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Exhibit 10.15
KLA-TENCOR CORPORATION
EXCESS PROFIT STOCK PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 Establishment. The KLA-Tencor Corporation Excess Profit
Stock Plan (the "PLAN") is hereby established effective as of April 25, 1996
(the "EFFECTIVE DATE").
1.2 Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward employees of the Participating Company Group and
by motivating such persons to contribute to the growth and profitability of the
Participating Company Group.
2. DEFINITIONS AND CONSTRUCTION.
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "BENEFICIARY" means one, some, or all (as the context shall
require) of those persons, trusts or other entities which a Participant, in his
or her most recent written form of beneficiary designation filed with the
Company, shall have designated as a beneficiary to receive a distribution of
shares of Stock allocated to the Participant's Plan account upon the
Participant's death, as provided in Section 7.
(b) "BOARD" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(c) "CODE" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
(d) "COMMITTEE" means a committee duly appointed by the Board to
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
(e) "COMPANY" means KLA-Tencor Corporation, a Delaware
corporation, or any successor corporation thereto.
(f) "COMPENSATION" means amounts paid by a Participating Company
to an employee as straight base salary, including lead differential pay, or
regular time hourly wages
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(based upon up to forty (40) hours per week), including lead differential pay,
as appropriate, before deduction for any contributions to any plan maintained by
a Participating Company and described in section 401(k) or section 125 of the
Code. Compensation shall not include overtime, bonuses, commissions, shift
differentials, payments in lieu of notice, payments pursuant to a severance
agreement, termination pay, any other extraordinary compensation, amounts which
have been deferred pursuant to a nonqualified deferred compensation plan or
amounts which are paid pursuant to such deferred compensation plan.
(g) "CONTRIBUTION PERIOD" means a three-month period ending on
each March 3l, June 30, September 30 or December 3l. The first Contribution
Period shall be the period which commenced on October 1, 1995 and ended on
December 31, 1995. Notwithstanding the foregoing, the Board may establish a
different term for one or more Contribution Periods.
(h) "DISABILITY" means the disability of the Participant, as such
term is defined for purposes of the Company's Long-Term Disability Plan, as it
may be amended from time to time.
(i) "ELIGIBLE EMPLOYEE" means an employee of a Participating
Company who is eligible to receive an allocation of Company contributions made
pursuant to Section 3.5 of the Retirement Plan for a Contribution Period.
(j) "EXCESS COMPENSATION" means the amount by which an Eligible
Employee's Compensation paid during the Plan Year through the end of a
Contribution Period exceeds the Code section 401(a) (17) limit.
(k) "EXCESS CONTRIBUTIONS" means, for any Contribution Period,
the amount of Profit Sharing Contributions which the Company could not
contribute to the Retirement Plan due to the contribution and deduction
limitations set forth in sections 401(a)(17) and 404(a)(3) of the Code and the
regulations promulgated thereunder.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "INVOLUNTARY TERMINATION" means the termination of a
Participant's employment with the Participating Company Group due to (i) an
involuntary termination due to lack of work, or (ii) the sale or other
divestiture of the company or division which employs the Participant.
(n) "PARTICIPANT" means any employee of a Participating Company
who receives an allocation of shares of Stock purchased with Excess
Contributions pursuant to the Plan.
(o) "PARTICIPATING COMPANY" means the Company or any organization
which:
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(i) is either (1) a member of a controlled group of
corporations (as determined for purposes of section 414(b) of the Code) of which
the Company is a member, (2) a member of a group of trades or businesses
(whether or not incorporated) which are under common control with the Company
(as determined for purposes of section 414(c) of the Code), (3) a member of an
affiliated service group within the meaning of section 414(m) of the Code, of
which the Company is also a member, or (4) otherwise aggregated with the Company
under section 414(o) of the Code; and
(ii) has adopted the Retirement Plan with the authorization
of the Company.
(p) "PARTICIPATING COMPANY GROUP" means, at any point in time,
all entities collectively which are then Participating Companies.
(q) "PLAN YEAR" means a twelve (12) month period beginning on
July 1 and ending on June 30.
