Exhibit 10.25


 


December 12, 2008


 


Nancy J. Baker


 


Re:                             Separation
Agreement


 


Dear Nancy:


 


This letter sets forth the terms and conditions of our agreement (the “Agreement”)
regarding the termination of your employment with Cymer, Inc. and all
subsidiary and/or affiliated entities (the “Company”). 
This Agreement shall become effective on the “Effective Date” as
defined in Section 12.  This
Agreement supersedes and extinguishes that certain Amended and Restated
Employment Agreement between you and the Company entered into effective November 6,
2008 (the “2008 Amended Employment Agreement”),
which shall be null and void upon the Effective Date.  You and the Company hereby agree as follows:


 


1.                                      Separation Date.  You have tendered, and the Company has
accepted, your resignation as an employee and officer effective as of December 19,
2008 (the “Separation
Date”).  Until the
Separation Date, you will continue to receive your base salary in effect as of December 12,
2008, less standard deductions and withholdings in accordance with the Company’s
regular payroll practices and you will continue to be eligible to participate
in those Company-sponsored employee welfare benefit programs in which you were
enrolled as of December 12, 2008. 
Upon the Separation Date, you will be eligible to receive the severance
benefits set forth in Sections 3, 4, and 7 below, subject to your satisfaction
of the conditions set forth therein. 
Except as expressly provided herein, you acknowledge and agree that you
are not entitled to and will not receive any additional compensation,
severance, or benefits from the Company.


 


2.                                      Stock
Awards.  All options previously
granted to you to purchase the common stock of the Company and all restricted
stock units previously granted to you (collectively, the “Stock
Awards”) will cease to vest effective on the Separation Date in
accordance with their terms.  Your right
to exercise any vested option shares will be governed by the relevant plan
documents and stock option agreements.


 


3.                                      Separation
Pay.  Provided that i) this Agreement
becomes effective; ii) you sign the Release and Waiver in the form attached
hereto as Exhibit A (the “Release and Waiver”)
on the Separation Date or within twenty-one (21) days following the Separation
Date; iii) you deliver the signed Release and Waiver to the Company within
thirty (30) days following the Separation Date; iv) you do not revoke the
Release and Waiver; and v) you fully comply with the terms of this Agreement,
the Company will pay you severance pay in the form of continuation of your
current annualized base salary ($392,000.18), less required deductions, for a
period of twelve (12) months following the effective date of the Release and
Waiver, such payments to be made on the Company’s regular payroll dates in
accordance with its standard payroll practices.


 


4.                                      Health
Insurance.  Provided that i) you
comply with the requirements of Section 3; and ii) you timely and properly
elect to continue group health insurance benefits pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall pay 


 

















 


directly to the insurer
the COBRA medical, dental and vision insurance premiums for such
Company-sponsored group health insurance plan benefits as you and your eligible
dependents were enrolled in effective as of the Separation Date until the
earlier of (i) twelve (12) months following the Separation Date, (ii) the
date that you are no longer eligible for COBRA coverage, or (iii) the date
upon which you become eligible for health insurance benefits pursuant to a plan
sponsored by a subsequent employer.  You
agree to immediately notify the Company in writing of such employment.  For purposes of this Section 4,
references to COBRA premiums shall not include any amounts payable by you under
an Internal Revenue Code Section 125 health care reimbursement plan.


 


5.                                      Bonus
Program Payments.  You will not be
eligible to receive a bonus for 2008 performance pursuant to the Company’s
Short-Term Incentive Bonus Plan (the “STIP”) as
the bonus eligibility criteria for the STIP have not been met.  You will not be eligible to receive any
amounts under the Company’s 3-Year Bonus Program, 2007 Long-term Incentive
Bonus Plan, or any other incentive compensation plan of the Company.


 


6.                                      Expense Reimbursement.  You will submit your final documented expense
reimbursement statement reflecting all business expenses you incurred prior to
and including the Separation Date, if any, for which you seek reimbursement no
later than January 15, 2009.  The
Company shall promptly reimburse your expenses pursuant to Company policy and
regular business practice, but in no event later than February 28, 2009.


 


7.                                      Other Compensation and Benefits.  Provided that this Agreement becomes
effective, the Company will provide you with a six-month executive outplacement
program from the firm of Lee, Hecht, Harrison.


