**Exhibit 10.21**

 

**EMPLOYMENTAGREEMENT**

 

This Employment Agreement (the “Agreement”) is made and entered intoeffective as of October 21, 2004 by and between Bill N. Alexander, Jr., (the“Employee”) and Cymer, Inc., a Nevada corporation (the “Company”).

 

**RECITALS**

 

A.            The Company may from time to time need toaddress the possibility of an acquisition transaction or change of controlevent.  The Board of Directors of theCompany (the “Board”) recognizes that such events can be a distraction to theEmployee and can cause the Employee to consider alternative employmentopportunities.  The Board has determinedthat it is in the best interests of the Company and its stockholders to assurethat the Company will have the continued dedication and objectivity of theEmployee, notwithstanding the possibility, threat or occurrence of a Change ofControl (as defined below) of the Company, although no such Change of Controlis now contemplated.

 

B.            The Board believes that it is in the bestinterests of the Company and its stockholders to provide the Employee with anincentive to continue his employment and to motivate the Employee to maximizethe value of the Company upon a Change of Control for the benefit of itsstockholders.

 

C.            The Board believes that it is imperative toprovide the Employee with certain benefits upon a Change of Control and, undercertain circumstances, upon termination of the Employee’s employment inconnection with a Change of Control, which benefits are intended to provide theEmployee with financial security and provide sufficient incentive andencouragement to the Employee to remain with the Company notwithstanding thepossibility of a Change of Control.

 

D.            To accomplish the foregoing objectives, theBoard has directed the Company, upon execution of this Agreement by theEmployee, to agree to the terms provided herein.

 

E.             Certain capitalized terms used in thisAgreement are defined in Section 7 below.

 

**AGREEMENT**

 

In consideration of the mutual covenants herein contained, and inconsideration of the continuing employment of the Employee by the Company, theparties agree as follows:

 

**1.****            ****Duties and Scope of Employment**.  TheCompany shall employ the Employee in the position of Senior Executive VicePresident as such position has been defined in terms of

 

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responsibilities and compensation as of theeffective date of this Agreement; provided, however, that the Board shall havethe right, at any time prior to the occurrence of a Change of Control, torevise such responsibilities and compensation as the Board in its discretionmay deem necessary or appropriate.  TheEmployee shall comply with and be bound by the Company’s operating policies,procedures and practices from time to time in effect during his employment.  During the term of the Employee’s employmentwith the Company, the Employee shall continue to devote his full time, skilland attention to his duties and responsibilities, and shall perform themfaithfully, diligently and competently, and the Employee shall use his bestefforts to further the business of the Company and its affiliated entities.

 

**2.****            ****Base Compensation**.  The Company shall pay theEmployee as compensation for his services a base salary at the annualized rateof $240,000.00 (“Base Compensation”). Such salary shall be paid periodically in accordance with normal Companypayroll practices.  The Board or theCompensation Committee of the Board shall review the base salary of theEmployee according to normal Company practice, but no less frequently thanannually, and may in its discretion increase but not decrease the base salarybelow the amount specified in this agreement.

 

**3.****            ****Annual Incentive**.  Beginning with the Company’scurrent fiscal year and for each fiscal year thereafter during the term of thisAgreement, the Employee shall be eligible to receive an annual bonus under theCompany’s annual incentive plan (the “Annual Incentive”) based upon performancetargets approved by the Compensation Committee of the Board (the “TargetIncentive”) in its sole discretion.  TheAnnual Incentive payable hereunder shall be payable in accordance with theCompany’s normal practices and policies.

 

**4.****            ****Employee Benefits**.  The Employee shall be eligibleto participate in the employee benefit plans and executive compensa­tionprograms maintained by the Company applicable to other key executives of theCompany, including (without limitation) retirement plans, savings orprofit-sharing plans, stock option, incentive or other bonus plans, life,disability, health, accident and other insurance programs, paid vacations, andsimilar plans or programs, subject in each case to the generally applicableterms and conditions of the applicable plan or program in question and to thesole determination of the Board or any committee administering such plan orprogram.

 

**5.****            ****Employment Relationship**.  TheCompany and the Employee acknowledge that the Employee’s employment is andshall continue to be at-will, as defined under applicable law.  If the Employee’s employment terminates forany reason, the Employee shall not be entitled to any payments, benefits,damages, awards or compensation other than as provided by this Agreement, or asmay otherwise be available in accordance with any Company plan or policyapproved by the Board.