(r) "PROFIT SHARING CONTRIBUTIONS" means, for any Contribution
Period, the aggregate amount determined pursuant to any of the Company's profit
sharing programs which the Company has designated for contribution to the
Retirement Plan, calculated without regard to the contribution and deduction
limits set forth in sections 401(a)(17) and 404(a)(3) of the code.
(s) "PROFIT SHARING CONTRIBUTION PERCENTAGE" means, for any
Contribution Period, the percentage of Compensation of each Eligible Employee
used to determine the amount of Profit Sharing Contributions.
(t) "RETIREMENT PLAN" means the KLA Retirement Plan, as it may be
amended from time to time.
(u) "RETIREMENT PLAN ACTUAL CONTRIBUTION PERCENTAGE" means the
percentage of compensation (as defined for purposes of Section 3.5 of the
Retirement Plan) represented by the actual Company contribution made to the
Retirement Plan pursuant to Section 3.5 thereof for a Contribution Period.
(v) "STOCK" means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.3.
(w) "TRUST" means the legal entity created by the Trust
Agreement.
(x) "TRUST AGREEMENT" means that trust agreement entered into
between the Company and Wells Fargo Bank, N.A. in connection with the
establishment of the Plan.
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(y) "TRUSTEE" means the original Trustee named in the Trust
Agreement and any duly appointed successor thereto.
2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the disjunctive.
3. ADMINISTRATION. The Plan shall be administered by the Board, including
any duly appointed Committee of the Board. All questions of interpretation of
the Plan shall be determined by the Board, and such determinations shall be
final and binding upon all persons having an interest in the Plan. Any officer
of a Participating Company shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election
which is the responsibility of or which is allocated to the Company herein,
provided the officer has apparent authority with respect to such matter, right,
obligation, determination or election.
4. SHARES SUBJECT TO PLAN.
4.1 Acquisition of Shares. The Company or the Trustee purchase on the
open market shares of Stock so that the Trust shall have a sufficient number of
shares of Stock with which to satisfy the Company's obligations under the Plan.
Such purchases shall be made at such time or times as determined by the Board,
in its sole discretion. Notwithstanding the foregoing, purchases of Stock with
Excess Contributions attributable to the first Contribution Period and the
Contribution Periods ending on March 31, 1996 and June 30, 1996 shall commence
as soon as practicable following the Effective Date. All purchases of Stock
pursuant to the Plan shall be made in accordance with any applicable foreign,
federal or state securities law or regulation, including, without limitation,
Rule 10b-18 promulgated under the Exchange Act.
4.2 Shares Held by Trustee. Any shares of Stock which the Company
repurchases on the open market to satisfy its obligations under the Plan shall
be deposited with the Trustee as soon as practicable following the Company's
repurchase of such shares. Until the shares of Stock which are purchased
pursuant to Section 4.1 for the Plan are distributed pursuant to Section 7 of
the Plan, the certificate evidencing such shares shall be registered in the in
the name of the Trustee. Any dividends paid with respect to the shares of Stock
held by the Trustee pursuant to the Trust Agreement ("DIVIDENDS") shall be used
to purchase shares of Stock to satisfy the Company's obligations under the Plan
with respect to the Contribution Period in which the Dividend was paid (or any
future Contribution Period, to the extent that the Dividends exceed the amount
of the Excess Contributions for the Contribution Period in which the Dividend
was paid). The amount of Excess Contributions which shall be used to purchase
shares of Stock shall be reduced by the amount of Dividends paid with respect to
shares of Stock held by the Trustee pursuant to the Trust Agreement.
4.3 Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number
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and class of shares subject to the Plan. The adjustments determined by the Board
pursuant to this Section shall be final, binding and conclusive.
5. ALLOCATION OF SHARES.
5.1 Persons Eligible to Receive an Allocation of Shares. For each
Contribution Period an Eligible Employee shall have his or her Plan account
credited with the number of shares of Stock equal to (a) his or her share of the
Excess Contributions for such Contribution Period, divided by (b) the average
price of the Stock allocated with respect to such Contribution Period.
5.2 Share of Excess Contributions. An Eligible Employee's share of the
Excess Contributions for a Contribution Period shall be the sum of the amounts
allocated to such Eligible Employee pursuant to Sections 5.2(a) and 5.2(b)
below.
