Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-Q
__________________________
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2014
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to          
Commission File No. 000-27965
___________________________
RUDOLPH TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
___________________________
Delaware
 
22-3531208
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
One Rudolph Road, PO Box 1000, Flanders, New Jersey 07836
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (973) 691-1300
___________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]   No [_]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]   No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act.    
Large accelerated filer [  ]
 
Accelerated filer [ X ]
 
Non-accelerated filer [  ]
 
Smaller reporting company [  ]
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes [_] No [X]
The number of outstanding shares of the Registrant’s Common Stock on July 21, 2014  was 33,267,370 .


Table of Contents

TABLE OF CONTENTS
Item No.
 
 Page
PART I    FINANCIAL INFORMATION
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II    OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 


Table of Contents

PART I FINANCIAL INFORMATION
Item 1. Financial Statements

RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 
June 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
54,658

 
$
80,790

Marketable securities
122,643

 
86,582

Accounts receivable, less allowance of $1,175 as of June 30, 2014 and $1,152 as of December 31, 2013
50,811

 
53,437

Inventories, net
65,624

 
61,351

Prepaid expenses and other current assets
22,204

 
14,804

Total current assets
315,940

 
296,964

Property, plant and equipment, net
11,837

 
13,058

Goodwill
22,495

 
22,553

Identifiable intangible assets, net
10,124

 
11,464

Other assets
28,685

 
27,323

Total assets
$
389,081

 
$
371,362

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
16,347

 
$
12,772

Other current liabilities
33,509

 
18,918

Total current liabilities
49,856

 
31,690

Convertible senior notes
53,225

 
51,751

Other non-current liabilities
9,403

 
8,918

Total liabilities
112,484

 
92,359

Commitments and contingencies


 


Stockholders’ equity:
 

 
 

Common stock
33

 
33

Additional paid-in capital
418,215

 
415,739

Accumulated other comprehensive loss
(1,541
)
 
(1,795
)
Accumulated deficit
(140,110
)
 
(134,974
)
Total stockholders’ equity
276,597

 
279,003

Total liabilities and stockholders’ equity
$
389,081

 
$
371,362


The accompanying notes are an integral part of these financial statements.

1

Table of Contents

RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2014

2013
 
2014
 
2013
Revenues
$
43,018

 
$
46,059

 
$
84,667

 
$
87,709

Cost of revenues
19,714

 
22,544

 
39,794

 
42,320

Gross profit
23,304

 
23,515

 
44,873

 
45,389

Operating expenses:
 
 
 
 
 
 
 
Research and development
10,841

 
10,214

 
20,846

 
19,917

Selling, general and administrative
21,285

 
10,519

 
32,066

 
20,771

Amortization
670

 
648

 
1,340

 
1,264

Total operating expenses
32,796

 
21,381

 
54,252

 
41,952

Operating income (loss)
(9,492
)
 
2,134

 
(9,379
)
 
3,437

Interest expense, net
1,341

 
1,200

 
2,622

 
2,409

Other expense (income)
162

 
(398
)
 
35

 
(49
)
Income (loss) before income taxes
(10,995
)
 
1,332

 
(12,036
)
 
1,077

Provision (benefit) for income taxes
(6,583
)
 
573

 
(6,900
)
 
(75
)
Net income (loss)
$
(4,412
)
 
$
759

 
$
(5,136
)
 
$
1,152

Earnings (loss) per share:
 
 
 

 
 
 
 
Basic
$
(0.13
)
 
$
0.02

 
$
(0.15
)
 
$
0.04

Diluted
$
(0.13
)
 
$
0.02

 
$
(0.15
)
 
$
0.03

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
33,240

 
32,567

 
33,186

 
32,633

Diluted
33,240

 
33,155

 
33,186

 
33,284



 
The accompanying notes are an integral part of these financial statements. 

2

Table of Contents

RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)  
(Unaudited)



Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,

2014
 
2013
 
2014
 
2013
Net income (loss)
$
(4,412
)
 
$
759

 
$
(5,136
)
 
$
1,152

Other comprehensive loss:
 
 
 
 
 
 
 
Change in net unrealized gains (losses) on investments, net of tax
24

 
(55
)
 
27

 
(41
)
Change in currency translation adjustments
359

 
(499
)
 
227

 
(948
)
Total comprehensive income (loss)
$
(4,029
)
 
$
205

 
$
(4,882
)
 
$
163



 
The accompanying notes are an integral part of these financial statements. 



3

Table of Contents

RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended June 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(5,136
)
 
$
1,152

Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:


 


Amortization of intangibles and other
1,344

 
1,444

Amortization of convertible note discount and issuance costs
1,648

 
1,482

Depreciation
2,038

 
2,067

Foreign currency exchange loss (gain)
35

 
(49
)
Contingent consideration adjustments
145

 

Share-based compensation
3,162

 
1,955

Provision for doubtful accounts and inventory valuation
1,398

 
1,673

Deferred income taxes
65

 

Changes in operating assets and liabilities, net of acquisitions
6,047

 
(15,812
)
Net cash and cash equivalents provided by (used in) operating activities
10,746

 
(6,088
)
Cash flows from investing activities:


 


Purchases of marketable securities
(110,591
)
 
(61,414
)
Proceeds from sales of marketable securities
75,389

 
35,440

Purchases of property, plant and equipment
(1,020
)
 
(2,485
)
Purchase of business

 
(3,365
)
Net cash and cash equivalents used in investing activities
(36,222
)
 
(31,824
)
Cash flows from financing activities:


 


Purchases of common stock
(986
)
 

Payment of contingent consideration for acquired business
(194
)
 

Proceeds from sales of shares through share-based compensation plans
182

 
630

Tax benefit for sale of shares through share-based compensation plans
118

 
611

Net cash and cash equivalents provided by (used in) financing activities
(880
)
 
1,241

Effect of exchange rate changes on cash and cash equivalents
224

 
(790
)
Net decrease in cash and cash equivalents
(26,132
)
 
(37,461
)
Cash and cash equivalents at beginning of period
80,790

 
104,253

Cash and cash equivalents at end of period
$
54,658

 
$
66,792

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Income taxes paid
$
893

 
$
3,923

Interest paid
$
1,125

 
$
1,125

 


The accompanying notes are an integral part of these financial statements. 

4

Table of Contents

RUDOLPH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)

NOTE 1.    Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements have been prepared by Rudolph Technologies, Inc. (the “Company” or “Rudolph”) and in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  Preparing financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Actual amounts could differ materially from those amounts.  The interim results for the three and six month periods ended June 30, 2014 are not necessarily indicative of results to be expected for the entire year or any future periods.  This interim financial information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 10-K”) filed with the Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements included in the 2013 10-K.
Reclassifications
Certain prior period amounts have been reclassified to conform to current financial statement presentation. These amounts include the reclassification of a portion of deferred tax assets from Other assets to Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. ASU 2014-09 will be effective for the Company starting in the first quarter of 2017. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the 2017 opening retained earnings balance. The Company is in the process of determining the adoption method as well as the effects the adoption of ASU 2014-09 will have on its consolidated financial position, results of operations, and cash flows.

NOTE 2.   Business Combinations
Tamar Technology
In April 2013, the Company announced that it had acquired specific assets of Tamar Technology, located in Newbury Park, California. The acquired business has been integrated into the Company’s inspection technology group.  The impact of the acquisition was not material to the Company’s consolidated financial position or results of operations.

NOTE 3.  Fair Value Measurements
The Company applies a three-level valuation hierarchy for fair value measurements. This hierarchy prioritizes the inputs into three broad levels.  Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based on management’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s fair value measurement classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

5


The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at June 30, 2014 and December 31, 2013 :
 
 
 
 
Fair Value Measurements Using
 
 
Carrying
Value
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3)
June 30, 2014
 
 

 
 

 
 

 
 

Assets:
 

 


 

 

Available-for-sale debt securities:
 

 


 

 

Municipal notes and bonds
 
$
122,335

 
$

 
$
122,335

 
$

Auction rate securities
 
308

 

 

 
308

Total Assets
 
$
122,643

 
$

 
$
122,335

 
$
308

Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration - acquisitions
 
$
5,159

 
$

 
$

 
$
5,159

Foreign currency forward contracts
 
47

 

 
47

 

Total Liabilities
 
$
5,206

 
$

 
$
47

 
$
5,159

December 31, 2013
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Available-for-sale debt securities:
 
 
 
 
 
 
 
 
Municipal notes and bonds
 
$
86,305

 
$

 
$
86,305

 
$

Auction rate securities
 
277

 

 

 
277

Foreign currency forward contracts
 
6

 

 
6

 

Total Assets
 
$
86,588

 
$

 
$
86,311

 
$
277

Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration - acquisitions
 
$
5,208

 
$

 
$

 
$
5,208

Total Liabilities
 
$
5,208

 
$

 
$

 
$
5,208

    
Level 1 investments are based on quoted prices that are available in active markets.
The Company’s investments classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. The foreign currency forward contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. Available-for-sale debt securities prices are obtained from third party pricing providers, which models prices utilizing the above observable inputs, for each asset class.
Level 3 investments consist of an auction rate security and contingent consideration related to an acquisition for which the Company uses a discounted cash flow model to value these investments. The Level 3 assumptions used in the discounted cash flow model for the auction rate security included estimates of interest rates of 3.1% , timing and amount of cash flows and expected holding periods of the auction rate security, based on data available on June 30, 2014 . Changes in the unobservable input values would be unlikely to cause material changes in the fair value of the auction rate security. The Level 3 assumptions used in the discounted cash flow model for the contingent consideration included projected revenues, estimates of discount rates of 5.3% and timing of cash flows. A significant decrease in the projected revenues or increase in discount rate could result in a significantly lower fair value measurement for the contingent consideration.

6


This table presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2014 :
 
 
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
Balance at December 31, 2013
 
$
277

Unrealized gain in accumulated other comprehensive loss
 
31

Purchases
 

Sales, issuances, and settlements
 

Transfers into (out of) Level 3
 

Balance at June 30, 2014
 
$
308

 
 
 
Liabilities:
 
 
Balance at December 31, 2013
 
$
5,208

Additions
 

Total gain included in earnings
 
145

Payments
 
(194
)
Transfers into (out of) Level 3
 

Balance at June 30, 2014
 
$
5,159

See Note 4 for additional discussion regarding the fair value of the Company’s marketable securities.
Fair Value of Other Financial Instruments
The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair value because of the short-term maturity of these instruments. The estimated fair value of these obligations is based, primarily, on a market approach, comparing the Company’s interest rates to those rates the Company believes it would reasonably receive upon re-entry into the market. Judgment is required to estimate the fair value, using available market information and appropriate valuation methods.
The Company’s convertible senior notes are not publicly traded. The estimated fair value of the Company’s convertible senior notes was valued using a discounted cash flow model. The Level 3 assumptions, based on data available at the valuation date used in preparing the discounted cash flow model included estimates of interest rates, timing and amount of cash flows and expected holding periods of the convertible senior notes. The fair value of the contingent interest associated with the convertible senior notes is valued quarterly using the present value of expected cash flow model incorporating the probabilities of the contingent events occurring.
The following table reflects information pertaining to the Company’s convertible senior notes:
 
June 30, 2014

 
December 31, 2013

Net carrying value of convertible senior notes
$
53,225

 
$
51,751

Estimated fair value of convertible senior notes
$
61,692

 
$
59,340

Estimated interest rate used in discounted cash flow model
3.2
%
 
4.2
%
There was no contingent interest related to the Company’s convertible senior notes as of June 30, 2014 and December 31, 2013 .

NOTE 4.   Marketable Securities
The Company has evaluated its investment policies and determined that all of its investment securities are to be classified as available-for-sale.  Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in Stockholders’ Equity under the caption “Accumulated other comprehensive loss.”  Realized gains and losses on available-for-sale securities are included in “Other expense (income)” in the Condensed Consolidated Statements of Operations.  The Company records other-than-temporary impairment charges for its available-for-sale investments when it intends to sell the securities, it is

7


more-likely-than not that it will be required to sell the securities before a recovery, or when it does not expect to recover the entire amortized cost basis of the securities.  The cost of securities sold is based on the specific identification method.
As of June 30, 2014 , the Company held one auction rate security with a fair value of $308 . The underlying asset of the Company’s auction rate security consisted of a municipal bond with an auction reset feature. Due to auction failures in the marketplace, the Company will not have access to these funds unless (a) future auctions occur and are successful, (b) the security is called by the issuer, (c) the Company sells the security in an available secondary market, or (d) the underlying note matures. Currently, there are no active secondary markets. As of June 30, 2014 , the Company had recorded a cumulative temporary unrealized impairment loss of $167 within “Accumulated other comprehensive loss” based upon its assessment of the fair value of this security. The Company believes that this impairment is temporary as it does not intend to sell this security, the Company will not be required to sell this security before recovery, and the Company expects to recover the amortized cost basis of this security.
The Company has determined that the gross unrealized losses on its marketable securities at June 30, 2014 and December 31, 2013 are temporary in nature. The Company reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, credit quality and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.
At June 30, 2014 and December 31, 2013 , marketable securities are categorized as follows:
 
 
Amortized Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Fair Value
June 30, 2014
 
 
 
 
 
 
 
 

Municipal notes and bonds
 
$
122,292

 
$
44

 
$
1

 
$
122,335

Auction rate securities
 
475

 

 
167

 
308

Total marketable securities
 
$
122,767

 
$
44

 
$
168

 
$
122,643

December 31, 2013
 
 
 
 
 
 
 
 

Municipal notes and bonds
 
$
86,257

 
$
50

 
$
2

 
$
86,305

Auction rate securities
 
475

 

 
198

 
277

Total marketable securities
 
$
86,732

 
$
50

 
$
200

 
$
86,582

 The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheet classification, is as follows at June 30, 2014 and December 31, 2013 :
 

June 30, 2014

December 31, 2013
 

Amortized Cost

Fair Value

Amortized Cost

Fair Value
Due within one year

$
110,226


$
110,253


$
81,495


$
81,533

Due after one through five years

12,066


12,082


4,762


4,772

Due after five through ten years








Due after ten years

475


308


475


277

Total marketable securities

$
122,767


$
122,643


$
86,732


$
86,582


8


The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position at June 30, 2014 and December 31, 2013 :  
 
 
In Unrealized Loss Position For Less Than 12 Months
 
In Unrealized Loss Position For Greater Than 12 Months
 
 
Fair Value

Gross Unrealized Losses
 
Fair Value

Gross Unrealized Losses
June 30, 2014
 





 





Municipal notes and bonds
 
$
15,122


$
1

 
$


$

Auction rate securities
 



 
308


167

Total
 
$
15,122


$
1

 
$
308


$
167

December 31, 2013
 





 





Municipal notes and bonds
 
$
16,448


$
2

 
$


$

Auction rate securities
 



 
277


198

Total
 
$
16,448


$
2

 
$
277


$
198

See Note 3 for additional discussion regarding the fair value of the Company’s marketable securities.

NOTE 5.    Derivative Instruments and Hedging Activities
The Company, when it considers it to be appropriate, enters into forward contracts to hedge the economic exposures arising from foreign currency denominated transactions. At June 30, 2014 and December 31, 2013 , these contracts included the future sale of Japanese Yen to purchase U.S. dollars. Derivative instruments are recognized as either “Prepaid expenses and other current assets” or “Other current liabilities” in the Condensed Consolidated Balance Sheets and are measured at fair value. The foreign currency forward contracts were entered into by the Company’s Japanese subsidiary to economically hedge a portion of certain intercompany obligations. The forward contracts are not designated as hedges for accounting purposes and decreases in the fair value of $53 and $255 for the six month period ended June 30, 2014 and 2013 , respectively, are recorded within the caption “Other expense (income)” in the Condensed Consolidated Statements of Operations.       
The dollar equivalent of the U.S. dollar forward contracts and related fair values as of June 30, 2014 and December 31, 2013 were as follows:

June 30, 2014

December 31, 2013
Notional amount
$
1,675


$
1,029

Fair value of asset (liability)
$
(47
)

$
6


NOTE 6.    Goodwill and Purchased Intangible Assets
Goodwill
The changes in the carrying amount of goodwill are as follows:
Balance at December 31, 2012
 
$
15,361

Goodwill acquired during period
 
6,989

Other, primarily currency translation
 
203

Balance at December 31, 2013
 
$
22,553

Goodwill acquired during period
 

Other
 
(58
)
Balance at June 30, 2014
 
$
22,495



9


Purchased Intangible Assets
Purchased intangible assets as of  June 30, 2014 and December 31, 2013 are as follows:


Gross Carrying Amount

Accumulated Amortization

Net
June 30, 2014







 

Finite-lived intangibles:
 
 
 
 
 
 
Developed technology

$
59,831


$
52,569


$
7,262

Customer and distributor relationships

9,560


7,639


1,921

Trade names

4,361


3,420


941

Total identifiable intangible assets

$
73,752


$
63,628


$
10,124

December 31, 2013

 


 


 

Finite-lived intangibles:
 
 
 
 
 
 
Developed technology

$
59,831


$
51,496


$
8,335

Customer and distributor relationships

9,560


7,449


2,111

Trade names

4,361


3,343


1,018

Total identifiable intangible assets

$
73,752


$
62,288


$
11,464

Intangible asset amortization expense for the three and six months ended June 30, 2014 was $670 and $1,340 , respectively. For the three and six months ended June 30, 2013 , intangible assets amortization expense was $648 and $1,264 , respectively. Assuming no change in the gross carrying value of identifiable intangible assets and estimated lives, estimated amortization expense for the remainder of 2014 will be $1,081 , and for each of the next five years estimated amortization expense amounts to $2,050 for 2015 , $1,941 for 2016 , $1,553 for 2017 , $1,117 for 2018 , and $1,117 for 2019 .

NOTE 7.    Balance Sheet Details
Inventories
Inventories are comprised of the following:


June 30, 2014

December 31, 2013
Materials

$
29,464


$
31,194

Work-in-process

24,679


19,867

Finished goods

11,481


10,290

Total inventories

$
65,624


$
61,351

The Company has established reserves of $7,056 and $6,101 as of June 30, 2014 and December 31, 2013 , respectively, for slow moving and obsolete inventory, which are included in the amounts above.


10


Property, Plant and Equipment
Property, plant and equipment, net is comprised of the following:
 
June 30, 2014
 
December 31, 2013
Land and building
$
5,024

 
$
5,024

Machinery and equipment
21,314

 
20,827

Furniture and fixtures
3,484

 
4,043

Computer equipment
6,088

 
5,568

Leasehold improvements
7,811

 
7,744


43,721

 
43,206

Less: Accumulated depreciation
31,884

 
30,148

Total property, plant and equipment, net
$
11,837

 
$
13,058


Other assets
Other assets is comprised of the following:

 
June 30, 2014
 
December 31, 2013
Deferred income taxes
 
$
27,087

 
$
25,547

Other
 
1,598

 
1,776

Total other assets
 
$
28,685

 
$
27,323


Other current liabilities

Other current liabilities is comprised of the following:

 
June 30, 2014
 
December 31, 2013
Litigation accrual
 
$
13,833

 
$
4,293

Deferred revenue
 
10,363

 
8,383

Contingent consideration - acquisitions
 
1,197

 
868

Other
 
8,116

 
5,374

Total other current liabilities
 
$
33,509

 
$
18,918


Other non-current liabilities

Other non-current liabilities is comprised of the following:


June 30, 2014

December 31, 2013
Unrecognized tax benefits (including interest)

$
3,526


$
2,806

Contingent consideration - acquisitions
 
3,962

 
4,340

Other

1,915


1,772

Total other non-current liabilities

$
9,403


$
8,918


NOTE 8.   Debt Obligations
On July 25, 2011 , the Company issued $60,000 aggregate principal amount of 3.75% Convertible Senior Notes due 2016 (the “Notes”) at par. The Notes were issued pursuant to an indenture, dated as of July 25, 2011 , between the Company and Bank of New York Mellon Trust Company, N.A., as Trustee, which includes a form of Note. The Notes provide for the payment of interest semi-annually in arrears on January 15 and July 15 of each year, beginning January 15, 2012 , at an annual rate of 3.75%

11


and will mature on July 15, 2016 , unless earlier converted or repurchased. The Notes may be converted, under certain circumstances, based on an initial conversion rate of 77.241 shares of Company common stock per $1 principal amount of Notes, which represents an initial conversion price of approximately $12.95 per share. Concurrently with the issuance of the Notes, the Company purchased a convertible note hedge and sold a warrant. Each of the convertible note hedge and warrant transactions were entered into with an affiliate of the initial purchaser of the Notes. The convertible note hedge is intended to reduce the potential future dilution to the Company’s common stock associated with the conversion of the Notes. However, the warrant transaction will have a dilutive effect on the Company’s earnings per share to the extent that the price of the Company’s common stock exceeds the strike price of the warrant. The strike price of the warrant is $17.00 per share subject to adjustment in accordance with the terms of the agreement. The net proceeds to the Company from the sale of the Notes, including the convertible note hedge and warrant were $50,249 .
The following table reflects the net carrying value of the Notes:

June 30, 2014
 
December 31, 2013
Convertible senior notes
$
60,000

 
$
60,000

Less: Unamortized interest discount
6,775

 
8,249

     Net carrying value of convertible senior notes
$
53,225

 
$
51,751

The following table presents the amount of interest cost recognized relating to the Notes during the three and six months ended June 30, 2014 and June 30, 2013 .
 