 

**6.****            ****Termination Benefits.**

 

**(a)****          **Subjectto Sections 8 and 9 below, in the event the Employee’s employment terminates asa result of an Involuntary Termination other than for Cause upon or withineighteen (18) months after a Change of Control, then the Employee shall beentitled to receive severance and other benefits as follows:

 

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**(i)****           ****Pay Continuation. **The Employee shall beentitled to monthly payments equal to the Employee’s monthly Base Compensationas in effect immediately prior to the Change of Control plus one-twelfth (1/12)of the average of the annual bonus amount paid to the Employee with respect tothe three previous calendar years.  Suchmonthly amounts shall be paid according to the normal payroll practice of theCompany for 12 months following the date of termination (the “TerminationPeriod”).

 

**(ii)****          ****Annual Incentive.**  The Employee shall be entitledto receive a percentage of the Employee’s Target Incentive for the calendaryear in which such termination occurs. Such percentage shall equal a fraction,the numerator of which shall be the number of days in such calendar year up toand including the date of such termination and the denominator of which shallbe the number of days in such calendar year. Such amount shall be payable according to the normal practice of theCompany with respect to the payment of bonuses.

 

**(iii)****        ****Options. **The unvested portion of any stock option(s)held by the Employee under the Company’s stock option plans shall vest andbecome exercisable in full upon the date of such termination. Employee shallhave one year from the date of such termination to exercise any vested options.

 

**(iv)****         ****Medical Benefits.** The Company shall reimburse the Employee for the cost of theEmployee’s group health, vision and dental plan coverage in effect until theend of the Termination Period.  TheEmployee may use this payment, as well as any other payment made under thisSection 6, for such continuation coverage or for any other purpose.  To the extent the Employee pays the cost ofsuch coverage, and the cost of such coverage is not deductible as a medicalexpense by the Employee, the Company shall “gross-up” the amount of suchreimbursement for all taxes payable by the Employee on the amount of such reimbursementand the amount of such gross-up.

 

**(b)****          **Inthe event the Employee voluntarily resigns his employment with the Companywithin the 30-day period beginning one year after a Change of Control, theEmployee shall receive the severance and other benefits set forth in Sections6(a)(i)-(iv) above.

 

**7.****            ****Definition of Terms.**  The following terms referred toin this Agreement shall have the following meanings:

 

**(a)****          ****Cause.**  “Cause” shall mean any of the following: (i)any act of personal dishonesty taken by the Employee in connection with hisresponsibilities as an employee and intended to result in substantial personalenrichment of the Employee, (ii) conviction of a felony that is injurious tothe Company, (iii) a willful act by the Employee which constitutes grossmisconduct and which is injurious to the Company, or (iv) continued violationsby the Employee of the Employee’s obligations under Section 1 of this Agreementafter there has been delivered to the Employee a written demand for performancefrom the Company which describes the basis for the Company’s belief that theEmployee has not substantially performed his duties.

 

**(b)****          ****Change of Control. **“Change of Control” shall mean the occurrenceof any of the following events:

 

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**(i)****           **Theacquisition by any “person” (as such term is used in Sections 13(d) and 14(d)of the Exchange Act) (other than the Company or a person that directly orindirectly controls, is controlled by, or is under common control with, theCompany) of the “beneficial ownership” (as defined in Rule 13d-3 under saidAct), directly or indirectly, of securities of the Company representing fiftypercent (50%) or more of the total voting power represented by the Company’sthen outstand­ing voting securities; or

 

**(ii)****          **Achange in the composition of the Board of Directors of the Company occurringwithin a two-year period, as a result of which fewer than a majority of thedirectors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directorsof the Company as of the date hereof, or (B) are elected, or nominated forelection, to the Board of Directors of the Company with the affirmative votesof at least a majority of the Incumbent Directors at the time of such election ornomination (but shall not include an individual not otherwise an IncumbentDirector whose election or nomination is in connection with an actual orthreatened proxy contest relating to the election of directors to the Company);or

 

**(iii)****        **Amerger or consolidation of the Company with any other corporation, other than amerger or consolidation which would result in the voting securities of theCompany outstanding immediately prior thereto continuing to represent (eitherby remaining outstanding or by being converted into voting securities of thesurviving entity) at least fifty percent (50%) of the total voting powerrepresented by the voting securities of the Company or such surviving entityoutstanding immediately after such merger or consolidation.

 

**(c)****          ****Disability.**  “Disability” shall mean that the Employee hasbeen unable to substantially perform his duties under this Agreement as theresult of his incapacity due to physical or mental illness, and such inability,at least 26 weeks after its commencement, is determined to be total andpermanent by a physician selected by the Company or its insurers and acceptableto the Employee or the Employee’s legal representative (such agreement as toacceptability not to be unreasonably withheld).

