Document:

Executive Employment Agreement, Byron W. Milstead

 Exhibit 10.4 
  
 Executive Employment Agreement 
  
 This Executive Employment Agreement (the “Agreement”), dated May 28, 2004, is between CREDENCE SYSTEMS CORPORATION
(the “Company”) and BYRON W. MILSTEAD (“Executive”). 
  

	I.	POSITION AND RESPONSIBILITIES 

  
 A. Position. Executive is employed by the Company to render services to the Company in the position of Vice President and General Counsel.
Executive shall perform such duties and responsibilities as are normally related to such position in accordance with the standards of the industry and any additional duties now or hereafter assigned to Executive by the Company. Executive shall abide
by the rules, regulations, and practices as adopted or modified from time to time in the Company’s sole discretion. 
  
 B. Other Activities. Except upon the prior written consent of the Company, Executive will not, during the term of this Agreement, (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. 
  
 C. 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 One
Hundred Ninety-Eight Thousand Four Hundred Fifty Dollars ($198,450) (“Base Salary”). The Base Salary shall be paid in accordance with the Company’s regularly established payroll practice. Executive’s Base Salary will be reviewed
from time to time in accordance with the established procedures of the Company for adjusting salaries for similarly situated employees and may be adjusted in the sole discretion of the Company. 
  
 B. Bonus. Executive shall be eligible for an annual target incentive
bonus equal to Fifty Percent (50%) of his then-current Base Salary (“Target Bonus”), based on Executive’s achievement of performance objectives determined by the Company. 
  
 C. Benefits. Executive shall be eligible to participate in the benefits made generally available by the
Company to similarly-situated executives, in accordance with the benefit plans established by the Company, and as may be amended from time to time in the Company’s sole discretion. 

 D. 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, By Death or By Disability (as defined in Section IV below), in the event that the Company terminates Executive’s employment at any time, Executive will be eligible to receive the following benefits
(collectively, “Separation Benefits”): 
  
 1. an
amount equal to (1) One Hundred Percent (100%) of Executive’s then-current Base Salary, plus (2) One Hundred Percent (100%) of Executive’s annual Target Bonus, payable in equal monthly installments over the twelve (12) month period
following the date of such termination (“Salary Continuation Period”); 
  
 2. 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; 
  
 3. if
Executive elects to continue his medical coverage under the Consolidated Omnibus Reconciliation Act (“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 
  
 4. continued payment of the premiums required to maintain Executive’s coverage under his Company-provided life insurance policy during 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; 
  

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 (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 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 Death. Executive’s employment shall terminate automatically upon Executive’s death. The Company shall pay to Executive’s
beneficiaries or estate, as appropriate, any compensation then due and owing. Thereafter all obligations of the Company under this Agreement shall cease. Nothing in this Section shall affect any entitlement of Executive’s heirs or devisees to
the benefits of any life insurance plan or other applicable benefits. 
  
 C. 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.	CHANGE OF CONTROL 

  
 A. “Change of Control.” For purposes of this Agreement, “Change of Control” shall mean a change in ownership or control of the
Company effected through a merger, consolidation or acquisition by any person or related group of persons (other than an acquisition by the Company or by a Company-sponsored employee benefit plan or by a person or persons that directly or indirectly
controls, is controlled by, or is under common control with, the 
  

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 Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of securities
possessing more than fifty percent of the total combined voting power of the outstanding securities of the Company. 
  
 B. Termination Following a Change of Control. If the Company terminates Executive’s employment in the absence of Cause, Death, or Disability,
and within twelve (12) months following a Change of Control, Executive will be eligible to receive the Separation Benefits provided in Section III(B) above, subject to the conditions set forth therein. However, in lieu of the continued stock option
vesting provided under Section III(B)(3), Executive would receive full accelerated vesting, effective as of the date of such termination, of any unvested stock option shares, and twelve (12) months following the end of the Salary Continuation Period
to exercise such options. 
  