(a) ALLOCATION OF EXCESS CONTRIBUTIONS DUE TO COMPENSATION LIMIT.
Each Eligible Employee whose Compensation exceeds the limit set forth in section
401(a)(17) of the Code shall be allocated a portion of the Excess Contributions
equal to (i) the amount of his or her Excess Compensation paid during the
Contribution Period, multiplied by (ii) the Profit Sharing Contribution
Percentage for such Contribution Period.
(b) ALLOCATION OF EXCESS CONTRIBUTIONS DUE TO DEDUCTION LIMIT.
The balance of the Excess Contributions for the Contribution Period shall be
allocated to the Eligible Employees in proportion to their Compensation not in
excess of the Code section 401(a)(17) limit for such Contribution Period. To
determine the balance of Excess Contributions allocable under this Section
5.2(b) expressed as a percentage of Compensation (not in excess of the Code
Section 401(a)(17) limit), subtract the Retirement Plan Actual Contribution
Percentage for the Contribution Period from the Profit Sharing Contribution
Percentage.
(c) EXAMPLES. Schedule A, attached hereto, illustrates the
allocation of Excess Contributions under the Plan assuming that the Profit
Sharing Contribution Percentage for each Contribution Period is equal to fifteen
percent (15%) of the Compensation of each Eligible Employee and that the
Retirement Plan Actual Contribution Percentage is only seven percent (7%) of the
Compensation of each Eligible Employee up to the Code section 401(a)(17) limit.
5.3 Price of Stock Allocated With Respect to a Contribution Period.
The average price Stock allocated with respect to a Contribution Period shall be
determined based upon the price(s) at which Stock was purchased by the Company
pursuant to Section 4.1 of the Plan on a first-in, first-out basis, or such
other method as the Company may, from time to time, establish.
5.4 Participant Accounts. Individual Plan accounts shall be maintained
for each Participant. All shares of Stock allocated to a Participant (pursuant
to this Section 5 or Section 6.3 below) shall be credited to such account, and
such account shall be reduced by the number of unvested shares of Stock
forfeited by the Participant pursuant to Section 6.2 below, as well as the
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number of shares of Stock distributed to a Participant or his or her Beneficiary
pursuant to Section 7 below.
6. VESTING OF SHARES.
6.1 Vesting Date. Shares of Stock allocated to a Participant's Plan
account are subject to forfeiture pursuant to the provisions of Section 6.2
below until the Participant becomes vested with respect to such shares. A
Participant will become vested with respect to shares of Stock allocated to his
or her Plan account ("VESTED SHARES") with respect to a Contribution Period on
the third January 1 following the end of the Plan Year in which such
Contribution Period occurred (the "VESTING DATE"); provided, however, that a
Participant ho has reached age fifty-five (55) years shall be fully vested with
respect to all shares of Stock allocated to his or her Plan account.
6.2 Forfeitures. In the event the Participant terminates employment
with the Participating Company Group, for any reason other than death,
Disability, or Involuntary Termination, the Participant shall forfeit any shares
of Stock allocated to his or her Plan account which are not Vested Shares
("FORFEITED SHARES") as of the date of his or her termination of employment with
the Participating Company Group.
6.3 Allocation of Forfeitures. Forfeited Shares shall be allocated to
each Participant who is employed by a Participating Company as of the end of the
Plan Year in which the forfeiture occurred. As soon as practicable following the
end of each Plan Year, the pro rata portion of the Forfeited Shares shall be
allocated to each Participant's Plan account based on the ratio of the
Participant's Compensation for the Plan Year divided by the aggregate
Compensation for the Plan Year of all Participants employed by a Participating
Company on the last day of the Plan Year. Such reallocated forfeited shares
shall vest in the same manner as do any other shares which are allocated with
respect to the last quarter in the Plan Year.