 

**(d)****          ****Exchange Act.**  “Exchange Act” shall mean the SecuritiesExchange Act of 1934, as amended.

 

**(e)****          ****Involuntary Termination. **“InvoluntaryTermination” shall mean (i) without the Employee’s express written consent, thesignificant reduction of the Employee’s duties or responsibilities relative tothe Employee’s duties or responsibilities in effect immediately prior to suchreduction; provided, however, that a reduction in duties or responsibilitiessolely by virtue of the Company being acquired and made part of a larger entity(as, for example, when the Chief Financial Officer of Company remains as suchfollowing a Change of Control and is not made the Chief Financial Officer ofthe acquiring corporation) shall not constitute an “Involuntary Termination”;(ii) without the Employee’s express written consent, a substantial reduction,without good business reasons, of the facilities and perquisites (includingoffice space and location) available to the Employee immediately prior to suchreduction; (iii) without the Employee’s express written consent, a materialreduction by the Company in the Base Compensation or Target Incentive of theEmployee as in effect immediately prior to such reduction, or the ineligibilityof the Employee to continue to participate in any long-term incentive plan ofthe Company; (iv) a material reduction by the Company in the kind or level of

 

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employee benefits to which theEmployee is entitled immediately prior to such reduction with the result thatthe Employee’s overall benefits package is significantly reduced; (v) therelocation of the Employee to a facility or a location more than 50 miles fromthe Employee’s then present location, without the Employee’s express writtenconsent; (vi) any purported termination of the Employee by the Company which isnot effected for death or Disability or for Cause; or (vii) the failure of theCompany to obtain the assumption of this agreement by any successorscontemplated in Section 10 below.

 

**8.****            ****Limitation on Payments.**

 

**(a)****          **Inthe event that the severance and other benefits provided for in this Agreementor otherwise payable to the Employee (i) constitute “parachute payments” withinthe meaning of Section 280G of the Internal Revenue Code of 1986, as amended(the “Code”) and (ii) but for this Section 8 would be subject to the excise taximposed by Section 4999 of the Code, then the Employee’s severance benefitsunder Section 6 shall be payable either (i) in full, or (ii) as to such lesseramount which would result in no portion of such severance benefits beingsubject to excise tax under Section 4999 of the Code, whichever of theforegoing amounts, taking into account the applicable federal, state and localincome taxes and the excise tax imposed by Section 4999, results in the receiptby the Employee on an after-tax basis, of the greatest amount of severancebenefits under this Agreement, notwithstanding that all or some portion of suchseverance benefits may be taxable under Section 4999 of the Code.

 

**(b)****          **Ifa reduction in the payments and benefits that would otherwise be paid orprovided to the Employee under the terms of this Agreement is necessary tocomply with the provisions of Section 8(a), the Employee shall be entitled toselect which payments or benefits will be reduced and the manner and method ofany such reduction of such payments or benefits (including but not limited tothe number of options that would vest under Section 6(b) subject to reasonablelimitations (including, for example, express provisions under the Company’sbenefit plans) (so long as the requirements of Section 8(a) are met).  Within thirty (30) days after the amount ofany required reduction in payments and benefits is finally determined inaccordance with the provisions of Section 8(c), the Employee shall notify theCompany in writing regarding which payments or benefits are to be reduced.  If no notification is given by the Employee,the Company will determine which amounts to reduce.  If, as a result of any reduction required bySection 8(a), amounts previously paid to the Employee exceed the amount towhich the Employee is entitled, the Employee will promptly return the excessamount to the Company.

 

**(c)****          **Unlessthe Company and the Employee otherwise agree in writing, any determinationrequired under this Section 8 shall be made in writing by the Company’sindependent public accountants (the “Accountants”), whose determination shallbe conclusive and binding upon the Employee and the Company for allpurposes.  For purposes of making thecalculations required by this Section 8, the Accountants may make reasonableassumptions and approximations concerning applicable taxes and may rely onreasonable, good faith interpretations concerning the application of Sections280G and 4999 of the Code. The Company and the Employee shall furnish to theAccountants such information and documents as the Accountants may reasonablyrequest in order to make a determination under this Section.  The Company shall bear all costs theAccountants may reasonably incur in connection with any calculationscontemplated by this Section 8.

 

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**9.****            ****Certain Business Combinations. **In the event it is determined by the Board, upon receipt of a writtenopinion of the Company’s independent public accountants, that the enforcementof any Section or subsection of this Agreement, including, but not limited to,Section 6(b) hereof, which allows for the acceleration of vesting of options topurchase shares of the Company’s common stock upon a termination in connectionwith a Change of Control, would preclude accounting for any proposed businesscombination of the Company involving a Change of Control as a pooling ofinterests, and the Board otherwise desires to approve such a proposed business transactionwhich requires as a condition to the closing of such transaction that it beaccounted for as a pooling of interests, then any such Section of thisAgreement shall be null and void, but only if the absence of enforcement ofsuch Section would preserve the pooling treatment.  For purposes of this Section 9, the Board’sdetermination shall require the unanimous approval of the disinterested Boardmembers.