 


8.                                      Application
of Internal Revenue Code Section 409A.  
Notwithstanding anything to the contrary set forth herein, any
payments and benefits provided under this Agreement (the “Severance
Benefits”) that constitute “deferred compensation” within the
meaning of Section 409A of the Internal Revenue Code and the regulations
and other guidance thereunder and any state law of similar effect (collectively
“Section 409A”) shall not
commence in connection with your termination of employment unless and until you
have also incurred a “separation from service” (as such term is defined in
Treasury Regulation Section 1.409A-1(h) (“Separation
From Service”), unless the Company reasonably determines that
such amounts may be provided to you without causing you to incur the additional
20% tax under Section 409A.


 


It is intended that each
installment of the Severance Benefits payments provided for in this Agreement
is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended
that payments of the Severance Benefits set forth in this Agreement satisfy, to
the greatest extent possible, the exemptions from the application of Section 409A
provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and
1.409A-1(b)(9).  However, if the Company
(or, if applicable, the successor entity thereto) determines that the Severance
Benefits constitute “deferred compensation” under Section 409A and you
are, on the termination of your service, a “specified employee” of the Company
or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of
the Internal Revenue Code, then, solely to the extent necessary to avoid the incurrence
of the adverse personal tax consequences under Section 409A, the timing of
the Severance Benefit 


 

















 


payments shall be delayed until the earlier to occur
of: (i) the date that is six months and one day after your Separation From
Service or (ii) the date of your death (such applicable date, the “Specified Employee Initial Payment Date”),
the Company (or the successor entity thereto, as applicable) shall (A) pay
to your a lump sum amount equal to the sum of the Severance Benefit payments
that you would otherwise have received through the Specified Employee Initial
Payment Date if the commencement of the payment of the Severance Benefits had
not been so delayed pursuant to this Section and (B) commence paying
the balance of the Severance Benefits in accordance with the applicable payment
schedules set forth in this Agreement.


 


9.                                      Company Property.  Upon the Separation Date, or such other date
as the Company may specify, you will return to the Company all Company
documents (and all copies thereof) and other Company property in your
possession or your control, including, but not limited to, Company files,
business plans, notes, samples, drawings, specifications, calculations,
sequences, data, computer-recorded information, tangible property, including,
but not limited to, cellular phones, computers, credit cards, entry cards, keys
and any other materials of any nature pertaining to your work with the Company,
and any documents or data of any description (or any reproduction of any
documents or data).


 


10.                               Confidentiality and Publicity.  The provisions of this Agreement shall be
held in strictest confidence by you and shall not be publicized or disclosed in
any manner whatsoever; provided, however,
that you may disclose this Agreement, in confidence, (a) to your immediate
family, (b) to your attorneys, accountants, tax preparers, and financial
advisors, and (c) insofar as such disclosure may be necessary to enforce
its terms or as otherwise required by law. 
You further agree that you shall not by any means of communication,
whether written, oral, electronic or otherwise, comment upon or discuss any
aspect of the Company’s business or operations (including, but not limited to
your employment or the termination thereof) unless you are specifically
required to do so by law. In the event of your breach of this section 10, you
shall forfeit any benefits and/or payments provided by this Agreement that have
not yet issued at the time of such breach, and you shall be liable to the
Company for all damages incurred by the Company as a result of such breach.


 


11.                               Release of Claims.  In exchange for the consideration provided to
you by this Agreement that you are not otherwise entitled to receive, you
hereby generally and completely release the Company and its directors, officers,
employees, shareholders, partners, agents, attorneys, predecessors, successors,
parent and subsidiary entities, insurers, affiliates, and assigns from any and
all claims, liabilities and obligations, both known and unknown, that arise out
of or are in any way related to events, acts, conduct, or omissions occurring
prior to your signing this Agreement other than the Company’s express
obligations under the Indemnification Agreement between the Company and you
dated November 6, 2008, (the “Indemnification Agreement”),
a copy of which is attached as Exhibit B. 
This general release includes, but is not limited to:  (1) all claims arising out of or in any
way related to your employment with the Company or the termination of that
employment; (2) all claims related to your compensation or benefits from
the Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, or fringe benefits; (3) all claims related
to contract, including but not limited to the 2008 Amended Employment Agreement
(and any predecessor agreements) but not including the Indemnification
Agreement; (4) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing; (5) all
tort claims, including claims 


 

















 


for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (6) all
federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Employee Retirement Income
Security Act, the federal Age Discrimination in Employment Act of 1967 (as
amended) (“ADEA”),
California Labor Code §970, the California Unruh Act, and the California Fair
Employment and Housing Act (as amended).