	VI.	TERMINATION BY EXECUTIVE 

  
 A. At-Will 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 Executive’s 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. 
  
 B. Termination for Good Reason
After Change of Control. Executive’s termination shall be for “Good Reason” if Executive provides written notice to the Company of the Good Reason within six (6) months of the event constituting Good Reason and provides the
Company with a period of twenty (20) days to cure the Good Reason and the Company fails to cure the Good Reason within that period. For purposes of this Agreement, “Good Reason” shall mean any of the following events if (i) the event is
effected by the Company without the consent of Executive, and (ii) such event occurs after a Change in Control: (A) a change in Executive’s position with Employer which materially reduces Executive’s level of responsibility; (B) a material
reduction in Executive’s Base Salary, except for reductions that are comparable to reductions generally applicable to similarly situated executives of the Company; or (C) a relocation of Executive’s principal place of employment by more
than fifty miles. In such event Executive may terminate his employment for Good Reason, in which case Executive will be eligible to receive the Separation Benefits provided in Section III(B) above, subject to the conditions set forth therein.

  

	VII.	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. 
  

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 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. 
  

	VIII.	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 one year 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. 
  

	IX.	ARBITRATION 

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

	X.	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. 
  

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	XI.	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 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. 
  

	XII.	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 
  
 Executive’s Notice
Address: 
  
 9800 SW Washington Street 
  
 Portland, Oregon 97225 
  

	XIII.	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 
  

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 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. 
  

	XIV.	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. 
  

	XV.	GOVERNING LAW 

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

	XVI.	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. 
  

	XVII.	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. 
  

	XVIII.	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. 
  

	XIX.	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. 
  

	XX.	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 
  

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 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
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. 
  

	XXI.	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

 
	 	BYRON W. MILSTEAD
		
	 /s/ Graham J. Siddall

 Signature
	 	 /s/ Byron W. Milstead

 Signature

		
	 Chairman and Chief Executive Officer

 Title
	 	 
		
	 September 9, 2004

 Date
	 	 September 9, 2004

 Date

  

 8Amendment to Security Agreement and Related Documents

 Exhibit 10.1 
  
 AMENDMENT 
 TO

 SECURITY AGREEMENT AND RELATED DOCUMENTS 
  
 This AMENDMENT (this “Amendment”) is entered into by and between TRANSGENOMIC, INC., a Delaware corporation (the
“Company”), and LAURUS MASTER FUND, LTD., a Cayman Islands company (“Laurus”) as of August 31, 2004, for the purpose of further amending the terms of (i) the Security Agreement, dated December 3, 2003 and
previously amended on February 20 and April 15, 2004, by and between the Company and Laurus (the ”Security Agreement”), (ii) the Secured Convertible Minimum Borrowing Note Series B, dated December 3, 2003 and previously amended
on April 15, 2004 (the ”Minimum Borrowing Note”) issued by the Company pursuant to the Security Agreement, (iii) the Secured Revolving Note, dated December 3, 2003 and previously amended on April 15, 2004 (the
”Revolving Note”) issued by the Company pursuant to the Security Agreement, (iv) the Registration Rights Agreement by and between the Company and Laurus, dated December 3, 2003 and previously amended on February 20, 2004 (the
”Registration Rights Agreement”) and (v) that certain Waiver Letter, dated February 20, 2004, made by Laurus and agreed to and accepted by the Company (the “Waiver Letter”) (collectively, the ”Revolving
Loan Documents”). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Security Agreement. 
  
 WHEREAS, the Company and Laurus have agreed to make certain changes to the Revolving Loan Documents as set forth herein, and in connection therewith, the
Company has agreed to issue an additional common stock purchase warrant to Laurus to purchase up to 400,000 shares of the Common Stock of the Company (the ”New Warrant”); 
  
 NOW, THEREFORE, in consideration of the above, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows: 
  
 1.    The definition of “Fixed Conversion Price” set forth in each of the Minimum Borrowing Note and the Revolving Note is hereby amended to mean, in each case, $1.00 per share. 
  