7. DISTRIBUTION OF SHARES.
7.1 Distribution upon Vesting Date. The Trustee shall distribute the
Vested Shares allocated to each Participant's Plan account on the first January
31 following the applicable Vesting Date for such Vested Shares, unless the
Participant elects to defer the distribution of the Vested Shares pursuant to
Section 7.2 below. For purposes of this Section 7 only, for a Participant who
becomes vested because he or she is age fifty-five (55) or older, the Vesting
Date shall mean the date which would have been the Vesting Date of such shares
determined as if such Participant had not yet reached age fifty-five (55).
7.2 Deferred Distribution. Subject to the provisions of Section
7.2(b), a Participant may elect to defer the distribution of all, but not less
than all, of his or her Vested Shares attributable to a particular Plan Year for
a period of one or more years (not to exceed ten (10) years) after the
applicable Vesting Date, and such Vested Shares shall be distributed to the
Participant on the first January 31 occurring after the expiration of the
deferral period (the "DEFERRED DISTRIBUTION
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DATE"). Notwithstanding the foregoing, if the Participant's employment with the
Participating Company Group terminates prior to the Deferred Distribution Date,
for any reason, all of the Participant's Vested Shares shall be distributed to
the Participant (or his or her Beneficiary) as soon as practicable after the end
of the quarter in which the Participant's termination of employment occurred.
(a) DEFERRAL ELECTION PROCEDURE. To elect to defer the
distribution of Vested Shares a Participant must submit an election (on a form
provided by the Company) to the Company (a "DEFERRAL ELECTION"), at any time
prior to the date occurring six (6) months prior to the Vesting Date applicable
to such shares. In the event a Participant submits more than one Deferral
Election, the latest such Deferral Election which is filed at least six (6)
months prior to the Vesting Date shall supersede and revoke any prior Deferral
Elections filed with respect to such shares. Except as otherwise expressly
provided in this Plan, once the applicable Deferral Election, if any, is filed
with respect to any shares, it shall become irrevocable upon the Vesting Date
for such shares. A Participant may make a one-time election to extend the
Deferred Distribution Date specified on any Deferral Election by filing a
request for such an extension with the Company on or before the date occurring
six (6) months prior to the Deferred Distribution Date originally specified in
the Deferral Election; provided, however, that the Participant may not extend
the Deferred Distribution Date to a date more than ten (10) years after the
Vesting Date applicable to the shares described in the Deferral Election. Except
as otherwise expressly provided in the Plan, a Deferral Election is irrevocable.
(b) EARLY WITHDRAWAL OF VESTED SHARES. Notwithstanding the
foregoing, a Participant may, upon written notice to the Company, elect to
receive a distribution of ninety percent (90%) of all Vested Shares credited to
his or her Plan account prior to the Deferred Distribution Date(s) for such
shares. Such Vested Shares shall be distributed as soon as it is
administratively feasible after the date the Participant files the written
notice of withdrawal in accordance with such requirements as may be established
by the Committee. After the distribution of such Vested Shares, the remaining
ten percent (10%) of the Vested Shares remaining in the Participant's Plan
account shall become Forfeited Shares and shall be allocated to Participants'
accounts pursuant to the provisions of Section 6.3. After the date on which a
Participant makes an early withdrawal election pursuant to this Section 7.2(b),
all shares of Stock allocated to the Participant's account which become Vested
Shares after the date of such early withdrawal election shall be distributed on
the applicable Vesting Date and the Participant shall not be permitted to defer
the distribution of such Vested Shares.
7.3 Death, Disability or Involuntary Termination. In the event of a
Participant's termination of employment with the Participating Company Group due
to death, Disability or Involuntary Termination, all of the shares of Stock
allocated to the Participant's Plan account as of such date shall immediately
become vested and shall be distributed to the Participant or the Participant's
Beneficiary as soon as practicable following the end of the quarter in which
such death, disability or involuntary termination occurred.
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(a) DESIGNATION OF BENEFICIARY. Each Participant shall have the
right to designate, on such form as may be prescribed by the Company, a
Beneficiary to receive a distribution of shares of Stock allocated to his or her
Plan account as of the date of the Participant's death. The Participant shall
have the right at any time to revoke such designation and to substitute another
such Beneficiary in accordance with any procedures as may be established by the
Company.
(b) NO DESIGNATED BENEFICIARY. If, upon the death of the
Participant, there is no valid designation of Beneficiary, the Beneficiary shall
be the Participant's estate.