Three Months Ended June 30,
 
Six Months Ended June 30,

2014
 
2013
 
2014

2013
Contractual interest coupon
$
563

 
$
562

 
$
1,125

 
$
1,124

Amortization of interest discount
739

 
670

 
1,474

 
1,337

Amortization of debt issuance costs
87

 
73

 
174

 
145

     Total interest cost recognized
$
1,389

 
$
1,305

 
$
2,773

 
$
2,606

The remaining bond discount of the Notes of $6,775 , as of June 30, 2014 , will be amortized over the remaining life of the Notes.
 
NOTE 9.   Commitments and Contingencies
Warranty Reserves
The Company generally provides a warranty on its products for a period of twelve to fifteen months against defects in material and workmanship. The Company estimates the costs that may be incurred during the warranty period and records a liability in the amount of such costs at the time revenue is recognized. The Company’s estimate is based primarily on historical experience. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Settlements of warranty reserves are generally associated with sales that occurred during the 12 to 15 months prior to the year-end and warranty accruals are related to sales during the year.

Changes in the Company’s warranty reserves are as follows:


Six Months Ended June 30,


2014

2013
Balance, beginning of the period

$
1,551


$
2,024

Accruals

961


1,033

Less: Usage

1,035


1,365

Balance, end of the period

$
1,477


$
1,692

Warranty reserves are reported in the Condensed Consolidated Balance Sheets within the caption “Accounts payable and accrued liabilities.”
Legal Matters
From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business. As previously disclosed, in December 2007, the Company completed the acquisition of specific assets and liabilities of the semiconductor division

12


of Applied Precision LLC (“Applied”). As a result of the acquisition, the Company assumed certain liabilities of Applied including a lawsuit filed in the United States District Court, District of Arizona, by Integrated Technology Corporation (“ITC”) which alleged Applied’s PrecisionPoint™, PrecisionWoRx ® and ProbeWoRx ® products infringed an ITC patent (Integrated Technology Corporation v. Rudolph Technologies, Inc., No.  CV-06-2182-PHX-ROS).  Prior to trial, the District Court ruled that such products sold prior to August of 2007 (the “pre-August 2007 tools”) infringed the ITC patent. At trial in December of 2011, a trial verdict was rendered in which the jury found that while the Company’s products manufactured after August of 2007 (the “post-August 2007 tools”) did not literally infringe ITC’s patent, the products were found to infringe under a rule known as the doctrine of equivalents, a legal principle which expands the language of patent claims to encompass products or processes which may otherwise be found not to literally infringe the patent. The jury awarded $15,475 to ITC in damages for sales made during the years 2000-2011, of which award approximately one-half related to sales for pre-August 2007 tools. The jury found that for the sales of the post-August 2007 tools, the infringement was willful. On July 23, 2012, the District Court issued an Order which affirmed the jury’s award, applied treble damages to the portion of the jury award related to post-August 2007 tool sales and granted ITC’s motion for attorney’s fees and prejudgment interest on the verdict and attorney’s fees. At that time, the District Court also enjoined the Company from future infringement of the ITC patent and from selling or supplying the applicable products with the applicable features from or into the United States. The Company appealed the injunction, the District Court Order and the damages assessment. In October 2012, the injunction was stayed by the U.S. Federal Court of Appeals and thereafter in June of 2013, the patent expired. On November 4, 2013, the U.S. Federal Court of Appeals issued a ruling which reversed the judgment of infringement against all post-August 2007 tools, reversed the finding of willfulness, vacated the treble damages award, vacated the award of attorney’s fees and costs, remanded the issue back to the District Court for further review, and affirmed the award of damages and interest for the pre-August 2007 tools. As a result, the matter is resolved with regard to the alleged infringement of the post-August 2007 tools in the Company’s favor. With regard to the damages assessment against the pre-August 2007 tools, on March 4, 2014, the Company filed a Petition for a Writ of Certiorari with the U.S. Supreme Court to appeal the basis of the Federal Court of Appeals’ decision affirming the damages award for the pre-August 2007 tools. On June 30, 2014, the Supreme Court denied the Company’s Petition and as a result, the Company increased its related litigation accrual by $9,622 for a total accrual of $13,833 . On July 22, 2014 , the Company then paid to ITC $10,613 which represented only the damages and interest portion of the judgment. Since the patent expired in June of 2013 and payment of the judgment has been made, this matter is fully resolved with the sole exception of the issue of the remanded attorney’s fees. The Company believes that it has meritorious defenses regarding this issue and intends to continue to vigorously prosecute the matter. Included in the total accrual of $13,833 , which is recorded under the caption, “Other current liabilities,” in the Condensed Consolidated Balance Sheets, is $3,250 related to the remanded attorney’s fees.  The Company expects that this is the maximum liability reasonably possible for the attorney’s fees, including interest, for this lawsuit with respect to both the pre-August 2007 and post-2007 August tools.

In the Company’s patent infringement suit against Camtek, Ltd., of Migdal Hamek, Israel, concerning the Company’s proprietary continuous scan wafer inspection technology, the U.S. Federal Court of Appeals issued a ruling on August 22, 2011.  In its opinion, the Appellate Court affirmed multiple rulings from trial at the District Court level including (i) finding the Company’s U.S. Patent No. 6,826,298 valid, (ii) the part of the infringement ruling based on the finding that Camtek’s Falcon product strobes “based on velocity,” and (iii) the dismissal of Camtek’s claim against the Company for inequitable conduct against the U.S. Patent and Trademark Office.  The court did, however, revise one claim construction ruling made by the District Court in the original case.  As a result, the Appellate Court set aside the verdict delivered by the jury for damages and the District Court’s decision to enter an injunction against Camtek’s selling Falcon tools in the U.S. and remanded the case back to the trial court for a limited trial on this single infringement issue.  On March 31, 2014, the District Court ruled in the Company’s favor, finding that Camtek’s Falcon tools continue to infringe the Company’s patent even under the revised claim construction of the patent, obviating the need for the limited trial.  The Company intends to petition the court to reinstate a permanent injunction against the sale by Camtek of its infringing semiconductor inspection systems. The Company also anticipates that the damages originally awarded by the jury in 2009 will be reinstated, as well as related interest and all subsequently awarded damages.   This lawsuit was initially brought in 2005 by August Technology prior to its merger with the Company. A subsequent lawsuit has been filed by Rudolph against Camtek alleging infringement of Rudolph’s U.S. Patent No. 7,729,528, also related to the Company’s proprietary continuous scan wafer inspection technology.  This lawsuit is currently stayed pending resolution of a re-examination petition filed by Camtek with the U.S. Patent and Trademark Office.
Letter of Credit
As of June 30, 2014 , the Company had a $40,000 irrevocable standby letter of credit with Credit Suisse AG available to secure the damages assessment in connection with the ITC litigation discussed in Legal Matters above. On July 22, 2014, the Company paid $10,613 to ITC through a draw down of the letter of credit. Pursuant to the terms of the letter of credit, upon draw down of the funds, the letter of credit was collateralized by securities held in the Company’s investment portfolios which were immediately sold to satisfy the letter of credit payment. The letter of credit was subsequently canceled upon completion of this payment.


13


NOTE 10.   Share-Based Compensation
Restricted Stock Unit Activity
A summary of the Company’s nonvested restricted stock unit activity with respect to the six months ended June 30, 2014 is as follows:


Number of Shares

Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013

1,116


$
9.73

Granted

577


$
11.04

Less: Vested

395


$
8.18

Less: Forfeited

33


$
10.39

Nonvested at June 30, 2014

1,265


$
10.79

As of June 30, 2014 and December 31, 2013 , there was $9,157 and $5,755 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.  That cost is expected to be recognized over a weighted average period of 2.5 years and 2.0 years for the respective periods.

NOTE 11.   Other Expense (Income)
 
Three Months Ended
 
Six Months Ended

June 30,
 
June 30,
 
2014

2013
 
2014
 
2013
Foreign currency exchange losses (gains), net
$
162

 
$
(398
)
 
$
35

 
$
(49
)
Total other expense (income)
$
162

 
$
(398
)
 
$
35

 
$
(49
)

NOTE 12.   Income Taxes
The following table provides details of income taxes:


Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2014

2013
 
2014
 
2013
Income (loss) before income taxes
$
(10,995
)
 
$
1,332

 
$
(12,036
)
 
$
1,077

Provision (benefit) for income taxes
$
(6,583
)
 
$
573

 
$
(6,900
)
 
$
(75
)
Effective tax rate
59.9
%
 
43.0
%
 
57.3
%
 
(7.0
)%
The income tax provision for the three and six months ended June 30, 2014 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year. The changes in the Company’s effective tax rate for the six months ended June 30, 2014 compared to the same period for the prior year are primarily due to the generation of federal R&D credits for both 2012 and 2013 recognized in 2013, which are not available in the 2014 period as a result of legislation, and an increase in foreign tax expense in excess of foreign tax credits generated in 2014.
The Company currently has a partial valuation allowance recorded against certain deferred tax assets. Each quarter, the Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers available evidence, both positive and negative, including prudent and feasible tax planning strategies in assessing the need for a valuation allowance. As a result of the Company’s analysis, it concluded that it is more likely than not that a portion of its deferred tax assets will not be realized. Therefore, the Company continues to provide a valuation allowance against certain deferred tax assets. The Company continues to closely monitor available evidence and may reverse some or all of the remaining valuation allowance in future periods, if appropriate. The Company has a valuation allowance of $1,646 as of June 30, 2014 and December 31, 2013.


14


NOTE 13.   Earnings (Loss) Per Share
Basic earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per share is computed in the same manner and also gives effect to all dilutive common equivalent shares outstanding during the period.  Potential common shares that would have the effect of increasing diluted earnings per share are considered to be antidilutive. In accordance with U.S. GAAP, these shares were not included in calculating diluted earnings per share. For the three and six months ended June 30, 2014 , all outstanding restricted stock units of 1,265 and stock options of 714 were excluded from the computation of diluted loss per share because the effect in the period would be antidilutive. For the three and six months ended June 30, 2013 , the weighted average number of stock options and restricted stock units excluded from the computation of diluted earnings per share totaled 711 and 760 , respectively, because their effect was antidilutive. Diluted earnings per share-weighted average shares outstanding do not include any effect resulting from assumed conversion of the Notes and warrants as their impact would be anti-dilutive.
The Company’s basic and diluted earnings (loss) per share amounts are as follows:

Three Months Ended June 30,
 
Six Months Ended June 30,

2014

2013
 
2014
 
2013
Numerator:


 


 
 
 
 
Net income (loss)
$
(4,412
)
 
$
759

 
$
(5,136
)
 
$
1,152

Denominator:


 
 

 
 
 
 
Basic earnings (loss) per share - weighted average shares outstanding
33,240

 
32,567

 
33,186

 
32,633

Effect of potential dilutive securities:
 
 
 
 
 
 
 
Employee stock options and restricted stock units - dilutive shares

 
588

 

 
651

     Diluted earnings (loss) per share - weighted average shares outstanding
33,240

 
33,155

 
33,186

 
33,284

Earnings (loss) per share:
 

 
 

 
 

 
 

Basic
$
(0.13
)
 
$
0.02

 
$
(0.15
)
 
$
0.04

Diluted
$
(0.13
)
 
$
0.02

 
$
(0.15
)
 
$
0.03


NOTE 14.   Accumulated Other Comprehensive Loss
Comprehensive income includes net income (loss), foreign currency translation adjustments, and net unrealized gains and losses on available-for-sale investments. See the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the effect of the components of comprehensive loss to our net income (loss).
The components of accumulated other comprehensive loss, net of tax, are as follows:
 
 
Foreign currency translation adjustments
 
Net unrealized losses on available-for-sale investments
 
Accumulated other comprehensive loss
Beginning Balance, December 31, 2012
 
$
985

 
$
100

 
$
1,085

    Net current period other comprehensive loss
 
660

 
50

 
710

    Reclassifications
 

 

 

Beginning Balance, December 31, 2013
 
$
1,645

 
$
150

 
$
1,795

    Net current period other comprehensive gain
 
(227
)
 
(27
)
 
(254
)
    Reclassifications
 

 

 

Ending balance, June 30, 2014
 
$
1,418

 
$
123

 
$
1,541



15


NOTE 15.   Segment Reporting and Geographic Information
The Company is engaged in the design, development, manufacture and support of high-performance control metrology, defect inspection, advanced packaging lithography and data analysis systems used by microelectronics device manufacturers. The Company and its subsidiaries currently operate in a single operating segment: the design, development, manufacture and support of high-performance process control defect inspection, metrology, and process control software systems used by microelectronics device manufacturers, and therefore have one reportable segment. The Company’s chief operating decision maker is the Chief Executive Officer. The chief operating decision maker allocates resources and assesses performance of the business and other activities at the reporting segment level.

The following table lists the different sources of revenue:

 
Three Months Ended
 
Six Months Ended

 
June 30,
 
June 30,

 
2014

2013
 
2014
 
2013
Systems and Software:
 
 
 
 
 
 
 
 
Inspection
 
$
22,852

 
53
%
 
$
26,829

 
58
%
 
$
40,853


48
%

$
51,708


59
%
Metrology
 
4,652

 
11
%
 
5,869

 
13
%
 
10,401


12
%

6,157


7
%
Lithography
 

 
%
 

 
%
 
3,657


5
%

3,700


4
%
Data Analysis and Review
 
6,956

 
16
%
 
4,856

 
11
%
 
12,930


15
%

9,013


10
%
Parts
 
5,072

 
12
%
 
5,255

 
11
%
 
10,112


12
%

10,801


13
%
Services
 
3,486

 
8
%
 
3,250

 
7
%
 
6,714


8
%

6,330


7
%
Total revenue
 
$
43,018

 
100
%
 
$
46,059

 
100
%
 
$
84,667


100
%

$
87,709


100
%
 
    
For geographical revenue reporting, revenues are attributed to the geographic location in which the product is shipped.  Revenue by geographic region is as follows:  
 
Three Months Ended
 
Six Months Ended

June 30,
 
June 30,

2014

2013
 
2014
 
2013
United States
$
9,704

 
$
10,077

 
$
19,638

 
$
19,478

Taiwan
12,252

 
19,490

 
20,182

 
32,621

Japan
5,068

 
1,319

 
6,353

 
3,707

China
2,295

 
4,520

 
7,125

 
7,269

South Korea
887

 
1,644

 
8,439

 
5,067

Other Asia
5,995

 
3,167

 
12,586

 
8,575

Germany
3,908

 
1,550

 
5,251

 
4,075

Other Europe
2,909

 
4,292

 
5,093

 
6,917

Total revenue
$
43,018

 
$
46,059

 
$
84,667

 
$
87,709


The following customers each accounted for more than 10% of total revenues for the indicated periods.
 
Six Months Ended

June 30,

2014
 
2013
Customer A
11.1
%
 
10.8
%
Customer B
6.2
%
 
11.0
%
Customer C
4.1
%
 
10.0
%


16


NOTE 16.   Share Repurchase Program
In 2008, the Board of Directors authorized a share repurchase program of up to 3,000 shares of the Company’s common stock with no established end date.  The program allows for repurchases to be made in the open market or through negotiated transactions from time to time. At June 30, 2014 , 2,900 shares remained available for future stock repurchases under this repurchase program. The shares of common stock purchased under the share repurchase program are being retired.
The Company did not repurchase any shares of its common stock during the three and six month periods ended June 30, 2013 . The following table summarizes the Company’s stock repurchases for the three and six month periods ended June 30, 2014 :

Three and Six Months Ended

June 30, 2014
Shares of common stock repurchased
100

Cost of stock repurchased

$986

Average price paid per share

$9.86


Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations    
Certain statements in this Quarterly Report on Form 10-Q are forward-looking statements, including those concerning our business momentum and future growth, the benefit to customers and market acceptance of our products and customer service, our ability to deliver both products and services consistent with our customers’ demands and expectations and strengthen our market position, our expectations of the semiconductor market outlook, future revenues, gross profits, research and development and engineering expenses, selling, general and administrative expenses, product introductions, technology development, manufacturing practices, cash requirements and anticipated trends and developments in and management plans for, our business and the markets in which we operate, our anticipated revenue as a result of recent acquisitions, and our ability to be successful in managing our cost structure and cash expenditures and results of litigation, including resolution of the remaining issue in our ITC litigation. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the words such as, but not limited to, “anticipate,” “believe,” “expect,” “intend,” “plan,” “should,” “may,” “could,” “will” and words or phrases of similar meaning, as they relate to our management or us.

The forward-looking statements contained herein reflect our current expectations with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially from those projected in such forward-looking statements for a number of reasons including, but not limited to, the following: variations in the level of orders which can be affected by general economic conditions and growth rates in the semiconductor manufacturing industry and in the markets served by our customers, the global economic and political climates, difficulties or delays in product functionality or performance, the delivery performance of sole source vendors, the timing of future product releases, failure to respond adequately to either changes in technology or customer preferences, changes in pricing by us or our competitors, our ability to manage growth, risk of nonpayment of accounts receivable, changes in budgeted costs, our ability to leverage our resources to improve our position in our core markets, our ability to weather difficult economic environments, our ability to open new market opportunities and target high-margin markets, the strength/weakness of the back-end and /or front-end semiconductor market segments, our ability to successfully integrate recently acquired businesses into our business and fully realize, or realize within the expected time frame, the expected combination benefits from the acquisitions, and the “Risk Factors” set forth in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2013 (“ 2013 10-K”). The forward-looking statements reflect our position as of the date of this report and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.
A critical accounting policy is defined as one that is both material to the presentation of our condensed consolidated financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition or results of operations. Specifically, these policies have the following attributes: (1) we are required to make judgments and assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates

17

Table of Contents

we could reasonably have used, or changes in the estimate that are reasonably likely to occur, could have a material effect on our financial position and results of operations.
Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have been included in the condensed consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. Certain of these uncertainties are discussed in our 2013 10-K in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our condensed consolidated financial statements are fairly stated in accordance with U.S. GAAP, and provide a fair presentation of our financial position and results of operations.
For more information, please see our critical accounting policies as previously disclosed in our 2013 10-K.
See Note 1 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q regarding the impact of recent accounting pronouncements on our financial position and results of operations.
Results of Operations for the Three and Six Month Periods Ended June 30, 2014 and 2013
We are a worldwide leader in the design, development, manufacture and support of defect inspection, advanced packaging lithography, process control metrology, and data analysis systems and software used by microelectronic device manufacturers. We provide process and yield management solutions used in both wafer processing and final manufacturing through a family of standalone systems for macro-defect inspection, lithography, probe card test and analysis, and transparent and opaque thin film measurements. All Rudolph systems feature sophisticated software and production-worthy automation. Rudolph systems are backed by worldwide customer support.
Rudolph’s business is affected by the annual spending patterns of our customers on semiconductor capital equipment. The amount that our customers devote to capital equipment spending depends on a number of factors, including general worldwide economic conditions as well as other economic drivers such as personal computer, tablet, cell phone, other personal electronic devices and automotive sales. Current forecasts by industry analysts for the semiconductor device manufacturing industry project a year-over-year increase in capital spending of approximately 5% to 10% for 2014. We monitor capital equipment spending through announced capital spending plans by our customers and monthly-published industry data such as the book-to-bill ratio. The book-to-bill ratio is a 3-month running statistic that compares bookings or orders placed with capital equipment suppliers to billings or shipments. A book-to-bill above 1.0 shows that semiconductor device equipment manufacturers are ordering equipment at a pace that exceeds the equipment suppliers’ shipments for the period. The 3-month rolling average North American semiconductor equipment book-to-bill ratio was 1.1 at June 30, 2014 , an increase from the book-to-bill ratio of 1.0 at December 31, 2013 .
Historically, a significant portion of our revenues in each quarter and year has been derived from sales to relatively few customers, and we expect this trend to continue. For the six month period ended June 30, 2014 and for the years ended December 31, 2013 , 2012 and 2011 , sales to customers that individually represented at least five percent of our revenues accounted for 32.2% , 41.6% , 50.9% , and 43.6% of our revenues, respectively.
We do not have purchase contracts with any of our customers that obligate them to continue to purchase our products, and they could cease purchasing products from us at any time. A delay in purchase or cancellation by any of our large customers could cause quarterly revenues to vary significantly. In addition, during a given quarter, a significant portion of our revenues may be derived from the sale of a relatively small number of systems. The following table lists the average selling price for our systems:

System
 
Average Selling Price Per System
Macro-defect inspection and probe card and test analysis
 
$250,000 to $1.7 million
Transparent film measurement
 
$800,000 to $1.2 million
Opaque film measurements
 
$1.0 million to $1.8 million
Lithography steppers
 
$3.0 million to $4.0 million


A significant portion of our revenues has been derived from customers outside of the United States.  We expect that revenues generated from customers outside of the United States will continue to account for a significant percentage of our revenues. 