 

**10.****         ****Successors.**

 

**(a)****          ****Company’s Successors. **Any successor to the Company (whether director indirect and whether by purchase, lease, merger, consolidation, liquidationor otherwise) to all or substantially all of the Company’s business and assetsshall assume the obligations under this Agreement and agree expressly toperform the obligations under this Agreement in the same manner and to the sameextent as the Company would be required to perform such obligations in theabsence of a succession.  For allpurposes under this Agreement, the term “Company” shall include any successorto the Company’s business and assets which executes and delivers the assumptionagreement described in this Section 10(a) or which becomes bound by the termsof this Agreement by operation of law.

 

**(b)****          ****Employee’s Successors. **The terms of thisAgreement and all rights of the Employee hereunder shall inure to the benefitof, and be enforceable by, the Employee’s personal or legal representatives,executors, administrators, successors, heirs, devisees and legatees.

 

**11.****         ****Notice.**  Notices and all other communicationscontemplated by this Agreement shall be in writing and shall be deemed to havebeen duly given when personally delivered or when mailed by U.S. registered orcertified mail, return receipt requested and postage prepaid.  In the case of the Employee, mailed noticesshall be addressed to him at the home address which he most recentlycommunicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to itscorporate headquarters, and all notices shall be directed to the attention ofits Secretary.

 

**12.****         ****Miscellaneous Provisions.**

 

**(a)****          ****Waiver.** No provision of this Agreement shall bemodified, waived or discharged unless the modification, waiver or discharge isagreed to in writing and signed by the Employee and by an authorized officer ofthe Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, anycondition or provision of this Agreement by the other party shall be considereda waiver of any other condition or provision or of the same condition orprovision at another time.

 

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**(b)****          ****Whole Agreement. **No agreements, representations orunderstandings (whether oral or written and whether express or implied) whichare not expressly set forth in this Agreement have been made or entered into byeither party with respect to the subject matter hereof.

 

**(c)****          ****Choice of Law.**  The validity, interpretation,construction and performance of this Agreement shall be governed by the laws ofthe State of California.

 

**(d)****          ****Severability. **The invalidity or unenforceability of anyprovision or provisions of this Agreement shall not affect the validity orenforceability of any other provision hereof, which shall remain in full forceand effect.

 

**(e)****          ****Arbitration. **Any dispute or controversy arising out of,relating to or in connection with this Agreement shall be settled exclusivelyby binding arbitration in San Diego, California, in accordance with theNational Rules for the Resolution of Employment Disputes of the AmericanArbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court havingjurisdiction.  The arbitrator shall: a)have the authority to compel adequate discovery for the resolution of thedispute and to award such relief as would otherwise be permitted by law; and(b) issue a written arbitration decision including the arbitrator’s essentialfindings and conclusions and a statement of the award.  Both the Employee and the Company shall beentitled to all rights and remedies they would have in a court of law.  The Company shall pay all fees in excess ofthose which will be required if the dispute were decided in a court of law.

 

**(f)****           ****No Assignment of Benefits. **The rights of any person to payments or benefits under this Agreementshall not be made subject to option or assignment, either by voluntary orinvoluntary assignment or by operation of law, including (without limitation)bankruptcy, garnishment, attachment or other creditor’s process, and any actionin violation of this Section 12(g) shall be void.

 

**(g)****          ****Assignment by Company. **The Company mayassign its rights under this Agreement to an affiliate, and an affiliate mayassign its rights under this Agreement to another affiliate of the Company orto the Company; provided, however, that no assignment shall be made if the networth of the assignee is less than the net worth of the Company at the time ofassignment.  In the case of any suchassignment, the term “Company” when used in a section of this Agreement shallmean the corporation that actually employs the Employee.

 

**(h)****          ****Counterparts. **This Agreement may be executed incounterparts, each of which shall be deemed an original, but all of whichtogether will constitute one and the same instrument.

 

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IN WITNESS WHEREOF, each of theparties has executed this Agreement, in the case of the Company by its dulyauthorized officer, as of the day and year first above written.

 

 
| COMPANY:  | CYMER, INC.                       |
|-----------|-----------------------------------|
|      |                              |
|      |                              |
|      | By:  /s/ Jennifer Lab-Elsner |
|      |                              |
|      | Title:  VP, Human Resources  |
|      |                              |
|      |                              |   |
|      |                              |
|      |                              |
| EMPLOYEE: | /s/ Bill N. Alexander             |   |

 

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