 2.    Notwithstanding anything to the contrary contained
in the Minimum Borrowing Note or the Revolving Note, in the event that the closing price of the Company’s common stock equals or exceeds $1.75 per share for any day (as such share price is adjusted for any combination, subdivision, stock split,
dividend, distribution or similar event which results in a greater or smaller number of shares of common stock of the Company), the Contract Rate (as defined in each of the Minimum Borrowing Note and the Revolving Note) for such day shall be reduced
to 0% (it being understood that in the event that the closing price of the Company’s common stock is less than $1.75 per share for any day following such a reduction referred to above in this Section 2, the Contract Rate for such day shall be
calculated in accordance with the Minimum Borrowing Note and the Revolving Note, as applicable, without giving effect to this Section 2). 
  
 3.    The Company hereby agrees to, on or prior to September 13, 2004, file a registration statement under the Securities Act of 1933,
as amended, relating to all shares that may be issued by it upon conversion of borrowings under the Minimum Borrowing Note, that certain Secured Convertible Term Note, dated February 19, 2004 (the ”Term Note”), and any warrants
related to either such transactions, to ensure that a sufficient number of shares of Common Stock of the Company are registered under such Registration Statement, assuming (x) the full conversion of each of the Minimum Borrowing Note (after giving
effect to the adjustments to the Fixed Conversion Price as set forth in Section 1 above), the Term Note (based on any amendments made to the conversion price thereof) and (y) the complete exercise of the New Warrant (the “Registration
Statement”). 
  
 4.    The definition
of “Warrants” contained in Section 1 of the Registration Rights Agreement is hereby deleted in its entirety and the following new definition is hereby inserted in lieu thereof: 
  
 “Warrants” means, the Common Stock purchase warrants issued pursuant to the Security
Agreement (including, without limitation, any Common Stock purchase warrants issued after December 3, 2003 in connection with any amendment, modification or supplementation to the Notes, the Security Agreement or any agreement related thereto).

  
 5.    The Waiver Letter is hereby amended
by deleting the text “ten months” set forth in the second paragraph thereof and inserting the text “thirteen months” in lieu thereof. 
  
 6.    As long as no Event of Default exist under any of the Revolving Loan Documents, Laurus agrees that it shall not require any
further amendment, modification or waiver by the Company of any of the terms of the Revolving Loan Documents in 
  

 
connection with obtaining the consent of Laurus to the sale of the any or all of the assets associated with the Company’s synthetic nucleic acid
operations in Boulder, Colorado, and Laurus agrees that such consent shall not be unreasonably withheld. 
  
 7.    This Amendment to each of the Revolving Loan Documents shall be effective as of the date hereof following (i) the execution of
same by each of the Company and the Laurus and (ii) the issuance by the Company to Laurus of the New Warrant. 
  
 8.    Except as specifically set forth in this Amendment, there are no other amendments to the Revolving Loan Documents, and all of
the other forms, terms and provisions of the Revolving Loan Documents remain in full force and effect, including, specifically, each of those provisions of the Revolving Loan Documents that limit the total number of shares of stock that the Company
will issue thereunder (which now shall include the New Warrants) at a price of less than $1.80 per share to 5,595,705. 
  
 9.    The Company hereby represents and warrants to Laurus that as of the date hereof all representations, warranties and covenants
made by Company in connection with the Revolving Loan Documents are true, correct and complete and all of Company’s covenant requirements have been met. 
  
 10.    This Amendment shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure
to the benefit of and be enforceable by each of the parties hereto and its successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment
may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. 
  
 IN WITNESS WHEREOF, each of the Company and Laurus has caused this Amendment to the Revolving Loan Documents to be signed in its name effective as
of this 31st day of August, 2004. 
  

			
	TRANSGENOMIC, INC.
		
	By:	 	 
	 	 	 Name:
 Title:

  

			
	LAURUS MASTER FUND, LTD.
		
	By:	 	 
	 	 	 Name:
 Title:

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