of this Agreement. Whenever the context
requires, references to the singular shall include the plural and the plural the
singular.

 

XVI. OBLIGATIONS SURVIVE TERMINATION OF EMPLOYMENT

 

Executive agrees that any and all of Executive’s obligations under this
agreement, including but not limited to Exhibits B and C, shall survive the
termination of employment and the termination of this Agreement.

 

XVII. COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this Agreement, but all of which together shall
constitute one and the same instrument.

 

XVIII. AUTHORITY

 

Each party represents and warrants that such party has the right, power and
authority to enter into and execute this Agreement and to perform and discharge
all of the obligations hereunder; and that this Agreement constitutes the valid
and legally binding agreement and obligation of such party and is enforceable in
accordance with its terms.

 

XIX. ENTIRE AGREEMENT

 

This Agreement is intended to be the final, complete, and exclusive statement of
the terms of Executive’s employment by the Company and may not be contradicted
by evidence of any prior or contemporaneous statements or agreements, except for
agreements specifically referenced herein (including the Executive Proprietary
Information and Inventions Agreement attached as Exhibit B, the Arbitration
Agreement attached as Exhibit C, and the Stock Plan and Stock Option Agreement
of the Company). To the extent that the practices, policies or procedures of the
Company, now or in the future, apply to Executive and are inconsistent with

 

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the terms of this Agreement, the provisions of this Agreement shall control. Any
subsequent change in Executive’s duties, position, or compensation will not
affect the validity or scope of this Agreement.

 

XX. EXECUTIVE ACKNOWLEDGEMENT

 

EXECUTIVE ACKNOWLEDGES EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT LEGAL
COUNSEL CONCERNING THIS AGREEMENT, THAT EXECUTIVE HAS READ AND UNDERSTANDS THE
AGREEMENT, THAT EXECUTIVE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT EXECUTIVE
HAS ENTERED INTO IT FREELY BASED ON EXECUTIVE’S OWN JUDGMENT AND NOT ON ANY
REPRESENTATIONS OR PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

 

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

 

CREDENCE SYSTEMS CORPORATION   GRAHAM J. SIDDALL

/s/ David A. Ranhoff

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/s/ Graham J. Siddall

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Signature   Signature

President and Chief Operating Officer

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    Title    

November 5, 2004

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November 5, 2004

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Date   Date

 

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Exhibit A

 

Company Executive Training Course:

 

Responsible for all aspects of the Company’s Executive training session which is
conducted every two years during the third or fourth calendar quarter.
Responsibilities include, but are not limited to the following:

 

Plan the agenda for the two week training session.

 

Develop the curriculum to be taught during the training session.

 

Select the individuals or groups responsible for teaching during the two week
session.

 

Teach various components of the Executive training session as needed.

 

Attend and facilitate the entire two week Executive training session.

 

Investor Relations Duties:

 

Review and provide feedback to the Company on current industry analyst reports.

 

Review and provide feedback on the Company presentation used for investor
relations activities.

 

Attend one-on-one research analyst meetings at the Company in order to provide
industry insight and Company Background to industry research analysts.

 

As requested by CEO, present at investor conferences as needed (no more than
four times each year).

 

Chinese Market Duties:

 

Work with Company executive and operating committee members to develop and
refine Company business plan for Chinese market.

 

As requested by CEO, participate in Chinese marketing initiatives and serve as
liaison with Chinese officials and business personnel.

 

General:

 

Consult with Company Executive staff members on industry/customer related
matters on an as needed basis (no more than 4 hours per week).

 

Provide feedback to Company Board of Directors on industry matters on an as
needed basis (no more than 4 hours per month).

 

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