18

Table of Contents

The following table lists, for the periods indicated, the revenue derived from customers outside of the United States (in percentages of total revenues): 
 
Six Months Ended
 
 
 
June 30,
 
Years Ended December 31,

2014
 
2013
 
2012
 
2011
Asia
64.6
%
 
62.4
%
 
67.3
%
 
51.3
%
Europe
12.2
%
 
14.4
%
 
13.4
%
 
20.4
%
Total international revenue
76.8
%
 
76.8
%
 
80.7
%
 
71.7
%
The sales cycle for our systems typically ranges from six to 15 months , and can be longer when our customers are evaluating new technology. Due to the length of these cycles, we invest significantly in research and development and sales and marketing in advance of generating revenues related to these investments.
Revenues. Our revenues are primarily derived from the sale of our systems, services, spare parts and software licensing.  Our revenue was $43.0 million and $84.7 million for the three and six month periods ended June 30, 2014 , compared to $46.1 million and $87.7 million for the three and six month periods ended June 30, 2013 , representing decreases of 6.6% and 3.5% in the year-over-year periods, respectively. 
The following table lists, for the periods indicated, the different sources of our revenues in dollars (thousands) and as percentages of our total revenues:


Three Months Ended
 
Six Months Ended


June 30,
 
June 30,


2014

2013
 
2014
 
2013
Systems and Software:


 


 
 
 
 
 
Inspection

$
22,852


53
%

$
26,829


58
%
 
$
40,853

 
48
%
 
$
51,708

 
59
%
Metrology

4,652


11
%

5,869


13
%
 
10,401

 
12
%
 
6,157

 
7
%
Lithography
 

 
%
 

 
%
 
3,657

 
5
%
 
3,700

 
4
%
Data Analysis and Review

6,956


16
%

4,856


11
%
 
12,930

 
15
%
 
9,013

 
10
%
Parts

5,072


12
%

5,255


11
%
 
10,112

 
12
%
 
10,801

 
13
%
Services

3,486


8
%

3,250


7
%
 
6,714

 
8
%
 
6,330

 
7
%
Total revenue

$
43,018


100
%

$
46,059


100
%
 
$
84,667

 
100
%
 
$
87,709

 
100
%
 
Total systems and software revenue decreased for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 . Year-over-year there was decreased customer demand for our inspection systems which contributed to a lower number of inspection systems sold during the six months ended June 30, 2014 as compared to the same period in the prior year. As a result, inspection systems revenue decreased $10.9 million for the 2014 period compared to the 2013 period. The number of metrology systems sold during the six months ended June 30, 2014 was significantly higher compared to the same period in the prior year, resulting in an increase in metrology systems revenue of $4.2 million for the 2014 period. Lithography system revenue was relatively flat for the six months ended June 30, 2014 as we sold the same number of lithography systems in both periods. The year-over-year increase in data analysis and review software revenue for the six months ended June 30, 2014 of $3.9 million is primarily due to increased sales in licensing revenue.  As a result, the decrease in total revenue for the 2014 period was caused by decreased volume rather than pricing changes as the average selling price of similarly configured systems has been consistent across the year-over-year periods. Systems revenue generated by our latest product releases and major enhancements in each of our product families amounted to 57% and 58% of total revenues for the three and six month periods ended June 30, 2014 , compared to 68% and 67% of total revenues for the three and six month periods ended June 30, 2013 .  The year-over-year decrease in total parts and services revenue for the six month period ended June 30, 2014 is primarily due to decreased spending by our customers on system upgrades and repairs of existing systems. Parts and services revenues are generated from part sales, maintenance service contracts, system upgrades, as well as time and material billable service calls. 
Deferred revenues of $10.4 million are recorded in the Condensed Consolidated Balance Sheets within the caption “Other current liabilities” at June 30, 2014 and primarily consist of $5.0 million for systems awaiting acceptance and outstanding deliverables and $5.4 million for deferred maintenance agreements.
Gross Profit. Our gross profit has been and will continue to be affected by a variety of factors, including manufacturing efficiencies, excess and obsolete inventory write-offs, pricing by competitors or suppliers, new product introductions, production

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volume, customization and reconfiguration of systems, international and domestic sales mix, and parts and service margins. Our gross profit was $23.3 million and $44.9 million for the three and six month periods ended June 30, 2014 , compared to $23.5 million and $45.4 million for the three and six month periods ended June 30, 2013 .  Our gross profit represented 54.2% and 53.0% of our revenues for the three and six month periods ended June 30, 2014 and 51.1% and 51.7% of our revenues for the same periods in the prior year.  The increase in gross profit as a percentage of revenue for the three and six month periods ended June 30, 2014 compared to the same period in the prior year is primarily due to product mix.
Operating Expenses. Major components of operating expenses include research and development as well as selling, general and administrative expenses.     
Research and Development .  Our research and development expense was $10.8 million and $20.8 million for the three and six month periods ended June 30, 2014 , compared to $10.2 million and $19.9 million for the same period in the prior year.  Research and development expense represented 25.2% and 24.6% of our revenues for the three and six month periods ended June 30, 2014 , compared to 22.2% and 22.7% of revenues for the prior year period.  The year-over-year dollar increase for the three and six month periods ended June 30, 2014 in research and development expenses primarily reflects an increase in compensation and project costs related to our lithography systems group.
Selling, General and Administrative .     Our selling, general and administrative expense was $21.3 million and $32.1 million for the three and six month periods ended June 30, 2014 , compared to $10.5 million and $20.8 million for the same period in the prior year.  Selling, general and administrative expense represented 49.5% and 37.9% of our revenues for the three and six month periods ended June 30, 2014 , compared to 22.8% and 23.7% of our revenues for the same period in the prior year.  The year-over-year dollar increase for the three and six month periods ended June 30, 2014 in selling, general and administrative expense was primarily due to higher litigation expenses of $9.6 million related to the final judgment awarded to ITC. For further information, see Note 9 in the accompanying unaudited condensed consolidated financial statements.
Income Taxes .  For the three and six month periods ended June 30, 2014 , we recorded income tax benefits of $6.6 million and $6.9 million , respectively. Our effective tax rate of 59.9% and 57.3% differs from the statutory rate of 35% for the three and six month periods ended June 30, 2014 primarily due to projected foreign tax expense in excess of foreign tax credits generated in 2014.
We currently have a partial valuation allowance recorded against our deferred tax assets. Each quarter we assess the likelihood that we will be able to recover our deferred tax assets primarily relating to state R&D credits. We consider available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. As a result of our analysis, we concluded that it is more likely than not that a portion of our net deferred tax assets will not be realized. Therefore, we continue to provide a valuation allowance against certain net deferred tax assets. We continue to closely monitor available evidence and may reverse some or all of the valuation allowance in future periods, if appropriate.
Litigation. As discussed in Part II, Item 1 of this Quarterly Report on Form 10-Q (“Legal Proceedings”), we are subject to legal proceedings and claims, which includes, among other things, our litigation with ITC in a patent infringement action related to the predictive scrub feature of our PrecisionPoint™, PrecisionWoRx ® and ProbeWoRx ® products in which we were the defendants (the “ITC Litigation”). See Legal Proceedings for a discussion of this action and the District Court’s adverse order affirming the jury award and ordering other relief in this matter, the ruling obtained from the U.S. Federal Court of Appeals, the ruling by the U.S. Supreme Court and the payment of the assessed $10.6 million judgment by the Company.
Liquidity and Capital Resources
At June 30, 2014 , we had $177.3 million of cash, cash equivalents and marketable securities and $266.1 million in working capital.  At December 31, 2013 , we had $167.4 million of cash, cash equivalents and marketable securities and $265.3 million in working capital. 
Operating activities provided  $10.7 million in net cash and cash equivalents for the six month period ended June 30, 2014 .  The net cash and cash equivalents provided by operating activities during the six month period ended June 30, 2014 was primarily a result of net loss, adjusted to exclude the effect of non-cash operating charges of $4.7 million and changes in operating assets and liabilities of $6.0 million . Operating activities used $6.1 million in net cash and cash equivalents for the six month period ended June 30, 2013 . The net cash and cash equivalents used in operating activities during the six month period ended June 30, 2013 was primarily a result of changes in operating assets and liabilities of $15.8 million , partially offset by net income adjusted to exclude the effect of non-cash operating charges of $9.7 million .
Net cash and cash equivalents used in investing activities during the six month period ended June 30, 2014 of $36.2 million was due to the purchase of marketable securities of $110.6 million , and capital expenditures of $1.0 million , partially offset by the proceeds from sales of marketable securities of $75.4 million .  Net cash and cash equivalents used in investing activities

20

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during the six month period ended June 30, 2013 of $31.8 million was due to the purchase of marketable securities of $61.4 million , purchase of business of $3.4 million and capital expenditures of $2.5 million , partially offset by the proceeds from sales of marketable securities of $35.4 million .
In 2008, our Board of Directors approved a stock repurchase program of up to 3 million shares of Company common stock with no established end date.  The program allows for repurchases to be made in the open market or through negotiated transactions from time to time. At June 30, 2014 , 2.9 million shares remained available for future stock repurchases under this repurchase program. The shares of common stock purchased under the share repurchase program are being retired. For further information, see Note 16 in the accompanying unaudited condensed consolidated financial statements.
From time to time, we evaluate whether to acquire new or complementary businesses, products and/or technologies. We may fund all or a portion of the purchase price of these acquisitions in cash, stock, or a combination of cash and stock.
As of June 30, 2014 , we had a $40 million irrevocable standby letter of credit available with Credit Suisse AG which was required to secure the damages assessment in connection with the ITC Litigation discussed in Legal Proceedings. On July 22, 2014, we paid $10.6 million to ITC through a draw down of the letter of credit. Pursuant to the terms of the letter of credit, upon draw down of the funds, the letter of credit was collateralized by securities held in the Company’s investment portfolios which were immediately sold to satisfy the letter of credit payment. The letter of credit was subsequently canceled upon completion of this payment.
Our future capital requirements will depend on many factors, including the timing and amount of our revenues and our investment decisions, which will affect our ability to generate additional cash. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements for working capital and capital expenditures for the next twelve months. Thereafter, if cash generated from operations and financing activities is insufficient to satisfy our working capital requirements, we may seek additional funding through bank borrowings, sales of securities or other means. There can be no assurance that we will be able to raise any such capital on terms acceptable to us or at all.


Item 3.    Quantitative and Qualitative Disclosures about Market Risk
Interest Rate and Credit Market Risk
We are exposed to changes in interest rates and market liquidity including our investments in certain available-for-sale securities. Our available-for-sale securities consist of fixed and variable rate income investments (municipal notes, municipal and corporate bonds and an auction rate security). We continually monitor our exposure to changes in interest rates, market liquidity and credit ratings of issuers from our available-for-sale securities. It is possible that we are at risk if interest rates, market liquidity or credit ratings of issuers change in an unfavorable direction. The magnitude of any gain or loss will be a function of the difference between the fixed or variable rate of the financial instrument and the market rate and our financial condition and results of operations could be materially affected. Based on a sensitivity analysis performed on our financial investments held as of June 30, 2014 , an immediate adverse change of 10% in interest rates (e.g. 3.00% to 3.30%) would result in an immaterial decrease in the fair value of our available-for-sale securities and would not have a material impact on our consolidated financial position, results of operations or cash flows.
Foreign Currency Risk
We have branch operations in Taiwan, Singapore and South Korea and wholly-owned subsidiaries in Europe, China and Japan.  Our international subsidiaries and branches operate primarily using local functional currencies.  The intercompany transactions denominated in U.S. dollars appearing on the financial statements of the subsidiaries and branches are remeasured at each quarter-end resulting in gains and losses which are reflected in net income.  A hypothetical 10% appreciation or depreciation in the U.S. dollar relative to the reporting currencies of our foreign subsidiaries at June 30, 2014 would have affected the foreign-currency-denominated non-operating expenses of our foreign subsidiaries by approximately $ 1.9 million . We cannot accurately predict future exchange rates or the overall impact of future exchange rate fluctuations on our business, results of operations and financial condition.
A substantial portion of our international sales are denominated in U.S. dollars with the exception of Japan and, as a result, we have relatively little exposure to foreign currency exchange risk with respect to these sales. Substantially all our sales in Japan are denominated in Japanese yen. From time to time, we may enter into forward exchange contracts to economically hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions expected to occur within 12 months. The change in fair value of the forward contracts is recognized in “Other expense (income)” in the Condensed Consolidated Statements of Operations for each reporting period. As of June 30, 2014 , we had seven forward contracts outstanding with a total notional contract value of $1.7 million . We do not use derivative financial instruments for trading or speculative purposes.


21

Table of Contents

Item 4.  Controls and Procedures
We maintain a set of disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act, designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure. The disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives. 
Scope of the Controls Evaluation
The evaluation of our disclosure controls and procedures included a review of the controls’ objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in this Quarterly Report on Form 10-Q. In the course of the evaluation, we sought to identify data errors, control problems or acts of fraud and confirm that appropriate corrective actions, if any, including process improvements, were being undertaken. This type of evaluation is performed on a quarterly basis so that the conclusions of management, including the CEO and CFO, concerning the effectiveness of the controls can be reported in our Quarterly Reports on Form 10-Q and in our Annual Reports on Form 10-K. Many of the components of our disclosure controls and procedures are also evaluated on an ongoing basis by other personnel in our accounting, finance and legal functions. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures and to modify them on an ongoing basis as necessary. A control system can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
Conclusions
As of June 30, 2014 , an evaluation of our disclosure controls and procedures was carried out under the supervision and with the participation of our management, including the CEO and CFO. Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this Quarterly Report on Form 10-Q.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II    OTHER INFORMATION

Item 1.   Legal Proceedings
For a description of our previously reported legal proceedings refer to “Part I, Item 3 - Legal Proceedings” in our 2013 10-K, as updated in Note 9 to the accompanying unaudited condensed consolidated financial statements.

In our ITC Litigation, on June 30, 2014, the U.S. Supreme Court denied the Company’s Petition for a Writ of Certiorari to appeal the basis of the Federal Court of Appeals’ decision affirming the damages award for the pre-August 2007 tools. As a result, the Company paid to ITC $10.6 million on July 22, 2014. This matter is now fully resolved with the sole exception of the issue of remanded attorney’s fees. See Note 9 to the accompanying unaudited condensed consolidated financial statements for additional information regarding this action.

We are party to other ordinary and routine litigation incidental to our business. We do not expect the outcome of any pending litigation to have a material adverse effect on our consolidated financial position or results of operations.

Item 1A.    Risk Factors
There were no material changes to our risk factors as discussed in Part I, Item 1A - Risk Factors in our 2013 10-K.


22

Table of Contents

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
In 2008, our Board of Directors authorized a share repurchase program of up to 3 million shares of the Company’s common stock with no established end date. The program allows for repurchases to be made in the open market or through negotiated transactions from time to time. At June 30, 2014 , $2.9 million shares remained available for future stock repurchases under this repurchase program. The shares of common stock purchased under the share repurchase program are being retired.
The following table provides details of common stock purchased during the three month period ended June 30, 2014 (in thousands, except per share data):
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Program
 
Maximum Number of Shares that May Yet Be Purchased Under the Program
April 1, 2014 - April 30, 2014
 

 

 

 
3,000

May 1, 2014 - May 31, 2014
 

 

 

 
3,000

June 1, 2014 - June 30, 2014
 
100

 
$
9.86

 
100

 
2,900


Item 3.    Defaults Upon Senior Securities
None.

Item 4.    Mine Safety Disclosures
None.

Item 5.    Other Information
On July 29, 2014, the Company’s Management Agreements with Paul F. McLaughlin and Steven R. Roth, as well as the Company’s Employment Agreements with Michael Plisinski and D. Mayson Brooks, were restated and amended. The restatement consisted of incorporating all prior amendments into a single operating document. The amendments to the agreements reflect certain modifications to clarify certain provisions and other modifications, none of which are deemed material by the Company. The restated and amended agreements provide no increase in base salary, level of annual or long-term incentive compensation, employee benefits, or cash severance amounts and provide no new equity compensation grants. Copies of the restated and amended agreements are included as Exhibits 10.1 through 10.4 to this Quarterly Report on Form 10-Q.



23

Table of Contents

Item 6.   Exhibits
Exhibit No.
Description
10.1
Restated and Amended Management Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and Paul F. McLaughlin. *
10.2
Restated and Amended Management Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and Steven R. Roth. *
10.3
Restated and Amended Employment Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and Michael Plisinski. *
10.4
Restated and Amended Employment Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and D. Mayson Brooks. *
31.1
Certification of Paul F. McLaughlin, Chief Executive Officer, pursuant to Securities Exchange Act Rule 13a-14(a).
 
31.2
Certification of  Steven R. Roth, Chief Financial Officer, pursuant to Securities Exchange Act Rule 13a-14(a).
 
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Paul F. McLaughlin, Chief Executive Officer of Rudolph Technologies, Inc.
 
32.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Steven R. Roth, Chief Financial Officer of Rudolph Technologies, Inc.
 
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 


24

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Rudolph Technologies, Inc.
Date:
August 6, 2014
By: 
/s/  Paul F. McLaughlin
 
 
Paul F. McLaughlin
 
 
Chairman and Chief Executive Officer
 
 
 
 
Date:
August 6, 2014
By: 
/s/  Steven R. Roth
 
 
Steven R. Roth
 
 
Senior Vice President, Chief Financial Officer and Principal Accounting Officer





25

Table of Contents

EXHIBIT INDEX

Exhibit No.
Description
10.1
Restated and Amended Management Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and Paul F. McLaughlin. *
10.2
Restated and Amended Management Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and Steven R. Roth. *
10.3
Restated and Amended Employment Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and Michael Plisinski. *
10.4
Restated and Amended Employment Agreement, dated as of July 29, 2014, by and between Rudolph Technologies, Inc. and D. Mayson Brooks. *
31.1
Certification of Paul F. McLaughlin, Chief Executive Officer, pursuant to Securities Exchange Act Rule 13a-14(a).
 
31.2
Certification of  Steven R. Roth, Chief Financial Officer, pursuant to Securities Exchange Act Rule 13a-14(a).
 
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Paul F. McLaughlin, Chief Executive Officer of Rudolph Technologies, Inc.
 
32.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Steven R. Roth, Chief Financial Officer of Rudolph Technologies, Inc.
 
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document



26


Exhibit 10.1
 

RUDOLPH TECHNOLOGIES

RESTATED AND AMENDED MANAGEMENT AGREEMENT


THIS MANAGEMENT AGREEMENT (the “ Agreement ”) is made as of July 24, 2000 (the “ Effective Date ”), as restated and amended through July 29, 2014, by and among Rudolph Technologies (“ Technologies ” or the “Company”), a Delaware corporation, and Paul F. McLaughlin (“ Executive ”).

WHEREAS, Executive desires to be employed as an Officer of Technologies, and Technologies desires to employ Executive Officer and to be assured of its right to his services on the terms and conditions hereinafter set forth, and Executive is willing to agree to such employment on such terms and conditions;

NOW, THEREFORE, the Company and Executive agree as follows:

1.
Definitions . As used herein, the following terms shall have the following meanings:

Board ” means the Company's board of directors.

Cause ” means the determination by the Board, in the exercise of its good faith judgment, that: (a) Executive has committed a fraud, felony or other serious act of moral turpitude; or (b) Executive has breached his duty of loyalty to the Company or its Subsidiaries; or (c) Executive has committed a material breach of this Agreement. A termination for Cause may be made effective on five (5) days written notice to the Executive from the Company. A termination for Cause shall not take effect unless, and Executive’s employment with the Company shall continue while, these provisions for a Cause termination are complied with. Executive shall be given written notice by the Company of its intention to terminate him for Cause, such notice (A) to follow a good faith investigation by the Company into the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, (B) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and (C) to be given within sixty (60) days of the Company's learning of such act or acts or failure or failures to act. Executive shall have thirty (30) days after the date that such written notice has been given to him in which to seek to remedy such matter. If he fails to remedy such matter, Executive shall be entitled to a hearing before the Board at which Executive (with legal counsel, if Executive so wishes) is entitled to appear. Such hearing shall be held within fifteen (15) days of the end of the foregoing thirty (30) day remedy period, provided Executive requests such hearing in writing within such thirty (30) day period. If following such hearing (or, if no hearing is so requested, following the end of the thirty (30) day remedy period), the Board furnishes to the Executive written notice and confirms that, in its good faith judgment, grounds for Cause on the basis of the original notice exist, the termination for Cause shall be effective five (5) days following the date of such subsequent notice.