 


12.                               ADEA.  You acknowledge that you are knowingly and
voluntarily waiving and releasing any rights you may have under the ADEA.  You also acknowledge that the consideration
given for the waiver in the above paragraph is in addition to anything of value
to which you were already entitled.  You
are advised by this writing, as required by the ADEA that:  (a) your waiver and release do not apply
to any claims that may arise after you sign this Agreement; (b) you should
consult with an attorney prior to executing this release; (c) you have
twenty-one (21) days within which to consider this release (although you may
choose to voluntarily execute this release earlier); (d) you have seven (7) days
following the execution of this release to revoke this Agreement; and (e) this
Agreement will not be effective until the eighth day after this Agreement has
been signed both by you and by the Company, provided that you have not earlier
revoked this Agreement (the “Effective Date”) and you will not be entitled to
receive any of the benefits specified by this Agreement unless and until it
becomes effective.


 


13.                               Section 1542 Waiver.  In giving this release, which includes claims
which may be unknown to you at present, you hereby acknowledge that you have
read and understand Section 1542 of the Civil Code of the State of
California which reads as follows:


 


A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her
settlement with the debtor.


 


You hereby expressly waive and relinquish all rights
and benefits under this section and any law or legal principle of similar
effect in any jurisdiction with respect to claims released hereby.


 


14.                               Confidential
Information and Proprietary Information Obligations.  You hereby acknowledge that you have had
access to confidential and proprietary information and trade secrets of the
Company in connection with your relationship therewith.  You hereby acknowledge that such information
includes, but is not limited to:  (a) inventions,
developments, designs, applications, improvements, trade secrets, formulae,
methods or processes, discoveries, techniques, plans, strategies and data
(hereinafter “Inventions”); and (b) plans
for research, development, new products, marketing and selling, information
regarding business plans, budgets and unpublished financial statements,
licenses, prices and costs, information concerning potential and existing
suppliers and customers and information regarding the skills and compensation
of employees of the Company; and (c) information and advice relating to
the Company’s legal strategies and positions (collectively, with Inventions,
hereinafter referred to as “Proprietary Information”).  In view of the foregoing, you hereby agree,
warrant and acknowledge that:


 


(a)                                  You
will surrender and deliver to the Company no later than the Separation Date 


 

















 


or such earlier date as specified by the Company all documents, notes,
laboratory notebooks, drawings, specifications, calculations, sequences, data
and other materials of any nature pertaining to your work with the Company, and
any documents or data of any description (or any reproduction of any documents
or data) containing or pertaining to any of the foregoing Proprietary
Information.


 


(b)                                  You
have held and will continue to hold in confidence and trust all Proprietary
Information and shall not use or disclose any Proprietary Information or
anything related to such information without the prior written consent of the
Company.  This commitment is in addition
to your obligation to hold in confidence all information subject to the
attorney-client privilege.


 


(c)                                  You
have assigned to the Company your entire right, title and interest in and to
any and all Inventions (and all proprietary rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made, conceived of, reduced to practice, or learned, by you, either alone or
jointly with others, during the course of your relationship with the Company.


 


(d)                                  You
will assist the Company in every proper way to obtain, and from time to time
enforce, United States and foreign proprietary rights relating to Inventions in
any and all countries.  To that end you
will execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request for
use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such proprietary rights and the assignment thereof.  In addition, you will execute, verify and deliver
assignments of such proprietary rights to the Company or its designee.  Your obligation to assist the Company with
respect to proprietary rights relating to such Inventions in any and all
countries shall continue beyond the termination of your employment, but the
Company shall compensate you at a reasonable rate after your termination for
the time actually spent by you at the Company’s request on such assistance.