7.4 Fractional Shares. The Trustee shall not be required to distribute
fractional shares pursuant to the Plan, and any distributions of Stock pursuant
to the Plan shall be made in whole shares of Stock, rounded down to the nearest
whole number.
7.5 Tax Withholding. The Company shall have the right to require the
Participant, through payroll withholding, cash payment or otherwise, to make
adequate provision for any federal, state local and foreign tax withholding
obligations of the Participating Company Group arising in connection with the
shares allocated or distributed to the Participant pursuant to the Plan. The
Trustee shall have no obligation to distribute shares of Stock to a Participant
until the Participating Company Group's tax withholding obligations with respect
to the Participant's shares, if any, have been satisfied.
7.6 Benefits Paid from Trust. All shares distributable pursuant to the
Plan shall be distributed by the Trustee to the extent of the shares held in
Trust by the Trustee, and by the Company to the extent that the shares in the
Trust are less than a Participant's Vested Shares.
7.7 No Secured Interest. Except as otherwise provided by the Trust
Agreement, the assets of the Trust shall be subject to the claims of the
Company's creditors and neither a Participant nor a Beneficiary shall have any
legal or equitable interest in such assets, or any other asset of the Company.
Each Participant and each Beneficiary is a general unsecured creditor of the
Company with respect to the promises of the Company made herein, except as
otherwise expressly provided by the Trust Agreement.
8. CASH DISTRIBUTION. Notwithstanding any other provision in the Plan to
the contrary, the Board may, in its sole discretion, pay each Eligible
Employee's share of the Excess Contributions for any quarter in cash, subject to
applicable tax withholding, within a reasonable period of time after the end of
the quarter. The provisions of Sections 5, 6 and 7 shall be inapplicable to any
Excess Contributions which are so distributed.
9. NONASSIGNMENT AND NONTRANSFERABILITY OF SHARES. Prior to the
distribution of shares of Stock to a Participant (or his or her Beneficiary),
neither the shares of Stock allocated to the Participant's Plan account nor any
rights hereunder may be assigned or transferred in any manner by the Participant
(or his or her Beneficiary), except by will or by the laws of descent and
distribution.
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10 . RESTRICTION ON DISTRIBUTION OF SHARES. The distribution of shares
under the Plan by the Trustee shall be subject to compliance with all applicable
requirements of foreign, federal or state law with respect to such securities.
In addition, shares may not be distributed to a Participant unless (a) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of distribution be in effect with respect to the shares issuable to the
Participant, or (b) in the opinion of legal counsel to the Company, the shares
issuable to the Participant may be issued in accordance with the terms of an
applicable exemption from the registration requirements of said Act. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company's legal counsel to be necessary to
the lawful issuance and sale of any shares under the Plan shall relieve the
Company of any liability in respect of the failure to issue such shares as to
which such requisite authority shall not have been obtained. As a condition to
the distribution of shares pursuant to the Plan, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation, and to make any
representation or warranty with respect thereto as may be requested by the
Company.
11. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. A Participant shall have no
rights as a stockholder with respect to the shares of Stock allocated to his or
her Plan account until the date of issuance to the Participant of a certificate
or certificates for such shares of Stock in accordance with the provisions of
the Plan (the "ISSUANCE DATE"). Except as provided in Section 4.3, no adjustment
to the Participant's Plan account shall be made for dividends or distributions
or other rights for which the record date is prior to the Issuance Date. On the
Issuance Date, the Participant shall become the record holder of any such shares
of Stock, entitled to dividends, if any, voting rights and other rights of a
holder thereof. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of a Participating Company or interfere in any way
with any right of the Participating Company Group to terminate the Participant's
employment at any time.
12. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
13. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend the
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Plan at any time; provided, however, that any such amendment or termination may
not reduce the number of shares of Stock allocated to a Participant's account as
of the date of such amendment or termination. To the extent provided by the
Board, the Vested Shares shall be distributed as soon as administratively
feasible after termination of the Plan without regard to any Deferral Elections
which have been filed and all unvested shares shall be distributed promptly upon
becoming vested.