Good Reason ” means the resignation by Executive of employment with Technologies as a direct result of either (i) a material diminution of duties and responsibilities of Executive as an employee of Technologies, (ii) the relocation of Executive outside of the Flanders, New Jersey area (for the avoidance of doubt, this area is considered a fifty (50) mile radius around the headquarters office in Flanders, NJ), (iii) any requirement by the Company that Executive make a material misstatement or omission in any financial report or governmental filing, or (iv) a material breach of this Agreement by the Company or its Subsidiaries in the absence of a material breach of this Agreement by Executive; provided that, in the case of Executive’s termination of employment for Good Reason pursuant to Section 4(c) of this Agreement, such diminution or breach, as the case may be, has continued fifteen (15) days after delivery of written notice by Executive to the Board stating Executive's intent to resign as a consequence of such diminution or breach and Executive's resignation actually occurs within sixty (60) days following the first occurrence of such diminution or breach.

Independent Third Party ” means any Person or group of Persons who, immediately prior to the contemplated transaction, does not own in excess of 5% of the common equity of the Company or its Subsidiaries on a fully-diluted basis, who is not controlling, controlled by or under common control with any such 5% owner of capital stock and who is not the spouse or descendent (by birth or adoption) of any such 5% owner of capital stock.


1



Permanent Disability ” means that Executive is unable to perform, by reason of physical or mental incapacity, his duties or obligations under this Agreement, for a period of one hundred eighty (180) days.

Sale of the Company ” means the sale of Technologies to an Independent Third Party or affiliated group of Independent Third Parties pursuant to which such party or parties acquire (i) capital stock of Technologies possessing the voting power to elect a majority of Technologies Board (whether by merger, consolidation or sale or transfer of the Company's capital stock) or (ii) all or substantially all of the Company's assets determined on a consolidated basis.

Change of Control ” shall be deemed to occur upon the earliest to occur after the Effective Date of this Agreement of any of the following events:

(i)
Acquisition of Stock by Third Party . Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities;

(ii)
Change in Board of Directors . During any period of two (2) consecutive years (not including any period prior to the Effective Date of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clauses (i), (iii) or (iv) of this definition of Change of Control whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

(iii)
Corporate Transactions . The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger of consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iv)
Liquidation . The approval by the shareholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; and

(v)
Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

Provided, however, that any transaction or other event described in clauses (i) through (v) above shall not be deemed to constitute a “Change of Control” under this Agreement unless such transaction or event constitutes a “change in control” under Section 409A of the Internal Revenue Code (“ Code ”) and the regulations and interpretative guidance thereunder.

Certain Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

(A)
Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

(B)
Person ” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. Person shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

2




(C)
Beneficial Owner ” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

2.
Employment . Technologies agrees to employ Executive, and Executive hereby accepts employment with Technologies, upon the terms and conditions set forth in this Agreement.

(a)
Position and Duties :

(i)
Executive shall serve as Chairman & CEO of Technologies and shall have such duties as may be consistent with such position and as are determined by the Board from time to time.

(ii)
Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity which does not constitute Permanent Disability) to the business and affairs of Technologies; provided, that subject to approval by the Board, Executive may serve as a director of other companies that are not competitive with the business of Technologies. Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

(b)
Term : The “ Term ” of this Agreement shall be for two (2) years from the Effective Date, unless earlier terminated by either party as provided in Section 4(a) below, subject to automatic renewals for successive two (2) year terms unless either party has delivered written notice not less than ninety (90) days prior to the expiration of the initial Term or any renewal thereof. Notwithstanding the foregoing, this Agreement shall terminate on December 31, 2015.

3.
Non-competition, non-solicitation :

(a)
Executive acknowledges that during the course of his employment with Technologies he will become familiar with the trade secrets and with other Confidential Information of the Company and its Subsidiaries and his services will be of a special, unique and extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the time he is employed by Technologies and for 2 years thereafter (the “ Non-Compete Period ”), Executive shall not directly or indirectly own, operate, manage, control, participate in, consult with, advise, provide services for, or in any manner engage in (including by himself or in association with any person, firm, corporate or other business organization or through an entity), any business engaged in the businesses in which the Company and its Subsidiaries is engaged or then proposes to engage within any geographical area in which the Company or its Subsidiaries engages in business. Nothing herein shall prohibit Executive from being a passive owner or not more that 5% of the outstanding stock of any class of a corporation which is publicly traded, or any other passive minority investment in any investment fund, limited partnership or similar entity, whether or not publicly traded, and so long as Executive has no active participation in the business of such entity.

(b)
During the time Executive is employed by Technologies and for 2 years thereafter (the “ Non-Solicitation Period ”), Executive shall not, directly or indirectly through another entity, (i) induce or attempt to induce any employee of Technologies to leave the employ of Technologies, or in any way interfere with the relationship between Technologies and any employee thereof, including without limitation, inducing or attempting to induce any employee, group of employees or any other person or persons to interfere with the business or operations of Technologies, (ii) hire any person who was an employee of Technologies at any time during Executive's employment period, or (iii) induce or attempt to induce, whether directly or indirectly, any customer, supplier, distributor, franchisee, licensee or other business relation of Technologies to cease doing business with Technologies, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and Technologies.


3



(c)
Executive agrees that: (i) the covenants set forth in this Section are reasonable in geographical and temporal scope and in all other respects, (ii) the Company would not have entered into this Agreement but for the covenants of Executive contained herein, and (iii) the covenants contained herein have been made in order to induce the Company to enter into this Agreement.

(d)
If, at the time of enforcement of this Section, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under the circumstances then existing, the parties agree that the courts shall be allowed to revise the maximum duration, scope or area contained herein to cover the maximum period, scope and area permitted by law.

(e)
Executive recognizes and affirms that in the event of his breach of the provisions of this Section 3 of this Agreement, money damages would be inadequate and the Company and its Subsidiaries would have no adequate remedy at law. Accordingly, Executive agrees that in the event of a breach or threatened breach by Executive of any of the provisions of this Section 3 of this Agreement, the Company and its Subsidiaries, in addition and supplementary to other rights and remedies existing in its favor may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

4.
Termination and Severance :

(a)
Termination . Executive and Technologies shall each have the right to terminate the Term and Executive's employment with Technologies (a “ Termination ”, and the date of such termination the “ Termination Date ”) at any time and for any reason or for no reason at all, by delivering written notice to the other party, and upon any such Termination, Technologies shall have no further obligations to Executive hereunder, except as set forth in Sections 4(b), (c), (d) and (e) and Section 5(b) below.

(b)
Base Salary through Termination: COBRA . Executive shall be entitled to receive his Base Salary earned through his Termination Date, prorated on a daily basis together with all accrued but unpaid vacation time earned through his Termination Date, all of which shall be paid in a lump sum as of the Termination Date. In addition, Executive shall be entitled to COBRA benefits after the Termination Date. Except as set forth in Section 4(c), (d) and (e) and Section 5(b) below, Executive shall not be entitled to receive his Base Salary or any bonuses or other benefits from Technologies for any period after the Termination Date.

(c)
Severance Obligation . In the event Executive’s employment is terminated by Technologies without Cause or Executive resigns from employment with Technologies with Good Reason, following such Termination and upon execution by Executive of a general release in favor of the Company and its Subsidiaries (i) satisfying all applicable requirements of the Older Workers Benefit Protection Act, including expiration of the applicable revocation period, and (ii) releasing any and all claims against the Company and its Subsidiaries, Technologies shall pay Executive (or his estate): (i) an amount equal to two (2) times his Base Salary (as in effect on the Termination Date), plus (ii) an amount equal to two (2) times the annual bonus paid or payable to Executive for the most recent completed annual bonus period prior to the Termination Date (with the aggregate amount under clauses (i) and (ii) the “ Severance Amount ”), with the Severance Amount to be paid to Executive in equal installments over a period of two (2) years immediately following the Termination Date, payable in accordance with Technologies’ normal payroll procedures and cycles commencing with the first payroll cycle after the Termination Date and shall be subject to withholding of applicable taxes and governmental charges in accordance with federal and state law, and all unvested options, restricted stock units or other awards granted in accordance with the Stock Plan (as hereinafter defined) as of the date of this Agreement as well as those granted after the date of this Agreement (“ Awards ”) shall fully vest, provided that such Awards have not already accelerated under the Stock Plan. None of the above Awards constituting options was granted at less than fair market value. The Awards constituting options shall be exercisable within the shorter of:

(a)
two (2) years from the Termination Date or December 31, 2015, whichever is sooner; or

(b)
the remaining term of the exercise life of the respective option as of the Termination Date.

Notwithstanding the foregoing, in the event that Executive shall breach any of his material obligations under this Agreement which, if such breach is capable of cure, is not cured or remedied within fifteen (15) business

4



days from the date on which written notice of such breach was given to Executive, Technologies shall be relieved from and shall have no further obligation to pay Executive any amounts to which Executive would otherwise be entitled pursuant to this Section 4.

(d)
Death or Permanent Disability . If Executive’s employment with Company is terminated as a result of Executive’s death or Permanent Disability, Executive shall be entitled to the following benefits:

(i)
Final Paycheck . Payment, in a lump sum as of the Termination Date, of any and all base salary due and owing through the Termination Date, plus an amount equal to all earned but unused vacation time earned through the Termination Date and reimbursement for all reasonable expenses, less any deductions required by applicable law;

(ii)
Bonus . Payment, in a lump sum as of the Termination Date, of an amount equal to Executive’s annual bonus paid or payable for the most recent completed annual bonus period; and

(iii)
Accelerated Vesting . All Awards shall fully vest, provided that such Awards have not already accelerated under the Stock Plan. None of the above Awards constituting options was granted at less than fair market value. The Awards constituting options shall be exercisable within the shorter of:

1.
two and one half (2½) years from the Termination Date or December 31, 2015, whichever is sooner; or

2.
the remaining term of the exercise life of the respective option as of the Termination Date.

(e)
Retention Incentive . If Executive remains in the employ of Company through December 31, 2014 and retires at any time thereafter (the date of such retirement, the “ Retirement Date ”), Executive shall be entitled to the following benefits:

(i)
Final Paycheck . Payment, in a lump sum as of the Retirement Date, of any and all base salary due and owing through the Retirement Date, plus an amount equal to all earned but unused vacation time earned through the Retirement Date and reimbursement for all reasonable expenses, less any deductions required by applicable law; and

(ii)
Accelerated Vesting . All Awards shall fully vest, provided that such Awards have not already accelerated under the Stock Plan. None of the above Awards constituting options was granted at less than fair market value. The Awards constituting options shall be exercisable within the shorter of:

1.
within ninety (90) days of the Retirement Date; or

2.
the remaining term of the exercise life of the respective option as of the Retirement Date.

(iii)
Retirement Bonus . A retirement bonus (“ Retirement Bonus ”) in the amount of $200,000.00 shall be paid to Executive, in a lump sum as of the Retirement Date, on or about the Retirement Date.

5.
Sale or Change of Control :

(a)
In the event of a Sale of the Company or Change of Control of Technologies which results in the Executive being offered and accepting a Management Agreement with the new owners or the new company (“ NewCo ”) that is substantially comparable to this Agreement, then the obligations of Technologies under this Agreement shall terminate effective on the execution of the comparable Management Agreement between the Executive and the new owners or NewCo. The new Management Agreement will specifically include comparable compensation, management duties and responsibilities, geographical location, and severance and equity award rights and terms, as set forth in this Agreement, among other things.

(b)
Termination Following a Change of Control . If, within one (1) year following the occurrence of a “Change of Control” as defined in Section 1 herein, Executive’s employment with Company is terminated: (A) by Company for any reason other than for “Cause” as defined in Section 1 herein; (B) by Executive for “Good Reason” as defined in Section 1 herein, having given the Company ninety (90) days advanced written notice

5



of the existence of the “Good Reason” condition, and where Company has had thirty (30) days to remedy the “Good Reason” condition and has failed to do so; or (C) upon mutual the agreement of Company and Executive, Executive shall be entitled to the following benefits:

(i)
Final Paycheck . Payment, in a lump sum as of the Termination Date, of any and all base salary due and owing through the Termination Date, plus an amount equal to all earned but unused vacation time earned through the Termination Date and reimbursement for all reasonable expenses, less any deductions required by applicable law;

(ii)
Continued Payment of Salary . Payment of Executive’s then-current base salary for a period of twenty-four (24) months commencing with the first payroll cycle after the Termination Date;

(iii)
Bonus . Payment of an amount equal to two (2) times the annual bonus paid or payable to Executive for the most recent completed annual bonus period prior to the Termination Date, payable in equal installments over a period of twenty-four (24) months commencing with the first payroll cycle after the Termination Date;

(iv)
Accelerated Vesting . Provided that Executive’s Awards have not accelerated under the Stock Plan, then all such Awards shall fully vest;

(v)
Option Exercise . Executive shall be entitled to exercise the Options granted herein within the shorter of:

1.
within ninety (90) days from the Termination Date; or

2.
the remaining term of the exercise life of the Options as of the Termination Date.

(vi)
Medical and Dental Benefits . Executive shall be entitled to elect to maintain Executive’s and his/her dependent's health care benefit coverage to the same extent provided for by and with the same Company/Executive payment contribution percentages under Company’s group plans at the time of termination. Such coverage shall extend for a term of one (1) year from the Termination Date unless Executive becomes covered as an insured under another employer’s or spousal health care plan. At such time Executive shall notify Company and Company shall cease its obligation to provide for continued health care benefits coverage. For tax purposes, this Company contribution may be considered income to the Executive.

The severance benefits provided in Section 5 are the exclusive remedies and shall not be provided in addition to those benefits provided in Section 4 of this Agreement.

6.
Notices . All notices or communications provided for herein shall be deemed to be validly given as of the date of delivery, if delivered personally, and three days after mailing, if sent by registered or certified mail, return receipt requested, addressed to Technologies at its headquarters or executive offices or to Executive at his current home address as set forth from time to time in the records of the Company.

7.
Miscellaneous :

(a)
Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(b)
Complete Agreement . This Agreement embodies the complete agreement and understanding among the parties and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.


6



(c)
Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d)
Governing Law . The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights of the Company and its stockholders. All other issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New Jersey, without giving effect to any choice of law or conflicts of law rules or provisions (whether of the State of New Jersey or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Jersey.

(e)
Successors and Assigns . Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and its subsidiaries and Executive and their respective successors and assigns; provided that the rights and obligations of Executive under this Agreement shall not be assignable without the prior written approval of the Board.

(f)
Remedies . Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys’ fees in the case where the Company has breached any obligation to provide any compensation or severance benefits or amounts to which Executive is entitled under this Agreement) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of Section 3 of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of Section 3 of the provisions of this Agreement.

(g)
Amendment and Waiver . The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive.

(h)
Timing of Payments . The payments provided for in this entire Agreement shall be payable pursuant to the specific Section terms but the Company’s obligation to pay the amounts and provide the benefits pursuant to Sections 4(c), (d)(ii)-(iii), and (e)(ii)-(iii) and 5(b)(ii)-(vi) will not begin until after Company’s receipt of a signed, unrevoked release of claims (“ General Release ”). This General Release must be returned to Company within eighty (80) days, so that payments shall begin no later than ninety (90) days after the Termination Date, provided that if such 90-day period begins in one calendar year and ends in the subsequent calendar year then notwithstanding any other provision of this Agreement payment of such amounts referenced above in this Section shall begin in the subsequent calendar year. All such payments will be subject to applicable payroll or other taxes required to be withheld by Company. Medical and other health benefit coverage provided for in this Agreement shall begin on the first day of the next full month following the Termination Date with no lapse in coverage.

(i)
Subsequent Employment . The compensation and benefits payable hereunder, with the exception of those medical and health benefits provided for under Section 5.(b)(vi), shall not be reduced or offset by any amounts that Executive earns or could earn from any subsequent employment.

(j)
Section 280G Matters . If the benefits described in Section 4 or 5 herein, as applicable, would otherwise constitute a parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”), and but for this Section would be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), Executive shall either:

(i)
pay the Excise Tax, or

(ii)
have the benefits reduced to such lesser extent as would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.


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Unless Company and Executive otherwise agree in writing, any determination required under this Section shall be made in writing by Company’s independent public accountants or other nationally-recognized accounting firm or executive compensation/s consulting firm in each case as shall be reasonably selected by Executive (“ Accounting/Benefits Firm ”), whose determination shall be conclusive and binding upon Executive and Company for all purposes. For purposes of making the calculations required by this Section, the Accounting/Benefits Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. Company and Executive shall furnish to the Accounting/Benefits Firm such information and documents as the Accounting/Benefits Firm may reasonably request in order to make a determination under this Section. Company shall bear all fees and costs of the Accounting/Benefits Firm in connection with the calculations and determinations contemplated by this Section.

(k)
Specified Employee .

(i)
Specified Employee ” is an Executive who, as of the Termination Date, is a key employee of the Company within the meaning of Section 416(i)(1)(A)(i), (ii), or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the twelve (12) month period ending on a Specified Employee Identification Date. If an Executive is a key employee as of a Specified Employee Identification Date, the Executive is treated as a key employee for purposes of the Agreement for the entire twelve (12) month period beginning on the Specified Employee Effective Date.

(ii)
Specified Employee Effective Date ” is the date as set forth in Treasury Regulation Section 1.409A-1(i)(4).

(iii)
Specified Employee Identification Date ” shall mean December 31st of each year.

(iv)
Anything in this Agreement to the contrary notwithstanding, if at the time of the Termination Date, the Executive is considered a “Specified Employee”, and if any payment that the Executive becomes entitled to under this Agreement is considered deferred compensation subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earlier of (1) six (6) months after the Executive's separation from service, or (2) the Executive's death, if and to the extent the delay in such payment is necessary to comply with the requirements of Section 409A of the Code and the regulations and interpretive guidance thereunder taking into account the extent to which such payments are exempt from Section 409A of the Code by virtue of the short-term deferral rule under Treas. Reg. Section 1.409A-1(b)(4) and/or the separation pay exception under Treas. Reg. Section 1.409A-1(b)(9)(iii). The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(l)
Code Section 409A . In order to avoid any ambiguity and to further clarify the understanding of the parties as to this Agreement, the parties intend that this Agreement comply with Section 409A of the Code and all regulations or other interpretative guidance issued thereunder, and that the payments of any benefits or amounts thereunder and the interpretation of this Agreement will be operated and administered accordingly. For purposes of clarification and for avoidance of ambiguity, (i) references to termination of employment, retirement and similar terms used in this Agreement are intended to refer to “separation from service” within the meaning of Section 409A of the Code to the extent necessary to comply with Section 409A of the Code (applying the default rules contained therein); (ii) the Company acknowledges that, for purposes of Section 409A of the Code, each and every payment under this Agreement shall, to the extent permitted by Section 409A of the Code, be deemed a separate payment and not a series of payments; (iii) to the extent that the reimbursement of any cost or expense or the provision of any in-kind benefits to or for the benefit of Executive is subject to Section 409A of the Code, the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, during any one calendar year shall not affect the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, reimbursement of any such cost or expense shall be made by no later than December 31 of the year following the calendar year in which such cost or expense is incurred, and Executive’s right to receive such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

8




8.
Stock Option Grant . Pursuant to the Rudolph Technologies 1999 Stock Plan (as such equity plan may be and has been amended and also including all successor or additional equity compensation plans of the Company, collectively “ Stock Plan ”) and subject to the terms and conditions set forth in this Agreement, the Company granted to Executive the right and option (the “ Option ”) to purchase from the Company one hundred seventy-two thousand (172,000) shares of Company common stock. The date of grant of this Option was the date on which the grant of such Option was approved by the Company’s Board of Directors (“ Grant Date ”). The Options shall have a term of ten (10) years and shall vest as follows: twenty percent (20%) of the Options subject to the grant (rounded down to the next whole number of Options) on each of the first five (5) anniversaries of the Grant Date. The Options shall constitute non-qualified stock options.

9.
RSU Grant . Pursuant to the Company’s Stock Plan, as of September 27, 2011 the Company granted to the Executive a total of 60,000 RSUs as a onetime incentive to enter into the 2011 amendment to this Agreement (the “ Incentive RSUs ”). The Incentive RSUs shall be separate from any other annual or other equity awards granted to the Executive. The Incentive RSUs shall be earned as follows (all earnings per share (EPS) goals used in this incentive are non-GAAP Earnings per Share consistent with the Executive Bonus EPS metric):

(a)
For the years 2012, 2013 and 2014, the Board has approved a Non-GAAP EPS goal for the Company (the “ Annual EPS Goals ”) for use as a performance metric hereunder.