 


(e)                                  In
the event the Company is unable for any reason, after reasonable effort, to
secure your signature on any document needed in connection with the actions
specified in the preceding paragraph, you hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as your agents
and attorneys in fact, which appointment is coupled with an interest, to act
for and in your behalf to execute, verify and file any such documents and to do
all other lawfully permitted acts to further the purposes of the preceding
paragraph with the same legal force and effect as if executed by you.  You hereby waive and quitclaim to the Company
any and all claims, of any nature whatsoever, which you now or may hereafter
have for infringement of any proprietary rights assigned hereunder to the
Company.


 


(f)                                    You
acknowledge your continuing obligation to comply with your Employee
Non-Disclosure Agreement (“NDA”), a
copy of which is attached as Exhibit C and incorporated by this
reference.  You represent that you have
not violated and will not violate the NDA prior to the Effective Date or
thereafter.


 


Your breach of
the foregoing agreements and acknowledgments will result in unique and special
harm to the Company and therefore the Company shall have the right to enforce
this Agreement and any of its provisions by injunction, specific performance or
other equitable relief 


 

















 


without prejudice to any other rights and remedies that the Company may
have for a breach of this Agreement.


 


15.                               Non-disparagement.  You agree that you will not at any time
disparage the Company or its officers, directors, employees, shareholders and
agents, in any manner likely to be harmful to them or their business, business
reputation or personal reputation; provided that you shall respond accurately
and fully to any questions, inquiry or request for information when required by
legal process.  In the event of your
breach of this section 15, you shall forfeit any benefits and/or payments
provided by this Agreement that have not yet issued at the time of such breach,
and you shall be liable to the Company for all damages incurred by the Company
as a result of such breach.


 


16.                               Cooperation and Assistance.  You agree that you will not voluntarily
provide assistance, information or advice, directly or indirectly (including
through agents or attorneys), to any person or entity in connection with any
claim by or against the Company, nor shall you induce or encourage any person
or entity to do so.  You agree that the
foregoing sentence shall not prohibit you from testifying truthfully under
subpoena or providing other assistance under compulsion of law.  You agree to provide (voluntarily and without
legal compulsion) reasonable cooperation and accurate and complete information
to the Company in the event of litigation involving the Company or its officers
or directors.


 


17.                               No Admissions.  The parties hereto hereby acknowledge that
this is a compromise settlement of various matters, and that the promised
payments in consideration of this Agreement shall not be construed to be an
admission of any liability or obligation by either party to the other party or
to any other person whomsoever.


 


18.                               Entire
Agreement.  This Agreement
constitutes the complete, final and exclusive embodiment of the entire
Agreement between you and the Company with regard to the subject matter
hereof.  It is entered into without
reliance on any promise or representation, written or oral, other than those
expressly contained herein.  It may not
be modified except in a writing signed by both you and the Chief Executive
Officer of the Company.  Each party has
carefully read this Agreement, has been afforded the opportunity to be advised
of its meaning and consequences by her or its respective attorneys, and signed
the same of her or its free will.


 


19.                               Successors
and Assigns.  This Agreement shall
bind the heirs, personal representatives, successors, assigns, executors, and
administrators of each party, and inure to the benefit of each party, its
agents, directors, officers, employees, servants, heirs, successors and
assigns.


 


20.                               Applicable
Law.  This Agreement shall be deemed
to have been entered into and shall be construed and enforced in accordance
with the laws of the State of California as applied to contracts made and to be
performed entirely within California.


 


21.                               Severability.  If a court of competent jurisdiction
determines that any term or provision of this Agreement is invalid or
unenforceable, in whole or in part, then the remaining terms and provisions
hereof shall be unimpaired.  Such court
will have the authority to modify or replace the invalid or unenforceable term
or provision with a valid and enforceable term or provision that 


 

















 


most accurately represents the parties’ intention with
respect to the invalid or unenforceable term or provision.


 


22.                               Indemnity.  You represent that you have not assigned or
otherwise alienated the claims released by this Agreement and that you will
indemnify and save harmless the Company from any loss incurred directly or
indirectly by reason of the falsity or inaccuracy of said representation.


 


23.                               Authorization.  You warrant and represent that there are no
liens or claims of lien or assignments in law or equity or otherwise of or
against any of the claims or causes of action released herein and, further,
that you are fully entitled and duly authorized to give the releases herein.


 


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


 


25.                               Section Headings.  The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.


 


 


Please sign and date below and return this Agreement
to me.