(b)
100% of the Incentive RSUs granted shall be earned upon the Company meeting the cumulative Annual EPS Goals. Should the Company not meet the total cumulative Annual EPS Goals, Executive shall receive the percent of the Incentive RSUs which equals the percentage of the cumulative Annual EPS Goals that was actually realized.
Example 1: If the Annual EPS Goals are $1.00 in each of the three years, the cumulative Annual EPS Goal is $3.00. Thereafter if the Company realizes an EPS of $0.90 in 2012, $1.10 in 2013 and $1.00 in 2014, for a total EPS of $3.00, then 100% of the Incentive RSUs granted shall be earned. Thus, a total of 60,000 RSUs would be earned.
Example 2: If the Annual EPS Goals are $1.00 in each of the three years, the cumulative Annual EPS Goal is $3.00. Thereafter if the Company realizes an EPS of $0.50 in 2012, $0.50 in 2013 and $0.50 in 2014, for a total EPS of $1.50, then 50% of the Incentive RSUs granted shall be earned. Thus, a total of 30,000 RSUs would be earned.

(c)
In the event that the Company exceeds the cumulative Annual EPS Goals, the Incentive RSU earnout shall be increased on a linear basis up to a maximum of 120% of the total Incentive RSUs granted (i.e. up to an additional 12,000 RSUs).
Example 3: If the Annual EPS Goals are $1.00 in each of the three years, the cumulative Annual EPS Goal is $3.00 and therefore 120% of this is $3.60. Thereafter if the Company realizes an EPS of $0.90 in 2012, $1.40 in 2013 and $1.00 in 2014, for a total EPS of $3.30, then 100% of the Incentive RSUs granted shall be earned as well as 50% ($0.30/$0.60) of the incremental RSUs obtainable. Thus, a total of 66,000 RSUs would be earned (60,000 + 6,000).

(d)
If during the term hereof, Executive resigns from employment for Good Reason or Executive’s employment with Company is terminated without Cause or following a Change in Control pursuant to Section 5(b) above, then the total Incentive RSU grant set forth in this Section at target shall fully vest.

(e)
RSUs that have satisfied the EPS performance conditions set forth above, except those Incentive RSUs vesting pursuant to Section 9(d) above, will remain unvested until December 31, 2014, at which time the RSUs earned pursuant to the above performance goals will become vested and paid in shares of Company common stock as of the vesting date as long as Executive remains employed by the Company through that date; provided that, payment of the Incentive RSU may be made after the vesting date so long as it is made within two-and-one-half months following the last day of the year that includes the vesting date.

(f)
During the course of any individual year, in the event of an acquisition, EPS performance objectives may be modified upon the approval of the Compensation Committee of the Board.


9



The Board reserves the right in its sole discretion to exclude any Annual EPS Goal due to circumstances beyond the control of the Executive and thereafter base the RSU earnout on the remaining Annual EPS Goals, up to a 120% maximum on the remaining Annual EPS Goals set forth above.

10.
Term Extension RSU Grant . Pursuant to the Company’s Stock Plan, as of February 6, 2013 the Company granted to the Executive a total of 200,000 RSUs as an incentive to enter into the 2013 amendment to this Agreement (the “ Extension RSUs ”). The Extension RSUs shall be separate from any other annual or other equity awards granted to the Executive. The Extension RSUs shall be earned as follows (all EPS goals used in this incentive are non-GAAP Earnings per Share consistent with the Executive Bonus EPS metric):

(a)
For the years 2013, 2014 and 2015, the Board shall approve an EPS goal for the Company (the “ Extension Annual EPS Goals ”) for use as a performance metric hereunder.

(b)
100% of the Extension RSUs granted shall be earned upon the Company meeting the cumulative Extension Annual EPS Goals. Should the Company not meet the total cumulative Extension Annual EPS Goals, Executive shall receive the percent of the Extension RSUs which equals the percentage of the cumulative Extension Annual EPS Goals that was actually realized.

(c)
In the event that the Company exceeds the cumulative Extension Annual EPS Goals, the Extension RSU earnout shall be increased on a linear basis up to a maximum of 120% of the total Extension RSUs granted (i.e. up to an additional 40,000 RSUs).

(d)
If during the term hereof, Executive resigns from employment for Good Reason or Executive’s employment with Company is terminated without Cause or following a Change in Control pursuant to Section 5(b) above, then the total Extension RSU grant set forth in this Section at target shall fully vest.

(e)
RSUs that have satisfied the EPS performance conditions set forth above, except those Extension RSUs vesting pursuant to Section 10(d) above, will remain unvested until December 31, 2015, at which time the RSUs earned pursuant to the above performance goals will become vested and paid in shares of Company common stock as long as Executive remains employed by the Company through that date; provided that, payment of this Extension RSU may be made after the vesting date so long as it is made within two-and-one-half months following the last day of the year that includes the vesting date.

(f)
During the course of any individual year, in the event of an acquisition, EPS performance objectives may be modified upon the approval of the Compensation Committee of the Board.

The Board reserves the right in its sole discretion to exclude any Extension Annual EPS Goal due to circumstances beyond the control of the Executive and thereafter base the RSU earnout on the remaining Annual EPS Goals, up to a 120% maximum on the remaining Extension Annual EPS Goals set forth above.

11.
Resolution of Disputes . Any controversy or claim or defense arising out of or relating to this Agreement or any breach or asserted breach hereof (other than seeking equitable relief such as specific performance and/or injunctive relief), shall be resolved by binding arbitration before a single arbitrator (who shall be a former New Jersey state or federal judge), to be held in Newark, New Jersey in accordance with the rules and procedures of the Rules for the Resolution of Employment Disputes of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The cost of the arbitrator shall be paid by the Company.

12.
Jurisdiction . Subject to Section 11 above, the Company and Executive each hereby consent to the exclusive jurisdiction of any or all of the following courts for purposes of resolving any dispute under this Agreement: (i) the United States District Court for New Jersey or (ii) any of the courts of the State of New Jersey. Each of the parties irrevocably consents to the service of any summons and complaint and all other process or notice in any such proceeding by certified mail, return receipt requested or by hand delivery or by such other method of service of process or notice as permitted under such court procedures or court rules. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which it or he may now or hereafter have to such jurisdiction and any defense of inconvenient forum.


10



13.
Survival . Any provision of or obligation under this Agreement which contemplates performance or observance subsequent to termination or expiration of this Agreement, shall survive any such termination or expiration of this Agreement and shall continue in effect.


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

EXECUTIVE

By: _ __ /s/ Paul F. McLaughlin ___

Name: _ Paul F. McLaughlin ______

Title: _ Chairman & CEO _________



RUDOLPH TECHNOLOGIES, INC.

By:      /s/ Daniel Berry                     

Name:      Daniel Berry                     

Title: _ Board Director ___________


11


Exhibit 10.2
 

RUDOLPH TECHNOLOGIES
RESTATED AMD AMENDED MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (the “ Agreement ”) is made as of July 24, 2000 (the “ Effective Date ”), as restated and amended through July 29, 2014, by and among Rudolph Technologies (“ Technologies ” or the “Company”), a Delaware corporation, and Steven R. Roth (“ Executive ”).

WHEREAS, Executive desires to be employed as an Officer of Technologies, and Technologies desires to employ Executive Officer and to be assured of its right to his services on the terms and conditions hereinafter set forth, and Executive is willing to agree to such employment on such terms and conditions:

NOW, THEREFORE, the Company and Executive agree as follows:

1.
Definitions . As used herein, the following terms shall have the following meanings:

Board ” means the Company’s board of directors.

Cause ” means the determination by the Board, in the exercise of its good faith judgment, that: (a) Executive has committed a fraud, felony or other serious act of moral turpitude; or (b) Executive has breached his duty of loyalty to the Company or its Subsidiaries; or (c) Executive has committed a material breach of this Agreement. A termination for Cause may be made effective on five (5) days written notice to the Executive from the Company. A termination for Cause shall not take effect unless, and Executive’s employment with the Company shall continue while, these provisions for a Cause termination are complied with. Executive shall be given written notice by the Company of its intention to terminate him for Cause, such notice (A) to follow a good faith investigation by the Company into the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, (B) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and (C) to be given within sixty (60) days of the Company’s learning of such act or acts or failure or failures to act. Executive shall have thirty (30) days after the date that such written notice has been given to him in which to seek to remedy such matter. If he fails to remedy such matter, Executive shall be entitled to a hearing before the Board at which Executive (with legal counsel, if Executive so wishes) is entitled to appear. Such hearing shall be held within fifteen (15) days of the end of the foregoing thirty (30) day remedy period, provided Executive requests such hearing in writing within such thirty (30) day period. If following such hearing (or, if no hearing is so requested, following the end of the thirty (30) day remedy period), the Board furnishes to the Executive written notice and confirms that, in its good faith judgment, grounds for Cause on the basis of the original notice exist, the termination for Cause shall be effective five (5) days following the date of such subsequent notice.

Good Reason ” means the resignation by Executive of employment with Technologies as a direct result of either (i) a material diminution of duties and responsibilities of Executive as an employee of Technologies, (ii) the relocation of Executive outside of the Flanders, New Jersey area (for the avoidance of doubt, this area is considered a fifty (50) mile radius around the headquarters office in Flanders, NJ), (iii) any requirement by the Company that Executive make a material misstatement or omission in any financial report or governmental filing, or (iv) a material breach of this Agreement by the Company or its Subsidiaries in the absence of a material breach of this Agreement by Executive, provided that, in the case of Executive’s termination of employment for Good Reason pursuant to Section 4(c) of this Agreement, such diminution or breach, as the case may be, has continued fifteen (15) days after delivery of written notice by Executive to the Board stating Executive’s intent to resign as a consequence of such diminution or breach and Executive’s resignation actually occurs within sixty (60) days following the first occurrence of such diminution or breach.

Independent Third Party ” means any Person or group of Persons who, immediately prior to the contemplated transaction, does not own in excess of 5% of the common equity of the Company or its Subsidiaries on a fully-diluted basis, who is not controlling, controlled by or under common control with any such 5% owner of capital stock and who is not the spouse or descendent (by birth or adoption) of any such 5% owner of capital stock.

Permanent Disability ” means that Executive, is unable to perform, by reason of physical or mental incapacity, his duties or obligations under this Agreement, for a period of one hundred eighty (180) days.

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Sale of the Company ” means the sale of Technologies to an Independent Third Party or affiliated group of Independent Third Parties pursuant to which such party or parties acquire (i) capital stock of Technologies possessing the voting power to elect a majority of Technologies Board (whether by merger, consolidation or sale or transfer of the Company’s capital stock) or (ii) all or substantially all of the Company’s assets determined on a consolidated basis.

Change of Control ” shall be deemed to occur upon the earliest to occur after the Effective Date of this Agreement of any of the following events:

(i)
Acquisition of Stock by Third Party . Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities;

(ii)
Change in Board of Directors . During any period of two (2) consecutive years (not including any period prior to the Effective Date of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clauses (i), (iii) or (iv) of this definition of Change of Control whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

(iii)
Corporate Transactions . The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger of consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iv)
Liquidation . The approval by the shareholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

(v)
Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule l4A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

Provided, however, that any transaction or other event described in clauses (i) through (v) above shall not be deemed to constitute a “Change of Control” under this Agreement unless such transaction or event constitutes a “change in control” under Section 409A of the Internal Revenue Code (“ Code ”) and the regulations and interpretative guidance thereunder.

Certain Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

(A)
Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

(B)
Person ” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. Person shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

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(C)
Beneficial Owner ” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

2.
Employment . Technologies agrees to employ Executive, and Executive hereby accepts employment with Technologies, upon the terms and conditions set forth in this Agreement.

(a)
Position and Duties :

(i)
Executive shall serve as CFO of Technologies and shall have such duties as may be consistent with such position and as are determined by the Board from time to time.

(ii)
Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity which does not constitute Permanent Disability) to the business and affairs of Technologies; provided, that subject to approval by the Board, Executive may serve as a director of other companies that are not competitive with the business of Technologies. Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

(b)
Term : The “ Term ” of this Agreement shall be for 1 year from the date hereof, unless earlier terminated by either party as provided in Section 4(a) below, subject to automatic renewals for successive 1 year Term unless either party has delivered written notice not less than ninety (90) days prior to the expiration of the initial Term or any renewal thereof.

3.
Non-competition, non-solicitation :

(a)
Executive acknowledges that during the course of his employment with Technologies he will become familiar with the trade secrets and with other Confidential Information of the Company and its Subsidiaries and his services will be of a special, unique and extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the time he is employed by Technologies and for 1 year thereafter (the “ Non-Compete Period ”), Executive shall not directly or indirectly own, operate, manage, control, participate in, consult with, advise, provide services for, or in any manner engage in (including by himself or in association with any person, firm, corporate or other business organization or through an entity), any business engaged in the businesses in which the Company and its Subsidiaries is engaged or then proposes to engage within any geographical area in which the Company or its Subsidiaries engages in business. Nothing herein shall prohibit Executive from being a passive owner or not more that 5% of the outstanding stock of any class of a corporation which is publicly traded, or any other passive minority investment in any investment fund, limited partnership or similar entity, whether or not publicly traded, and so long as Executive has no active participation in the business of such entity.

(b)
During the time Executive is employed by Technologies and for 1 year thereafter (the “ Non-Solicitation Period ”), Executive shall not, directly or indirectly through another entity, (i) induce or attempt to induce any employee of Technologies to leave the employ of Technologies, or in any way interfere with the relationship between Technologies and any employee thereof, including without limitation, inducing or attempting to induce any employee, group of employees or any other person or persons to interfere with the business or operations of Technologies, (ii) hire any person who was an employee of Technologies at any time during Executive’s employment period, or (iii) induce or attempt to induce, whether directly or indirectly, any customer, supplier, distributor, franchisee, licensee or other business relation of Technologies to cease doing business with Technologies, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and Technologies.

(c)
Executive agrees that: (i) the covenants set forth in this Section are reasonable in geographical and temporal scope and in all other respects, (ii) the Company would not have entered into this Agreement but for the covenants of Executive contained herein, and (iii) the covenants contained herein have been made in order to induce the Company to enter into this Agreement.


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(d)
If, at the time of enforcement of this Section, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under the circumstances then existing, the parties agree that the courts shallbe allowed to revise the maximum duration, scope or area contained herein to cover the maximum period, scope and area permitted by law.

(e)
Executive recognizes and affirms that in the event of his breach of the provisions of this Section 3 of this Agreement, money damages would be inadequate and the Company and its Subsidiaries would have no adequate remedy at law. Accordingly, Executive agrees that in the event of a breach or threatened breach by Executive of any of the provisions of this Section 3 of this Agreement, the Company and its Subsidiaries, in addition and supplementary to other rights and remedies existing in its favor may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

4.
Termination and Severance :

(a)
Termination . Executive and Technologies shall each have the right to terminate the Term and Executive’s employment with Technologies (a “ Termination ”, and the date of such termination the “ Termination Date ”) at any time and for any reason or for no reason at all, by delivering written notice to the other party, and upon any such Termination, Technologies shall have no further obligations to Executive hereunder, except as set forth in Sections 4(b), (c) and (d) and Sections 5(b) and (c) below.

(b)
Base Salary through Termination: COBRA . Executive shall be entitled to receive his Base Salary earned through his Termination Date, prorated on a daily basis together with all accrued but unpaid vacation time earned through his Termination Date, all of which shall be paid in a lump sum as of the Termination Date. In addition, Executive shall be entitled to COBRA benefits after the Termination Date. Except as set forth in Sections 4(c) and (d) and Sections 5(b) and (c) below, Executive shall not be entitled to receive his Base Salary or any bonuses or other benefits from Technologies for any period after the Termination Date.

(c)
Severance Obligation . In the event Executive’s employment is terminated by Technologies without Cause or Executive resigns from employment with Technologies with Good Reason, following such Termination and upon execution by Executive of a general release in favor of the Company and its Subsidiaries (i) satisfying all applicable requirements of the Older Workers Benefit Protection Act, including expiration of the applicable revocation period, and (ii) releasing any and all claims against the Company and its Subsidiaries, Technologies shall pay Executive (or his estate): (i) an amount equal to his Base Salary (as in effect on the Termination Date), plus (ii) an amount equal to the annual bonus paid or payable to Executive for the most recent completed annual bonus period prior to the Termination Date (with the aggregate amount under clauses (i) and (ii) the “ Severance Amount ”), with the Severance Amount to be paid to Executive in equal installments over a period of one (1) year immediately following the Termination Date, payable in accordance with Technologies’ normal payroll procedures and cycles commencing with the first payroll cycle after the Termination Date and shall be subject to withholding of applicable taxes and governmental charges in accordance with federal and state law and all unvested options, restricted stock units or other awards granted in accordance with the Stock Plan (as hereinafter defined) as of the date of this Agreement as well as those granted after the date of this Agreement (“ Awards ”) shall fully vest, provided that such Awards have not already accelerated under the Stock Plan. None of the above Awards constituting options was granted at less than fair market value. The Awards constituting options shall be exercisable within the shorter of:

(x)
three (3) years from the Termination Date; or

(y)
the remaining term of the exercise life of the respective option as of the Termination Date.

Notwithstanding the foregoing, in the event that Executive shall breach any of his material obligations under this Agreement which, if such breach is capable of cure, is not cured or remedied within fifteen (15) business days from the date on which written notice of such breach was given to Executive, Technologies shall be relieved from and shall have no further obligation to pay Executive any amounts to which Executive would otherwise be entitled pursuant to this Section 4.

(d)
Death or Permanent Disability . If Executive’s employment with Company is terminated as a result of Executive’s death or Permanent Disability, Executive shall be entitled to the following benefits:

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(i)
Final Paycheck . Payment, in a lump sum as of the Termination Date, of any and all base salary due and owing through the Termination Date, plus an amount equal to all earned but unused vacation time earned through the Termination Date and reimbursement for all reasonable expenses, less any deductions required by applicable law; and

(ii)
Bonus . Payment, in a lump sum as of the Termination Date, of an amount equal to Executive’s annual bonus paid or payable for the most recent completed annual bonus period

(iii)
Accelerated Vesting . All Awards shall fully vest, provided that such Awards have not already accelerated under the Stock Plan. None of the above Awards constituting options was granted at less than fair market value. The Awards constituting options shall be exercisable within the shorter of:

1.
three (3) years from the Termination Date; or
2.
the remaining term of the exercise life of the respective option as of the Termination Date.
5.
Sale or Change of Control :

(a)
In the event of Sale of the Company or Change of Control of Technologies which results in the Executive being offered and accepting a Management Agreement with the new owners or the new company (“ NewCo ”) that is substantially comparable to this Agreement, then the obligations of Technologies under this Agreement shall terminate effective on the execution of the comparable Management Agreement between the Executive and the new owners or NewCo. The new Management Agreement will specifically include comparable compensation, management duties and responsibilities, geographical location and severance and equity award rights and terms, as set forth in this Agreement, among other things.

(b)
Termination By Company Without Cause Following a Change of Control . If Executive’s employment with Company is terminated by Company for any reason other than for “Cause” as defined in Section 1 herein, within one (1) year following the occurrence of a “Change of Control” as defined in Section 1 herein, Executive shall be entitled to the following benefits:

(i)
Final Paycheck . Payment, in a lump sum as of the Termination Date, of any and all base salary due and owing through the Termination Date, plus an amount equal to all earned but unused vacation time earned through the Termination Date and reimbursement for all reasonable expenses, less any deductions required by applicable law;

(ii)
Continued Payment of Salary . Payment of Executive’s then-current base salary for a period of twelve (12) months commencing with the first payroll cycle after the Termination Date;

(iii)
Bonus . Payment of an amount equal to the annual bonus paid or payable to Executive for the most recent completed annual bonus period prior to the Termination Date, payable in equal installments over a period of twelve (12) months commencing with the first payroll cycle after the Termination Date;

(iv)
Accelerated Vesting . Provided that Executive’s Awards have not accelerated under the Stock Plan, then all such Awards shall fully vest;

(v)
Option Exercise . Executive shall be entitled to exercise the Options granted herein within the shorter of:

1.
three (3) years from the Termination Date; or
2.
the remaining term of the exercise life of the Options as of the Termination Date.
(vi)
Medical and Dental Benefits . Executive shall be entitled to elect to maintain Executive’s and his/her dependent’s health care benefit coverage to the same extent provided for by and with the same Company/Executive payment contribution percentages under Company’s group plans at the time of termination. Such coverage shall extend for a term of one (1) year from the Termination Date unless Executive becomes covered as an insured under another employer’s or spousal health care plan. At such time Executive shall notify Company and Company shall cease its obligation to provide for continued health care benefits coverage. For tax purposes, this Company contribution may be considered income to the Executive.

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(c)
Termination By Executive for Good Reason Following a Change of Control . Alternatively, should Executive terminate employment with Company for “Good Reason” as defined in Section 1 herein, having given the Company ninety (90) days advanced written notice of the existence of the “Good Reason” condition, and where Company has had thirty (30) days to remedy the “Good Reason” condition and has failed to do so, provided however, this has occurred within one (1) year of a “Change of Control” as defined in Section 1 herein, Executive shall be entitled to the following benefits:

(i)
Final Paycheck . Payment, in a lump sum as of the Termination Date, of any and all base salary due and owing through the Termination Date, plus an amount equal to all earned but unused vacation time earned through the Termination Date and reimbursement for all reasonable expenses, less any deductions required by applicable law;

(ii)
Continued Payment of Salary . Payment of Executive’s then-current base salary for a period of twelve (12) months commencing with the first payroll cycle after the Termination Date;

(iii)
Bonus . Payment of an amount equal to the annual bonus paid or payable to Executive for the most recent completed annual bonus period prior to the Termination date, payable in equal installments over a period of twelve (12) months commencing with the first payroll cycle after the Termination Date;

(iv)
Accelerated Vesting . Provided that Executive’s Awards have not accelerated under the Stock Plan, then all such Awards shall fully vest.

(v)
Option Exercise . Executive shall be entitled to exercise the Options granted herein within the shorter of:

1.
three (3) years from the Termination Date; or
2.
the remaining term of the exercise life of the Options as of the Termination Date.
(vi)
Medical and Dental Benefits . Executive shall be entitled to elect to maintain Executive’s and his/her dependent’s health care benefit coverage to the same extent provided for by and with the same Company/Executive payment contribution percentages under Company’s group plans at the time of termination. Such coverage shall extend for a term of one (1) year from the Termination Date unless Executive becomes covered as an insured under another employer’s or spousal health care plan. At such time Executive shall notify Company and Company shall cease its obligation to provide for continued health care benefits coverage. For tax purposes, this Company contribution may be considered income to the Executive.

The severance benefits provided in Section 5 are the exclusive remedies and shall not be provided in addition to those benefits provided in Section 4 of this Agreement.

6.
Notices . All notices or communications provided for herein shall be deemed to be validly given as of the date of delivery, if delivered personally, and three days after mailing, if sent by registered or certified mail, return receipt requested, addressed to Technologies at its headquarters or executive offices or to Executive at his current home address as set forth from time to time in the records of the Company.

7.
Miscellaneous :

(a)
Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(b)
Complete Agreement . This Agreement embodies the complete agreement and understanding among the parties and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.


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(c)
Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d)
Governing Law . The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights of the Company and its stockholders. All other issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New Jersey, without giving effect to any choice of law or conflicts of law rules or provisions (whether of the State of New Jersey or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Jersey.

(e)
Successors and Assigns . Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and its subsidiaries and Executive and their respective successors and assigns; provided that the rights and obligations of Executive under this Agreement shall not be assignable without the prior written approval of the Board.

(f)
Remedies . Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys’ fees in the case where the Company has breached any obligation to provide any compensation or severance benefits or amounts to which Executive is entitled under this Agreement) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of Section 3 of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of Section 3 of this Agreement.

(g)
Amendment and Waiver . The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive.

(h)
Timing of Payments . The payments provided for in Sections 4.(b), 4.(d)(i), 5.(b)(i), or 5.(c)(i) herein, as applicable, shall be payable immediately upon Executive’s termination or cessation of employment. Payments provided for in Section 4(c), 4.(d)(ii)-(v), 5.(b)(ii)-(v) or 5.(c)(ii)-(v) herein, as applicable, will not begin until after Company’s receipt of a signed, unrevoked release of claims (“ General Release ”). This General Release must be returned to Company within eighty (80) days, so that payments shall begin no later than ninety (90) days after the Termination Date, provided that if such 90-day period begins in one calendar year and ends in the subsequent calendar year then notwithstanding any other provision of this Agreement payment of such amounts referenced above in this Section shall begin in the subsequent calendar year. All such payments will be subject to applicable payroll or other taxes required to be withheld by Company. Medical and other health benefit coverage provided for in Section 5.(b)(vi) or 5.(c)(vi) shall begin on the first day of the next full month following the Termination Date with no lapse in coverage.

(i)
Subsequent Employment . The compensation and benefits payable hereunder, with the exception of those medical and health benefits provided for under Section 5.(b)(v) or 5.(c)(v), shall not be reduced or offset by any amounts that Executive earns or could earn from any subsequent employment.

(j)
Section 280G Matters . If the benefits described in Section 4 or 5 herein, as applicable, would otherwise constitute a parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”), and but for this Section would be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), Executive shall either:

(i)
pay the Excise Tax, or

(ii)
have the benefits reduced to such lesser extent as would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.


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Unless Company and Executive otherwise agree in writing, any determination required under this Section shall be made in writing by Company’s independent public accountants or other nationally-recognized accounting firm or executive compensation/consulting firm in each case as shall be reasonably selected by Executive (“ Accounting/Benefits Firm ”), whose determination shall be conclusive and binding upon Executive and Company for all purposes. For purposes of making the calculations required by this Section, the Accounting/Benefits Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. Company and Executive shall furnish to the Accounting/Benefits Firm such information and documents as the Accounting/Benefits Firm may reasonably request in order to make a determination under this Section. Company shall bear all fees and costs of the Accounting/Benefits Firm in connection with the calculations and determinations contemplated by this Section.

(k)
Specified Employee .

(i)
Specified Employee ” is an Executive who, as of the Termination Date, is a key employee of the Company within the meaning of Section 416(i)(1)(A)(i), (ii), or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the twelve (12) month period ending on a Specified Employee Identification Date. If an Executive is a key employee as of a Specified Employee Identification Date, the Executive is treated as a key employee for purposes of the Agreement for the entire twelve (12) month period beginning on the Specified Employee Effective Date.

(ii)
Specified Employee Effective Date ” is the date as set forth in Treasury Regulation Section 1.409A-1(i)(4).

(iii)
Specified Employee Identification Date ” shall mean December 31st of each year.

Anything in this Agreement to the contrary notwithstanding, if at the time of the Termination Date, the Executive is considered a “Specified Employee”, and if any payment that the Executive becomes entitled to under this Agreement is considered deferred compensation subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earlier of (1) six (6) months after the Executive’s separation from service, or (2) the Executive’s death, if and to the extent the delay in such payment is necessary to comply with the requirements of Section 409A of the Code and the regulations and interpretive guidance thereunder taking into account the extent to which such payments are exempt from Section 409A of the Code by virtue of the short-term deferral rule under Treas. Reg. Section 1.409A-1(b)(4) and/or the separation pay exception under Treas. Reg. Section 1.409A-1(b)(9)(iii). The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(l)
Code Section 409A . In order to avoid any ambiguity and to further clarify the understanding of the parties as to this Agreement, the parties intend that this Agreement comply with Section 409A of the Code and all regulations or other interpretative guidance issued thereunder, and that the payments of any benefits or amounts thereunder and the interpretation of this Agreement will be operated and administered accordingly. For purposes of clarification and for avoidance of ambiguity, (i) references to termination of employment, retirement and similar terms used in this Agreement are intended to refer to “separation from service” within the meaning of Section 409A of the Code to the extent necessary to comply with Section 409A of the Code (applying the default rules contained therein); (ii) the Company acknowledges that, for purposes of Section 409A of the Code, each and every payment under this Agreement shall, to the extent permitted by Section 409A of the Code, be deemed a separate payment and not a series of payments; (iii) to the extent that the reimbursement of any cost or expense or the provision of any in-kind benefits to or for the benefit of Executive is subject to Section 409A of the Code, the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, during any one calendar year shall not affect the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, reimbursement of any such cost or expense shall be made by no later than December 31 of the year following the calendar year in which such cost or expense is incurred, and Executive’s right to receive such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

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8.
Stock Option Grant . Pursuant to the Rudolph Technologies 1999 Stock Plan (as such equity plan may be and has been amended and also including all successor or additional equity compensation plans of the Company, collectively “ Stock Plan ”) and subject to the terms and conditions set forth in this Agreement, the Company granted to Executive the right and option (the “ Option ”) to purchase from the Company fifty-six thousand (56,000) shares of Company common stock. The date of grant of this Option was the date on which the grant of such Option was approved by the Company’s Board of Directors (“ Grant Date ”). The Options shall have a term of ten (10) years and shall vest as follows: twenty percent (20%) of the Options subject to the grant (rounded down to the next whole number of Options) on each of the first five (5) anniversaries of the Grant Date. The Options shall constitute non-qualified stock options.

9.
Resolution of Disputes . Any controversy or claim or defense arising out of or relating to this Agreement or any breach or asserted breach hereof (other than seeking equitable relief such as specific performance and/or injunctive relief), shall be resolved by binding arbitration before a single arbitrator (who shall be a former New Jersey state or federal judge), to be held in Newark, New Jersey in accordance with the rules and procedures of the Rules for the Resolution of Employment Disputes of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The cost of the arbitrator shall be paid by the Company.

10.
Jurisdiction . Subject to Section 11 above, the Company and Executive each hereby consent to the exclusive jurisdiction of any or all of the following courts for purposes of resolving any dispute under this Agreement: (i) the United States District Court for New Jersey or (ii) any of the courts of the State of New Jersey. Each of the parties irrevocably consents to the service of any summons and complaint and all other process or notice in any such proceeding by certified mail, return receipt requested or by hand delivery or by such other method of service of process or notice as permitted under such court procedures or court rules. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which it or he may now or hereafter have to such jurisdiction and any defense of inconvenient forum.

11.
Survival . Any provision of or obligation under this Agreement which contemplates performance or observance subsequent to termination or expiration of this Agreement, shall survive any such termination or expiration of this Agreement and shall continue in effect.



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



EXECUTIVE

By: ____ /s/ Steven R. Roth                         
Name: _ Steven R. Roth _________________

Title: _ CFO __________________________




RUDOLPH TECHNOLOGIES, INC.

By: _ ________ /s/ Paul F. McLaughlin ___

Name: _ Paul F. McLaughlin ___________

Title: _ Chairman & CEO ______________

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Exhibit 10.3
 

RESTATED AND AMENDED EMPLOYMENT AGREEMENT

This Agreement is entered into by and between August Technology Corporation (“August Technology”), a Minnesota corporation, with its principal place of business at 4900 West 78th Street, Bloomington, Minnesota 55435, and Michael Plisinski of [Address]. (“Employee”). This Agreement has been restated and amended effective as of July 29, 2014. For all purposes of the Agreement, reflecting the merger of August Technology with and into Rudolph Technologies, Inc. effective as of February 15, 2006, references in the Agreement to August Technology or the Company shall mean Rudolph Technologies, Inc.

WHEREAS, Employee desires employment with Company or has been employed with Company and wishes to continue employment under the terms and conditions set forth in this Agreement;

WHEREAS, Employee acknowledges and agrees that he has and will continue to have access to confidential, proprietary and trade secret information in the course of his employment and continued employment with Company, the unauthorized use or disclosure of which would cause irreparable harm to Company;

WHEREAS, Company and Employee wish to set forth the terms of their agreement in writing;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and for other good and valuable consideration the receipt and sufficiency of which is specifically acknowledged by the parties, Company and Employee agree as follows:

1. Employment . Company agrees to employ or continue to employ Employee, effective April 22, 2005 and Employee accepts employment or continued employment, upon the terms and conditions set forth in this Agreement.

2. Term of Employment . Company shall continue to employ Employee for an indefinite duration until his employment is terminated in accordance with Paragraph 8 of this Agreement.

3. Duties and Responsibilities . Employee shall devote his time, attention and best efforts to the duties and responsibilities of his position, and to the business and affairs of Company. Employee’s title shall be as set forth in Exhibit A as “Employee’s Title”, reporting to the person or office as set forth in Exhibit A as “Manager”. Employee shall perform all duties and responsibilities of the position he holds with Company as those duties and responsibilities may change from time to time. Employee shall comply with Company’s standards, policies and procedures in effect and as they may change from time to time; provided that to the extent such policies and procedures are inconsistent with this Agreement, the provisions of this Agreement shall control.

4. Compensation . Company shall pay Employee a gross annual salary as set forth in Exhibit A as “Base Salary”, less appropriate payroll deductions. Employee may also receive incentive compensation in accordance with the Annual Incentive Plan, as issued and as may change from time to time by the Company, or any other similar plan authorized by the Board of Directors. Employee’s compensation may be periodically increased or adjusted as authorized by the Board of Directors in the case of the Chief Executive Officer, or, in the case of all others, as recommended by the Chief Executive Officer and approved by the Board of Directors.

5. Business Expenses . Company will, in accordance with its policies and practices as such may change from time to time, reimburse Employee for all ordinary and necessary business expenses after receipt of appropriate documentation of such expenses.

6. Benefits . Employee shall be entitled to insurance and other benefits provided to key management employees in accordance with applicable plan documents and commensurate with vice president and higher positions within the Company. Benefits provided to employees are subject to change in the discretion of Company.

7. Stock Options . At the discretion of Company, Employee may be granted stock options from time to time, which options shall be subject to the terms and conditions of the Rudolph Technologies 2009 Stock Plan, as amended from time to time, or any successor plan, and the related stock option agreements. Further, Employee shall be eligible to participate in the Rudolph Technologies 2009 Employee Stock Purchase Plan, as amended from time to time, or any successor plan, subject to the terms and conditions contained therein.


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8. Termination . Employee’s employment under this Agreement may be terminated:

(a)
At any time upon mutual written agreement of the parties;

(b)
By either Employee or Company at any time, with or without cause, upon thirty (30) days’ written notice to the other;

(c)
By Company immediately upon notice to Employee for cause which shall be defined as:

(1)
Employee’s material failure or neglect, or refusal to perform, the duties and responsibilities of his position and/or the reasonable direction of the Board of Directors or his superiors;

(2)
Commission by Employee of any willful, intentional or negligent act that has the effect of injuring the reputation, business or performance of Company;

(3)
Employee’s conviction of a crime, or commission of any act involving moral turpitude;

(4)
Any material default or nonperformance of the terms of this Agreement, or any violation of Paragraphs 10, 11, 12, 14 and/or 15 of this Employment Agreement; or

(d)
Immediately upon Employee’s death.

Upon Employee’s resignation or termination under this Paragraph 8 for any reason, Company shall pay Employee his Base Salary through the Employee’s last date of employment, and any accrued and unused vacation or other paid time off through the Employee’s last date of employment. Employee’s entitlement to any vested pension, profit sharing or other benefits shall be governed by applicable plan documents. In the event Employee’s employment is terminated either by Employee or Company under Paragraph 8(b), Company may elect, in its sole discretion, to pay Employee his salary for the thirty (30) day notice period in lieu of Employee’s continued performance of duties during the notice period. In the event Employee is terminated by Company in accordance with Paragraph 8(b) above, without cause, Company shall, in addition to the above, pay Employee a severance at his then current Base Salary rate for the time period set forth in Exhibit A as “Severance Period”, to be paid according to the normal payroll schedule, directly following the thirty (30) day notice period, and Company shall, if the Employee elects to continue group health or other group benefits as allowed by COBRA, make the COBRA payments for the Severance Period. Employee shall not be entitled to any further or other payments or benefits of any kind upon the Employee’s termination or resignation under this Paragraph 8. In the event, Employee is entitled to Change in Control benefits as set forth in Paragraph 9, Employee shall not be entitled to any severance or notice rights under this Paragraph 8.

9. Change in Control . If, within eighteen (18) months following a Change in Control (as defined below), Employee’s employment is Terminated (as defined in Paragraph 9(f) below), then:

(a)
Employee shall be paid his last Base Salary on a regular payroll cycle as of the effective date for the time period as set forth in Exhibit A as “Change In Control Severance Period” from the effective date of such termination;

(b)
For the same Change In Control Severance Period from the effective date of such termination as set forth in Paragraph 9(b), the Company shall, if Employee elects to continue group health or other group benefits as allowed under COBRA, make the COBRA payments for the Change In Control Severance Period;

(c)
All unvested options, restricted stock units or other equity awards granted in accordance with the Stock Plan (as hereinafter defined) as of the date of this Amendment as well as those granted after the date of this Amendment (“Awards”) shall fully vest and options will immediately be fully exercisable and other Awards will be paid within sixty (60) days of such termination, provided that such Awards have not already vested under the Rudolph Technologies 1999 Stock Plan or the Rudolph Technologies 2009 Stock Plan, as applicable (each as amended to date and including all successor and additional equity compensation plans of the Company, collectively the “Stock Plan”); and

(d)
Limitation on Change of Control Payments . Employee shall not be entitled to receive any Change of Control Action, as defined below, which would constitute an “excess parachute payment” for purposes of Code Section 280G, or any successor provision, and the regulations thereunder. In the event any Change of Control Action payable to Employee would constitute an “excess parachute payment,” then the acceleration

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of the exercisability of such stock options, the accelerated vesting of other Awards and the payments to such Participant pursuant to this Paragraph 9 shall be reduced to the largest extent or amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Code. For purposes of this Paragraph 9, a “Change of Control Action” shall mean any payment, benefit or transfer of property in the nature of compensation paid to or for the benefit of Employee under any arrangement which is considered contingent on a Change of Control for purposes of Code Section 280G, including, without limitation, any and all salary, bonus, incentive, restricted stock, stock option, compensation or benefit plans, programs or other arrangements, and shall include benefits payable under this Agreement.

(e)
Change of Control . For purposes of this Agreement, “Change of Control” shall mean any of the following events occurring after the date of this Agreement:

(1)
A merger or consolidation to which the Company is a party, an acquisition by the Company involving the issuance of the Company’s securities as consideration for the acquired business, or any combination of fully closed and completed mergers, consolidations or acquisitions during any consecutive twenty-four (24) month period, if the individuals and entities who were shareholders of the Company immediately prior to the effective date of such merger, consolidation, or acquisition (or prior to the effective date of the first of a combination of such transactions) have, immediately following the effective date of such merger, consolidation or acquisition (or following the effective date of the last of a combination of such transactions), beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of less than fifty percent (50%) of the total combined voting power of all classes of securities issued by the surviving corporation for the election of directors of the surviving corporation;

(2)
The acquisition of direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Company by any person or entity or by a group of associated persons or entities acting in concert in one or a series of transactions, which causes the aggregate beneficial ownership of such person, entity or group to equal or exceed twenty percent (20%) or more of the total combined voting power of all classes of the Company’s then issued and outstanding securities;

(3)
The sale of the properties and assets of the Company substantially as an entirety, to any person or entity which is not a wholly-owned subsidiary of the Company;

(4)
The stockholders of the Company approve any plan or proposal for the liquidation of the Company; or

(5)
A change in the composition of the Board of the Company at any time during any consecutive twenty-four (24) month period such that the “Continuity Directors” no longer constitute at least a seventy percent (70%) majority of the Board. For purposes of this event, “Continuity Directors” means (i) those members of the Board who were directors at the beginning of such consecutive twenty-four (24) month period or at the date of this Agreement if this Agreement was entered into less than twenty-four months prior to the change in composition of the Board; and (ii) any new director whose election to the Board of Directors or nominations for election to the Board of Directors was approved by a vote of at least two-thirds (2/3) of the directors identified in the immediately preceding clause (i).

(6)
The Company enters into a letter of intent, an agreement in principle or a definitive agreement relating to an event described in Paragraph 9(e)(1), 9(e)(2), 9(e)(3), 9(e)(4), or 9(e)(5) that ultimately results in such a Change of Control, or a tender or exchange offer or proxy contest is commenced that ultimately results in an event described in Paragraph 9(e)(2) or 9(e)(5).

Provided, however, that any transaction or other event described in clauses (1) through(6) above shall not be deemed to constitute a Change of Control under this Agreement unless such transaction or event constitutes a “change in control” under Section 409A of the Internal Revenue Code (“Code”) and the regulations and interpretative guidance thereunder.