 


Sincerely,


 


	
  Cymer, Inc.

  	
   

  
	
   

  	
   

  
	
  /s/ Robert
  P. Akins

  	
   

  
	
   

  	
   

  
	
  Robert P.
  Akins, Ph.D.

  	
   

  



 


 


HAVING READ
AND REVIEWED THE FOREGOING, I HEREBY AGREE TO AND ACCEPT THE TERMS AND
CONDITIONS OF THIS AGREEMENT AS STATED ABOVE.


 


 


	
  Dated:

  	
  12/12/08

  	
   

  	
  /s/ Nancy J. Baker

  
	
   

  	
  Nancy J. Baker

  



 

















 


EXHIBIT A


 


Release and Wavier of Claims


 


To be signed on or after December 19,
2008


 


In
consideration of the payments and other benefits set forth in the Separation
Agreement dated December 12, 2008 (the “Agreement”),
to which this form is attached, I, NANCY J.
BAKER, hereby furnish CYMER, INC.
(the “Company”),
with the following release and waiver (“Release and Waiver”).


 


In exchange
for the consideration provided to me by the Agreement that I am not otherwise
entitled to receive, I hereby generally and completely release the Company and
its directors, officers, executives, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns from any and all claims, liabilities and obligations, both known
and unknown, that arise out of or are in any way related to events, acts,
conduct, or omissions occurring prior to my signing this Release and Waiver
other than the Company’s express obligations under the Indemnification
Agreement between the Company and me dated November 6, 2008.  This general release includes, but is not
limited to: (1) all claims arising out of or in any way related to my
employment with the Company or the termination of that employment; (2) all
claims related to my compensation or benefits from the Company, including, but
not limited to, salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership interests in the Company, provided, however, that
I do not waive any right to exercise any unexercised stock options that were
vested on or before the Separation Date specified in the Agreement; (3) all
claims for breach of contract, wrongful termination, and breach of the implied
covenant of good faith and fair dealing; (4) all tort claims, including,
but not limited to, claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (5) all federal, state, and
local statutory claims, including, but not limited to, claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”), the federal Employee Retirement and
Security Act, the California Unruh Act, and the California Fair Employment and
Housing Act (as amended).


 


I also
acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows:  “A general release does not extend to claims which the
creditor does not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights
and benefits under that section and any law of any jurisdiction of similar
effect with respect to any claims I may have against the Company.


 


I acknowledge
that, among other rights, I am waiving and releasing any rights I may have
under ADEA, that this Release and Waiver is knowing and voluntary, and that the
consideration given for this Release and Waiver is in addition to anything of
value to which I was already entitled as an executive of the Company.  I further acknowledge that I have been advised,
as required by the Older Workers Benefit Protection Act, that:  (a) the release and waiver granted
herein does not relate to claims under the ADEA which may arise after this
Release and Waiver is executed; (b) I should consult with an attorney
prior to executing this Release and Waiver; (c) I have twenty-one (21)
days from the date of termination of my employment with the Company 


 

















 


in which to consider this Release and Waiver (although I may choose
voluntarily to execute this Release and Waiver earlier); (d) I have seven (7) days
following the execution of this Release and Waiver to revoke my consent to this
Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired without my having
previously revoked this Release and Waiver, and no benefits will be paid unless
and until this Release and Waiver has become effective.


 


This Release
and Waiver constitutes the complete, final and exclusive embodiment of the
entire agreement between the Company and me with regard to the subject matter
hereof.  I am not relying on any promise
or representation by the Company that is not expressly stated herein.  This Release and Waiver may only be modified
by a writing signed by both me and the Chief Executive Officer of the Company.


 


 


	
  Date:

  	
  12/20/08

  	
   

  	
  /s/ Nancy J. Baker

  
	
   

  	
  Nancy J. Baker

  



 

















 


EXHIBIT B


 


INDEMNIFICATION AGREEMENT


 


[Standard form of Indemnification Agreement, incorporated herein by
reference to Cymer’s Annual Report on Form 10-K for the year ended December 31,
2003.]


 

















 


EXHIBIT C


 


NON-DISCLOSURE AGREEMENT


 


[Company standard form of Employee Non-Disclosure Agreement]