(f)
Termination . For purposes of this Paragraph 9, “Termination” shall mean any of the following events occurring within eighteen (18) months after a Change of Control:


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(1)
The termination of Employee’s employment by the Company for any reason, with or without cause, except for termination resulting from conduct by Employee constituting (a) a felony involving moral turpitude under either federal law or the law of the State of Minnesota, or (b) Employee’s willful failure to fulfill his employment duties with the Company; provided, however, that for purposes of this clause (b), an act or failure to act by Employee shall not be “willful” unless it is done, or omitted to be done, in bad faith and without any reasonable belief that Employee’s action or omission were in the best interests of the Company; or

(2)
The termination of employment with the Company by Employee for Good Reason. Such termination shall be accomplished by, and effective upon, Employee giving written notice to Company of his decision to terminate. “Good Reason” shall mean a good faith determination by Employee, in Employee’s sole and absolute judgment, that any one or more of the following events has occurred, at any time during the term of this Agreement or after a Change of Control; provided, however, that such event shall not constitute “Good Reason” if Employee has expressly consented to such event in writing or if Employee fails to provide written notice of his decision to terminate within sixty (60) days of the occurrence of such event:

(a)
A material change in Employee’s reporting responsibilities, titles or offices, or any removal of Employee from or any failure to re-elect Employee to any of such positions, which has the effect of materially diminishing Employee’s responsibility or authority;

(b)
A reduction by the Company in Employee’s base salary (as increased from time to time);

(c)
A requirement imposed by the Company on Employee that results in Employee being based at a location that is outside of a twenty-five (25) mile radius of Employee’s prior job location;

(d)
Without the adoption of a replacement plan, program or arrangement that provides benefits to Employee that are equal to or greater than those benefits that are discontinued or adversely affected:

i.
A failure by the Company to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership, stock purchase, stock option, life insurance, health, accident, disability, or any other employee compensation or benefit plan, program or arrangement, in which Employee is or has been participating;

ii.
The taking of any action by the Company that would adversely affect Employee’s participation or materially reduce Employee’s benefits under any of such plans, programs or arrangements; or

(e)
Any action by the Company that would materially adversely affect the physical conditions in or under which Employee performs his employment duties; or

(f)
Any material breach by the Company of this Employment Agreement between Employee and the Company.

Termination for “Good Reason” shall not include Employee’s death or a termination for any reason other than the events specified in clauses (a) through (f) above.

10. Confidential Information . During the term of this Agreement and at all times thereafter, Employee shall not directly or indirectly use or disclose any trade secret, proprietary or confidential information of Company or any subsidiary for the benefit of any person or entity other than Company or any subsidiary without prior written approval of Company’s Board of Directors. For purposes of this Agreement, in addition to all materials and information protected by applicable statute or law, the parties acknowledge that confidential information shall include any information, whether in print, on computer disc or tape or otherwise, which is not public information and which relates to Company or any subsidiary, or Company’s or any subsidiary’s existing or reasonably foreseeable business, including but not limited to information relating to research, development, technology, manufacturing processes, purchasing and sales, information relating to sales and other financial strategies, plans and/or goals, information relating to proprietary rights and data, ideas, know-how, and/or trade secrets, information regarding the identity and/or needs of clients or customers, client or

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customer lists and other client or customer information, information regarding active and inactive accounts of Company or any subsidiary, and information relating to Company’s or any subsidiary’s methods of operation.

11. Noncompetition O bligations . As a condition to and in consideration of his employment and continued employment, participation in and payment under the Key Executive Bonus Plans of Company and in exchange for the severance and Change of Control provisions as set forth in Paragraphs 8 and 9 of this Employment Agreement, and the mutual covenants herein, Employee agrees that, during his employment and for a period of one (1) year following his voluntary or involuntary resignation or termination for any reason, the Employee will not, on behalf of himself or any other person or entity:

(a)
Directly or indirectly solicit, on Employee’s own behalf, or on behalf of another, any of Company’s or any subsidiary’s customers or potential customers with whom Employee or Employee’s supervisees had contact, either directly or indirectly, within the twelve months immediately preceding Employee’s resignation or termination of employment, for the purpose of providing, selling, or attempting to sell any products or services competing with those provided or sold by Company or any subsidiary, or clearly contemplated thereby due to research, development, engineering, applications, licensing, or other like projects in process, at the time of resignation or termination; or

(b)
Hire or attempt to hire, or influence or solicit, or attempt to influence or solicit, either directly or indirectly, any employee of Company or any subsidiary to leave or terminate his or her employment, or to work for any other person or entity.

(c)
Directly or indirectly, whether as sole proprietor, partner, silent partner, venturer, stockholder, director, officer, consultant or employee or agent, engage or participate in any employment or activity which involves the sale, distribution, design and/or manufacturing of precision film thickness measurement instruments, defect and yield metrology tools or data analysis systems for use in the semiconductor manufacturing industry or is otherwise competitive with Company’s business within the United States; and

(d)
Directly or indirectly, whether as sole proprietor, partner, silent partner, venturer, stockholder, director, officer, consultant or employee or agent, engage or participate in any employment or activity which may cause him to use or disclose, either intentionally or inadvertently, Company’s confidential information.

12. Work Product and Inventions . Company shall be entitled to all of the benefits, profits, results and work product arising from or incident to all work, services, advice and activities of Employee, including without limitation all rights in inventions (as set forth below), trademark or trade name creations, and copyrightable materials.    Employee shall not, during the term of his employment by Company, be interested, directly or indirectly, in any manner, including, but not limited to, as partner, officer, advisor, or in any other capacity in any other business similar to, or in competition with, Company’s or any subsidiary’s business.

Employee agrees to communicate promptly and fully to Company all inventions, discoveries, improvements or designs conceived or reduced to practice by Employee during the period of his employment with Company (alone or jointly with others), and, except as provided in this Paragraph 12, Employee will and hereby does assign to Company and/or its nominees all of the Employee’s right, title and interest in such inventions, discoveries, improvements or designs and all of his right, title and interest in any patents, patent applications or copyrights based thereon without obligation on the part of Company or any subsidiary to make any further compensation, royalty or payment to Employee. Employee further agrees to assist Company and/or its nominee (without charge but at no expense to Employee) at any time and in every proper way to obtain and maintain for its and/or their own benefit, patents for all such inventions, discoveries and improvements and copyrights for all such designs.

This Agreement does not obligate Employee to assign to Company any invention, discovery, improvement or design for which no equipment, supplies, facility or trade secret information of Company or any subsidiary was used and which was developed entirely on Employee’s own time, and (1) which does not relate (a) directly to the business of Company or any subsidiary, or (b) to Company’s or any subsidiary’s actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by Employee for Company or any subsidiary.

13. Exempt Inventions . Identified under Exempt Inventions in Exhibit A by descriptive title are all of the Inventions, if any, in which Employee possesses any right, title or interest prior to Employee’s employment with Company or execution of this Employment Agreement which are not subject to the terms hereof.


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14. Copyrights . Employee acknowledges that any documents, drawings, computer software or other work of authorship prepared by Employee within the scope of his employment is a “work made for hire” under U.S. copyright laws and that, accordingly, Company exclusively owns all copyright rights in such works of authorship. For purposes of this paragraph, “scope of employment” means that the work of authorship (a) relates to any subject matter pertaining to his employment, (b) relates to or is directly or indirectly connected with the existing or reasonably foreseeable business, products, projects or confidential information of Company or any subsidiary, or (c) involves the use of any time, material or facility of Company or any subsidiary.

15. Return of Property . Employee shall, immediately upon his involuntary or voluntary resignation or termination from employment for any reason, deliver to Company all documents and other items, whether on computer disc or tape or otherwise, including all copies thereof, belonging to Company or any subsidiary or in any way related to the business of Company or any subsidiary or the services Employee performed for Company or any subsidiary, including but not limited to any documents or items containing trade secret, proprietary, or confidential information, documents in any way relating to any inventions or copyrights, client or customer information, information relating to Company’s or any subsidiary’s processes or procedures and any other materials or documents of any sort relating to Company or any subsidiary. Employee shall not retain any copies or summaries of any kind of documents and materials covered by this Paragraph 15.

16. Remedy upon Violation . Employee and Company agree that a breach or threatened breach of Paragraphs 10, 11, 12, 14 or 15 would cause irreparable harm to Company and/or its subsidiaries, and that monetary damages alone would not be an adequate remedy. Employee agrees that Company and any subsidiary shall be entitled, in addition to any other remedy it may have at law or in equity, to an injunction, without the posting of a bond if allowed by applicable law or with the posting of a minimal bond if required, enjoining or restraining Employee from any violation or violations or threatened violation or violations of Paragraphs 10, 11, 12, 14 and 15, and/or for specific performance of duties and obligations under such paragraphs, and Employee hereby consents to the issuance of such injunction. If any rights or restrictions contained in Paragraphs 10, 11, 12, 14 and 15 shall be deemed to be unenforceable by reason of the extent, duration or geographic scope, or other provision thereof, the parties contemplate that the Court shall reduce such extent, duration or geographic scope or other provision and enforce Paragraphs 10, 11, 12, 14 and 15 in their reduced form for all purposes in the manner contemplated by such Paragraphs.

17. Other Ag reements . By Employee’s signature to this Agreement, Employee warrants that he is not subject to any employment, noncompetition, confidentiality, inventions or other obligations or agreements which would prevent or restrict the Employee in any way from accepting employment with Company and fully performing his duties and responsibilities as described in this Agreement. Employee, by his signature to this Agreement, further warrants that he has not taken and will not take any trade secret, proprietary or confidential information of any former employer, and will not use or disclose any such information to anyone in the performance of duties and responsibilities under this Agreement.

18. Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and assigns of Company.

19. Notices . All notices and other communications to be given under this Agreement shall be in writing and shall be deemed to be given when delivered personally, or when mailed by registered or certified mail or overnight courier, addressed to the party to whom such notice is intended to be given, at the last known address for that party or at such other address as the party may specify by written notice.

(a)
In the case of Company, the notice shall be provided to:

Rudolph Technologies, Inc.
One Rudolph Road
Flanders, New Jersey 07836
Attn: Chief Executive Officer

(b)
In the case of Employee, the notice shall be provided to:

Michael Plisinski
[Address]


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Either party may, by written notice hereunder, designate a change of address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received within the fifth business day thereafter, or when it is actually received, whichever is sooner.

20. Survival of Provisions . Employee acknowledges and agrees that the restrictions and obligations set forth in Paragraphs 10, 11, 12, 13, 14, 15 and 16 of this Agreement are reasonable, shall survive his resignation from or the termination of his employment, and shall apply to him whether his resignation or termination from employment is voluntary or involuntary and regardless of the reason for such resignation or termination.

21. Nonwaivers . No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any right or remedy granted hereby or by any related document or by law.

22. Governing Law . This Agreement shall be construed and interpreted according to the laws of the State of Minnesota, without reference to its conflict of laws provisions.

23. Paragraph Headings . Paragraph headings are included in this Agreement for convenience of reference only, and are not intended to be full or accurate descriptions of the contents hereof.

24. Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one (1) and the same instrument.

25. Entire Agreement . This Agreement states the entire Agreement of the parties on the subjects set forth herein, and merges and supersedes all prior agreements and understandings between the parties. No modification, termination, or attempted waiver of any provision of this Agreement will be valid unless it is made in writing and signed by the party against whom the same is sought to be enforced, and is specifically identified as a modification, termination, release, waiver or discharge of this Agreement. If any term, clause or provision of this Agreement shall for any reason be adjudged invalid, unenforceable or void, the same shall not impair or invalidate any of the other provisions contained herein, all of which shall be performed in accordance with their respective terms.

26. General Release . All post-employment termination compensation and benefits arising as a result of termination pursuant to Paragraph 8(b) or 9 hereof, as applicable, are in consideration for Employee’s execution of a general release (“General Release”) of all known and unknown claims that Employee may then have against Company and its officers, directors, employees and affiliates, a form of which is available from Company. If Employee does not properly execute such General Release, the parties expressly acknowledge and agree that Employee will not be entitled to any of the post-employment termination compensation and benefits provided as a result of termination pursuant to Paragraph 8(b) or 9 hereof, as applicable.

27. Code Section 409A . In order to avoid any ambiguity and to further clarify the understanding of the parties as to this Agreement, the parties intend that this Agreement comply with Section 409A of the Code and all regulations or interpretive guidance issued thereunder, and that the payment of any benefits or amounts thereunder and the interpretation of this Agreement will be operated and administered accordingly, provided, however, that the Company makes no representation or warranty to Employee that this Agreement or the payment of any amounts or benefits hereunder will in fact comply with Section 409A of the Code. The parties each acknowledge that as of the date of this Amendment all severance amounts and benefits which would be payable under this Agreement would be exempt from Section 409A of the Code by reason of the severance pay exception under Treas. Reg. 1.409A-1(b)(9)(iii). For purposes of clarification and for the avoidance of ambiguity,

(a)
Employee agrees that if, at the time of termination of employment, Employee is considered to be a specified employee as defined in Section 409A of the Code (as determined as of December 31 preceding the termination of employment, unless the termination of employment occurs prior to April 1, in which case the determination will be made as of the second preceding December 31), then such payments as are to be made under any of such agreements as a result of Employee’s termination of employment will be delayed until the first business day following the date that is six months and a day following such termination of employment (or, if earlier, the date of Employee’s death), if and to the extent the delay in such payments is necessary in order to comply with the requirements of Section 409A of the Code, taking into account the extent to which such payments

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are exempt from Section 409A of the Code by virtue of the short-term deferral rule under Treas. Reg. Sec. 1.409A-1(b)(4) and/or the severance pay exception under Treas. Reg. Sec. 1.409A-1(b)(9)(iii).

(b)
In the event that any payment is determined to be payable to Employee under this Agreement and under this Agreement such payment is conditioned upon Employee executing (and not thereafter revoking) a release of claims, then if the period during which Employee is entitled to consider the release of claims (and to revoke the release, if applicable) spans two calendar years, then any payment that otherwise would have been payable during the first calendar year will in no case be made until the later of (i) the end of any revocation period (assuming that Employee does not revoke), or (ii) the first business day of the second calendar year (regardless of whether Employee used the full time period allowed for consideration), all as required for purposes of Section 409A of the Code.

(c)
References to termination of employment and similar terms used in this Agreement are intended to refer to “separation from service” within the meaning of Section 409A of the Code to the extent necessary to comply with Section 409A of the Code (applying the default rules contained therein).

(d)
The Company acknowledges that, for purposes of Section 409A of the Code, each and every payment under this Agreement shall, to the extent permitted by Section 409A of the Code, be deemed a separate payment and not a series of payments.

(e)
To the extent that the reimbursement of any cost or expense or the provision of any in-kind benefits to or for the benefit of Employee is subject to Section 409A of the Code, the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, during any one calendar year shall not affect the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, reimbursement of any such cost or expense shall be made by no later than December 31 of the year following the calendar year in which such cost or expense is incurred, and Employee’s right to receive such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.


RUDOLPH TECHNOLOGIES, INC.

Dated: July 29, 2014                By: Paul F. McLaughlin
Its: Chairman & CEO



Dated: July 29, 2014                By: Michael P. Plisinski
Employee


                    



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EXHIBIT A



Employee’s Name    =    Michael Plisinski

Employee’s Title     =     VP & General Manager, Data Analysis and Review Business Unit

Manager            =    Chief Executive Officer

Base Salary (2014)    =    $289,261

Severance Period        =    twelve (12) months

Change In Control
Severance Period        =    eighteen (18) months

Exempted Inventions    =             




Initials of approval of Exhibit:    RUDOLPH TECHNOLOGIES, INC.     PFM

EMPLOYEE                 MPP


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Exhibit 10.4
 

RESTATED AND AMENDED EMPLOYMENT AGREEMENT

This Agreement is entered into by and between August Technology Corporation (“August Technology”), a Minnesota corporation, with its principal place of business at 4900 West 78th Street, Bloomington, Minnesota 55435, and D. Mayson Brooks of [Address] (“Employee”). This Agreement has been restated and amended effective as of July 29, 2014. For all purposes of the Agreement, reflecting the merger of August Technology with and into Rudolph Technologies, Inc. effective as of February 15, 2006, references in the Agreement to August Technology or the Company shall mean Rudolph Technologies, Inc.

WHEREAS, Employee desires employment with Company or has been employed with Company and wishes to continue employment under the terms and conditions set forth in this Agreement;

WHEREAS, Employee acknowledges and agrees that he has and will continue to have access to confidential, proprietary and trade secret information in the course of his employment and continued employment with Company, the unauthorized use or disclosure of which would cause irreparable harm to Company;

WHEREAS, Company and Employee wish to set forth the terms of their agreement in writing;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and for other good and valuable consideration the receipt and sufficiency of which is specifically acknowledged by the parties, Company and Employee agree as follows:

1. Employment . Company agrees to employ or continue to employ Employee, effective March 1, 2002, and Employee accepts employment or continued employment, upon the terms and conditions set forth in this Agreement.

2. Term of Employment . Company shall continue to employ Employee for an indefinite duration until his employment is terminated in accordance with Paragraph 8 of this Agreement.

3. Duties and Responsibilities . Employee shall devote his time, attention and best efforts to the duties and responsibilities of his position, and to the business and affairs of Company. Employee’s title shall be as set forth in Exhibit A as “Employee’s Title”, reporting to the person or office as set forth in Exhibit A as “Manager”. Employee shall perform all duties and responsibilities of the position he holds with Company as those duties and responsibilities may change from time to time. Employee shall comply with Company’s standards, policies and procedures in effect and as they may change from time to time; provided that to the extent such policies and procedures are inconsistent with this Agreement, the provisions of this Agreement shall control.

4. Compensation . Company shall pay Employee a gross annual salary as set forth in Exhibit A as “Base Salary”, less appropriate payroll deductions. Employee may also receive incentive compensation in accordance with the Annual Incentive Plan, as issued and as may change from time to time by the Company, or any other similar plan authorized by the Board of Directors. Employee’s compensation may be periodically increased or adjusted as authorized by the Board of Directors in the case of the Chief Executive Officer, or, in the case of all others, as recommended by the Chief Executive Officer and approved by the Board of Directors.

5. Business Expenses . Company will, in accordance with its policies and practices as such may change from time to time, reimburse Employee for all ordinary and necessary business expenses after receipt of appropriate documentation of such expenses.

6. Benefits . Employee shall be entitled to insurance and other benefits provided to key management employees in accordance with applicable plan documents and commensurate with vice president and higher positions within the Company. Benefits provided to employees are subject to change in the discretion of Company.

7. Stock Options . At the discretion of Company, Employee may be granted stock options from time to time, which options shall be subject to the terms and conditions of the Rudolph Technologies 2009 Stock Plan, as amended from time to time, or any successor plan, and the related stock option agreements. Further, Employee shall be eligible to participate in the Rudolph Technologies 2009 Employee Stock Purchase Plan, as amended from time to time, or any successor plan, subject to the terms and conditions contained therein.


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8. Termination . Employee’s employment under this Agreement may be terminated:

(a)
At any time upon mutual written agreement of the parties;

(b)
By either Employee or Company at any time, with or without cause, upon thirty (30) days’ written notice to the other;

(c)
By Company immediately upon notice to Employee for cause which shall be defined as:

(1)
Employee’s material failure or neglect, or refusal to perform, the duties and responsibilities of his position and/or the reasonable direction of the Board of Directors or his superiors;

(2)
Commission by Employee of any willful, intentional or negligent act that has the effect of injuring the reputation, business or performance of Company;

(3)
Employee’s conviction of a crime, or commission of any act involving moral turpitude;

(4)
Any material default or nonperformance of the terms of this Agreement, or any violation of Paragraphs 10, 11, 12, 14 and/or 15 of this Employment Agreement; or

(d)
Immediately upon Employee’s death.

Upon Employee’s resignation or termination under this Paragraph 8 for any reason, Company shall pay Employee his Base Salary through the Employee’s last date of employment, and any accrued and unused vacation or other paid time off through the Employee’s last date of employment. Employee’s entitlement to any vested pension, profit sharing or other benefits shall be governed by applicable plan documents. In the event Employee’s employment is terminated either by Employee or Company under Paragraph 8(b), Company may elect, in its sole discretion, to pay Employee his salary for the thirty (30) day notice period in lieu of Employee’s continued performance of duties during the notice period. In the event Employee is terminated by Company in accordance with Paragraph 8(b) above, without cause, Company shall, in addition to the above, pay Employee a severance at his then current Base Salary rate for the time period set forth in Exhibit A as “Severance Period”, to be paid according to the normal payroll schedule, directly following the thirty (30) day notice period, and Company shall, if the Employee elects to continue group health or other group benefits as allowed by COBRA, make the COBRA payments for the Severance Period. Employee shall not be entitled to any further or other payments or benefits of any kind upon the Employee’s termination or resignation under this Paragraph 8. In the event, Employee is entitled to Change in Control benefits as set forth in Paragraph 9, Employee shall not be entitled to any severance or notice rights under this Paragraph 8.

9. Change in Control . If, within eighteen (18) months following a Change in Control (as defined below), Employee’s employment is Terminated (as defined in Section (f) below), then:

(a)
Employee shall be paid his last Base Salary on a regular payroll cycle as of the effective date for the time period as set forth in Exhibit A as “Change In Control Severance Period” from the effective date of such termination;

(b)
For the same Change In Control Severance Period from the effective date of such termination as set forth in Paragraph 9(b), the Company shall, if Employee elects to continue group health or other group benefits as allowed under COBRA, make the COBRA payments for the Change In Control Severance Period;

(c)
All unvested options, restricted stock units or other equity awards granted in accordance with the Stock Plan (as hereinafter defined) as of the date of this Amendment as well as those granted after the date of this Amendment (“Awards”) shall fully vest and options will immediately be fully exercisable and other Awards will be paid within sixty (60) days of such termination, provided that such Awards have not already vested under the Rudolph Technologies 1999 Stock Plan or the Rudolph Technologies 2009 Stock Plan, as applicable (each as amended to date and including all successor and additional equity compensation plans of the Company, collectively the “Stock Plan”); and

(d)
Limitation on Change of Control Payments . Employee shall not be entitled to receive any Change of Control Action, as defined below, which would constitute an “excess parachute payment” for purposes of Code Section 280G, or any successor provision, and the regulations thereunder. In the event any Change of Control Action payable to Employee would constitute an “excess parachute payment,” then the acceleration

2



of the exercisability of such stock options, the accelerated vesting of other Awards and the payments to such Participant pursuant to this Paragraph 9 shall be reduced to the largest extent or amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Code. For purposes of this Paragraph 9, a “Change of Control Action” shall mean any payment, benefit or transfer of property in the nature of compensation paid to or for the benefit of Employee under any arrangement which is considered contingent on a Change of Control for purposes of Code Section 280G, including, without limitation, any and all salary, bonus, incentive, restricted stock, stock option, compensation or benefit plans, programs or other arrangements, and shall include benefits payable under this Agreement.

(e)
Change of Control . For purposes of this Agreement, “Change of Control” shall mean any of the following events occurring after the date of this Agreement:

(1)
A merger or consolidation to which the Company is a party, an acquisition by the Company involving the issuance of the Company’s securities as consideration for the acquired business, or any combination of fully closed and completed mergers, consolidations or acquisitions during any consecutive twenty-four (24) month period, if the individuals and entities who were shareholders of the Company immediately prior to the effective date of such merger, consolidation, or acquisition (or prior to the effective date of the first of a combination of such transactions) have, immediately following the effective date of such merger, consolidation or acquisition (or following the effective date of the last of a combination of such transactions), beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of less than fifty percent (50%) of the total combined voting power of all classes of securities issued by the surviving corporation for the election of directors of the surviving corporation;

(2)
The acquisition of direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Company by any person or entity or by a group of associated persons or entities acting in concert in one or a series of transactions, which causes the aggregate beneficial ownership of such person, entity or group to equal or exceed twenty percent (20%) or more of the total combined voting power of all classes of the Company’s then issued and outstanding securities;

(3)
The sale of the properties and assets of the Company substantially as an entirety, to any person or entity which is not a wholly-owned subsidiary of the Company;

(4)
The stockholders of the Company approve any plan or proposal for the liquidation of the Company; or

(5)
A change in the composition of the Board of the Company at any time during any consecutive twenty-four (24) month period such that the “Continuity Directors” no longer constitute at least a seventy percent (70%) majority of the Board. For purposes of this event, “Continuity Directors” means (i) those members of the Board who were directors at the beginning of such consecutive twenty-four (24) month period or at the date of this Agreement if this Agreement was entered into less than twenty-four months prior to the change in composition of the Board; and (ii) any new director whose election to the Board of Directors or nominations for election to the Board of Directors was approved by a vote of at least two-thirds (2/3) of the directors identified in the immediately preceding clause (i).

(6)
The Company enters into a letter of intent, an agreement in principle or a definitive agreement relating to an event described in Paragraph 9(e)(l ), 9(e)(2), 9(e)(3), 9(e)(4), or 9(e)(5) that ultimately results in such a Change of Control, or a tender or exchange offer or proxy contest is commenced that ultimately results in an event described in Paragraph 9(e)(2) or 9(e)(5).

Provided, however, that any transaction or other event described in clauses (1) through(6) above shall not be deemed to constitute a Change of Control under this Agreement unless such transaction or event constitutes a “change in control” under Section 409A of the Internal Revenue Code (“Code”) and the regulations and interpretative guidance thereunder.

(f)
Termination . For purposes of this Paragraph 9, “Termination” shall mean any of the following events occurring within eighteen (18) months after a Change of Control:


3



(1)
The termination of Employee’s employment by the Company for any reason, with or without cause, except for termination resulting from conduct by Employee constituting (a) a felony involving moral turpitude under either federal law or the law of the State of Minnesota, or (b) Employee’s willful failure to fulfill his employment duties with the Company; provided, however, that for purposes of this clause (b), an act or failure to act by Employee shall not be “willful” unless it is done, or omitted to be done, in bad faith and without any reasonable belief that Employee’s action or omission were in the best interests of the Company; or

(2)
The termination of employment with the Company by Employee for Good Reason. Such termination shall be accomplished by, and effective upon, Employee giving written notice to Company of his decision to terminate. “Good Reason” shall mean a good faith determination by Employee, in Employee’s sole and absolute judgment, that any one or more of the following events has occurred, at any time during the term of this Agreement or after a Change of Control; provided, however, that such event shall not constitute “Good Reason” if Employee has expressly consented to such event in writing or if Employee fails to provide written notice of his decision to terminate within sixty (60) days of the occurrence of such event:

(a)
A material change in Employee’s reporting responsibilities, titles or offices, or any removal of Employee from or any failure to re-elect Employee to any of such positions, which has the effect of materially diminishing Employee’s responsibility or authority;

(b)
A reduction by the Company in Employee’s base salary (as increased from time to time);

(c)
A requirement imposed by the Company on Employee that results in Employee being based at a location that is outside of a twenty-five (25) mile radius of Employee’s prior job location;

(d)
Without the adoption of a replacement plan, program or arrangement that provides benefits to Employee that are equal to or greater than those benefits that are discontinued or adversely affected:

i.
A failure by the Company to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership, stock purchase, stock option, life insurance, health, accident, disability, or any other employee compensation or benefit plan, program or arrangement, in which Employee is or has been participating;

ii.
The taking of any action by the Company that would adversely affect Employee’s participation or materially reduce Employee’s benefits under any of such plans, programs or arrangements; or

(e)
Any action by the Company that would materially adversely affect the physical conditions in or under which Employee performs his employment duties; or

(f)
Any material breach by the Company of this Employment Agreement between Employee and the Company.

Termination for “Good Reason” shall not include Employee’s death or a termination for any reason other than the events specified in clauses (a) through (f) above.

10. Confidential Information . During the term of this Agreement and at all times thereafter, Employee shall not directly or indirectly use or disclose any trade secret, proprietary or confidential information of Company or any subsidiary for the benefit of any person or entity other than Company or any subsidiary without prior written approval of Company’s Board of Directors. For purposes of this Agreement, in addition to all materials and information protected by applicable statute or law, the parties acknowledge that confidential information shall include any information, whether in print, on computer disc or tape or otherwise, which is not public information and which relates to Company or any subsidiary, or Company’s or any subsidiary’s existing or reasonably foreseeable business, including but not limited to information relating to research, development, technology, manufacturing processes, purchasing and sales, information relating to sales and other financial strategies, plans and/or goals, information relating to proprietary rights and data, ideas, know-how, and/or trade secrets, information regarding the identity and/or needs of clients or customers, client or

4



customer lists and other client or customer information, information regarding active and inactive accounts of Company or any subsidiary, and information relating to Company’s or any subsidiary’s methods of operation.

11. Noncompetition Obligations . As a condition to and in consideration of his employment and continued employment, participation in and payment under the Key Executive Bonus Plans of Company and in exchange for the severance and Change of Control provisions as set forth in Paragraphs 8 and 9 of this Employment Agreement, and the mutual covenants herein, Employee agrees that, during his employment and for a period of one (1) year following his voluntary or involuntary resignation or termination for any reason, the Employee will not, on behalf of himself or any other person or entity:

(a)
Directly or indirectly solicit, on Employee’s own behalf, or on behalf of another, any of Company’s or any subsidiary’s customers or potential customers with whom Employee or Employee’s supervisees had contact, either directly or indirectly, within the twelve months immediately preceding Employee’s resignation or termination of employment, for the purpose of providing, selling, or attempting to sell any products or services competing with those provided or sold by Company or any subsidiary, or clearly contemplated thereby due to research, development, engineering, applications, licensing, or other like projects in process, at the time of resignation or termination; or

(b)
Hire or attempt to hire, or influence or solicit, or attempt to influence or solicit, either directly or indirectly, any employee of Company or any subsidiary to leave or terminate his or her employment, or to work for any other person or entity.

(c)
Directly or indirectly, whether as sole proprietor, partner, silent partner, venturer, stockholder, director, officer, consultant or employee or agent, engage or participate in any employment or activity which involves the sale, distribution, design and/or manufacturing of precision film thickness measurement instruments, defect and yield metrology tools or data analysis systems for use in the semiconductor manufacturing industry or is otherwise competitive with Company’s business within the United States; or

(d)
Directly or indirectly, whether as sole proprietor, partner, silent partner, venturer, stockholder, director, officer, consultant or employee or agent, engage or participate in any employment or activity which may cause him to use or disclose, either intentionally or inadvertently, Company’s confidential information.

12. Work Product and Inventions . Company shall be entitled to all of the benefits, profits, results and work product arising from or incident to all work, services, advice and activities of Employee, including without limitation all rights in inventions (as set forth below), trademark or trade name creations, and copyrightable materials.    Employee shall not, during the term of his employment by Company, be interested, directly or indirectly, in any manner, including, but not limited to, as partner, officer, advisor, or in any other capacity in any other business similar to, or in competition with, Company’s or any subsidiary’s business.

Employee agrees to communicate promptly and fully to Company all inventions, discoveries, improvements or designs conceived or reduced to practice by Employee during the period of his employment with Company (alone or jointly with others), and, except as provided in this Paragraph 12, Employee will and hereby does assign to Company and/or its nominees all of the Employee’s right, title and interest in such inventions, discoveries, improvements or designs and all of his right, title and interest in any patents, patent applications or copyrights based thereon without obligation on the part of Company or any subsidiary to make any further compensation, royalty or payment to Employee. Employee further agrees to assist Company and/or its nominee (without charge but at no expense to Employee) at any time and in every proper way to obtain and maintain for its and/or their own benefit, patents for all such inventions, discoveries and improvements and copyrights for all such designs.

This Agreement does not obligate Employee to assign to Company any invention, discovery, improvement or design for which no equipment, supplies, facility or trade secret information of Company or any subsidiary was used and which was developed entirely on Employee’s own time, and (1) which does not relate (a) directly to the business of Company or any subsidiary, or (b) to Company’s or any subsidiary’s actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by Employee for Company or any subsidiary.

13. Exempt Inventions . Identified under Exempt Inventions in Exhibit A by descriptive title are all of the Inventions, if any, in which Employee possesses any right, title or interest prior to Employee’s employment with Company or execution of this Employment Agreement which are not subject to the terms hereof.


5



14. Copyrights . Employee acknowledges that any documents, drawings, computer software or other work of authorship prepared by Employee within the scope of his employment is a “work made for hire” under U.S. copyright laws and that, accordingly, Company exclusively owns all copyright rights in such works of authorship. For purposes of this paragraph, “scope of employment” means that the work of authorship (a) relates to any subject matter pertaining to his employment, (b) relates to or is directly or indirectly connected with the existing or reasonably foreseeable business, products, projects or confidential information of Company or any subsidiary, or (c) involves the use of any time, material or facility of Company or any subsidiary.

15. Return of Property . Employee shall, immediately upon his involuntary or voluntary resignation or termination from employment for any reason, deliver to Company all documents and other items, whether on computer disc or tape or otherwise, including all copies thereof, belonging to Company or any subsidiary or in any way related to the business of Company or any subsidiary or the services Employee performed for Company or any subsidiary, including but not limited to any documents or items containing trade secret, proprietary, or confidential information, documents in any way relating to any inventions or copyrights, client or customer information, information relating to Company’s or any subsidiary’s processes or procedures and any other materials or documents of any sort relating to Company or any subsidiary. Employee shall not retain any copies or summaries of any kind of documents and materials covered by this Paragraph 15.

16. Remedy upon Violation . Employee and Company agree that a breach or threatened breach of Paragraphs 10, 11, 12, 14 or 15 would cause irreparable harm to Company and/or its subsidiaries, and that monetary damages alone would not be an adequate remedy. Employee agrees that Company and any subsidiary shall be entitled, in addition to any other remedy it may have at law or in equity, to an injunction, without the posting of a bond if allowed by applicable law or with the posting of a minimal bond if required, enjoining or restraining Employee from any violation or violations or threatened violation or violations of Paragraphs 10, 11, 12, 14 and 15, and/or for specific performance of duties and obligations under such paragraphs, and Employee hereby consents to the issuance of such injunction. If any rights or restrictions contained in Paragraphs 10, 11, 12, 14 and 15 shall be deemed to be unenforceable by reason of the extent, duration or geographic scope, or other provision thereof, the parties contemplate that the Court shall reduce such extent, duration or geographic scope or other provision and enforce Paragraphs 10, 11, 12, 14 and 15 in their reduced form for all purposes in the manner contemplated by such Paragraphs.

17. Other Agreements . By Employee’s signature to this Agreement, Employee warrants that he is not subject to any employment, noncompetition, confidentiality, inventions or other obligations or agreements which would prevent or restrict the Employee in any way from accepting employment with Company and fully performing his duties and responsibilities as described in this Agreement. Employee, by his signature to this Agreement, further warrants that he has not taken and will not take any trade secret, proprietary or confidential information of any former employer, and will not use or disclose any such information to anyone in the performance of duties and responsibilities under this Agreement.

18. Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and assigns of Company.

19. Notices . All notices and other communications to be given under this Agreement shall be in writing and shall be deemed to be given when delivered personally, or when mailed by registered or certified mail or overnight courier, addressed to the party to whom such notice is intended to be given, at the last known address for that party or at such other address as the party may specify by written notice.

(a)
In the case of Company, the notice shall be provided to:

Rudolph Technologies, Inc.
One Rudolph Road
Flanders, New Jersey 07836
Attn: Chief Executive Officer

(b)
In the case of Employee, the notice shall be provided to:

D. Mayson Brooks
[Address]


6



Either party may, by written notice hereunder, designate a change of address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received within the fifth business day thereafter, or when it is actually received, whichever is sooner.

20. Survival of Provisions . Employee acknowledges and agrees that the restrictions and obligations set forth in Paragraphs 10, 11, 12, 13, 14, 15 and 16 of this Agreement are reasonable, shall survive his resignation from or the termination of his employment, and shall apply to him whether his resignation or termination from employment is voluntary or involuntary and regardless of the reason for such resignation or termination.

21. Nonwaivers . No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any right or remedy granted hereby or by any related document or by law.

22. Governing Law . This Agreement shall be construed and interpreted according to the laws of the State of Minnesota, without reference to its conflict of laws provisions.

23. Paragraph Headings . Paragraph headings are included in this Agreement for convenience of reference only, and are not intended to be full or accurate descriptions of the contents hereof.

24. Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one (1) and the same instrument.

25. Entire Agreement . This Agreement states the entire Agreement of the parties on the subjects set forth herein, and merges and supersedes all prior agreements and understandings between the parties. No modification, termination, or attempted waiver of any provision of this Agreement will be valid unless it is made in writing and signed by the party against whom the same is sought to be enforced, and is specifically identified as a modification, termination, release, waiver or discharge of this Agreement. If any term, clause or provision of this Agreement shall for any reason be adjudged invalid, unenforceable or void, the same shall not impair or invalidate any of the other provisions contained herein, all of which shall be performed in accordance with their respective terms.

26. General Release . All post-employment termination compensation and benefits arising as a result of termination pursuant to Section 8(b) or 9 hereof, as applicable, are in consideration for Employee’s execution of a general release (“General Release”) of all known and unknown claims that Employee may then have against Company and its officers, directors, employees and affiliates, a form of which is available from Company. If Employee does not properly execute such General Release, the parties expressly acknowledge and agree that Employee will not be entitled to any of the post-employment termination compensation and benefits provided as a result of termination pursuant to Section 8(b) or 9 hereof, as applicable.

27. Code Section 409A . In order to avoid any ambiguity and to further clarify the understanding of the parties as to this Agreement, the parties intend that this Agreement comply with Section 409A of the Code and all regulations or interpretive guidance issued thereunder, and that the payment of any benefits or amounts thereunder and the interpretation of this Agreement will be operated and administered accordingly, provided, however, that the Company makes no representation or warranty to Employee that this Agreement or the payment of any amounts or benefits hereunder will in fact comply with Section 409A of the Code. The parties each acknowledge that as of the date of this Amendment all severance amounts and benefits which would be payable under this Agreement would be exempt from Section 409A of the Code by reason of the severance pay exception under Treas. Reg. 1.409A-1(b)(9)(iii). For purposes of clarification and for the avoidance of ambiguity,

(a)
Employee agrees that if, at the time of termination of employment, Employee is considered to be a specified employee as defined in Section 409A of the Code (as determined as of December 31 preceding the termination of employment, unless the termination of employment occurs prior to April 1, in which case the determination will be made as of the second preceding December 31), then such payments as are to be made under any of such agreements as a result of Employee’s termination of employment will be delayed until the first business day following the date that is six months and a day following such termination of employment (or, if earlier, the date of Employee’s death), if and to the extent the delay in such payments is necessary in order to comply with the requirements of Section 409A of the Code, taking into account the extent to which such payments are exempt from Section 409A of the Code by virtue of the short-term deferral rule under Treas. Reg. Sec. 1.409A-1(b)(4) and/or the severance pay exception under Treas. Reg. Sec. 1.409A-1(b)(9)(iii).

7




(b)
In the event that any payment is determined to be payable to Employee under this Agreement and under this Agreement such payment is conditioned upon Employee executing (and not thereafter revoking) a release of claims, then if the period during which Employee is entitled to consider the release of claims (and to revoke the release, if applicable) spans two calendar years, then any payment that otherwise would have been payable during the first calendar year will in no case be made until the later of (i) the end of any revocation period (assuming that Employee does not revoke), or (ii) the first business day of the second calendar year (regardless of whether Employee used the full time period allowed for consideration), all as required for purposes of Section 409A of the Code.

(c)
References to termination of employment and similar terms used in this Agreement are intended to refer to “separation from service” within the meaning of Section 409A of the Code to the extent necessary to comply with Section 409A of the Code (applying the default rules contained therein).

(d)
The Company acknowledges that, for purposes of Section 409A of the Code, each and every payment under this Agreement shall, to the extent permitted by Section 409A of the Code, be deemed a separate payment and not a series of payments.

(e)
To the extent that the reimbursement of any cost or expense or the provision of any in-kind benefits to or for the benefit of Employee is subject to Section 409A of the Code, the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, during any one calendar year shall not affect the amount of such cost or expense eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, reimbursement of any such cost or expense shall be made by no later than December 31 of the year following the calendar year in which such cost or expense is incurred, and Employee’s right to receive such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.


RUDOLPH TECHNOLOGIES, INC.


Dated: July 29, 2014                By: ______________________________
Name: Paul F. McLaughlin
Title: Chairman & CEO


Dated: July 29, 2014                By: _______________________________
Name: D. Mayson Brooks


8



EXHIBIT A


Employee’s Name    =    D. Mayson Brooks

Employee’s Title        =    Senior V.P. Worldwide Sales and Field Operations

Manager            =    Chief Executive Officer

Base Salary (2014)    =    $309,000

Severance Period        =    twelve (12) months

Change In Control
Severance Period        =    eighteen (18) months

Exempted Inventions    =    1. Book titled: Sales 101: How to sell to the recurring customer







Initials of approval of Exhibit:        RUDOLPH TECHNOLOGIES, INC.      PFM

EMPLOYEE                 DMB






9


Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Paul F. McLaughlin, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Rudolph Technologies, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 6, 2014

 
By:
/s/ PAUL F. MCLAUGHLIN
 
 
Paul F. McLaughlin
Chairman and Chief Executive Officer






Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven R. Roth, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Rudolph Technologies, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 6, 2014

 
By:
/s/ STEVEN R. ROTH
 
 
Steven R. Roth
Senior Vice President and Chief Financial Officer





Exhibit 32.1
 


CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 
I, Paul F. McLaughlin, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Rudolph Technologies, Inc. on Form 10-Q for the quarter ended June 30, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Rudolph Technologies, Inc.

 

Date: August 6, 2014

 
 
By: 
/s/  PAUL F. MCLAUGHLIN
 
 
Paul F. McLaughlin  
Chairman and Chief Executive Officer  





Exhibit 32.2
 



CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 
I, Steven R. Roth, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Rudolph Technologies, Inc. on Form 10-Q for the quarter ended June 30, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Rudolph Technologies, Inc.
 
 

Date: August 6, 2014

 
 
By: 
/s/  STEVEN R. ROTH
 
 
Steven R. Roth
Senior Vice President and Chief Financial Officer