**Exhibit 10.13**

 

**EMPLOYMENT AGREEMENT**

 

This Employment Agreement (the“Agreement”) is made and entered into effective as of March 01, 2004 by andbetween Nancy Baker (the “Employee”) and Cymer, Inc., a Nevada corporation (the“Company”).

 

 

**RECITALS**

 

A.                                   TheCompany may from time to time need to address the possibility of an acquisitiontransaction or change of control event. The Board of Directors of the Company (the “Board”) recognizes that suchevents can be a distraction to the Employee and can cause the Employee toconsider alternative employment opportunities. The Board has determined that it is in the best interests of the Companyand its stockholders to assure that the Company will have the continueddedication and objectivity of the Employee, notwithstanding the possibility,threat or occurrence of a Change of Control (as defined below) of the Company,although no such Change of Control is now contemplated.

 

B.                                     TheBoard believes that it is in the best interests of the Company and itsstockholders to provide the Employee with an incentive to continue hisemployment and to motivate the Employee to maximize the value of the Companyupon a Change of Control for the benefit of its stockholders.

 

C.                                     TheBoard believes that it is imperative to provide the Employee with certainbenefits upon a Change of Control and, under certain circumstances, upontermination of the Employee’s employment in connection with a Change ofControl, which benefits are intended to provide the Employee with financialsecurity and provide sufficient incentive and encouragement to the Employee toremain with the Company notwithstanding the possibility of a Change of Control.

 

D.                                    Toaccomplish the foregoing objectives, the Board has directed the Company, uponexecution of this Agreement by the Employee, to agree to the terms providedherein.

 

E.                                      Certaincapitalized terms used in this Agreement are defined in Section 7 below.

 

 

**AGREEMENT**

 

In consideration of the mutualcovenants herein contained, and in consideration of the continuing employmentof the Employee by the Company, the parties agree as follows:

 

**1.****                                      Dutiesand Scope of Employment**.  TheCompany shall employ the Employee in the position of Chief Financial Officer,as such position has been defined in terms of responsibilities

 

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andcompensation as of the effective date of this Agreement; provided, however,that the Board shall have the right, at any time prior to the occurrence of aChange of Control, to revise such responsibilities and compensation as theBoard in its discretion may deem necessary or appropriate.  The Employee shall comply with and be boundby the Company’s operating policies, procedures and practices from time to timein effect during his employment.  Duringthe term of the Employee’s employment with the Company, the Employee shallcontinue to devote his full time, skill and attention to his duties andresponsibilities, and shall perform them faithfully, diligently andcompetently, and the Employee shall use his best efforts to further thebusiness of the Company and its affiliated entities.

 

**2.****                                      BaseCompensation**.  The Company shall paythe Employee as compensation for his services a base salary at the annualizedrate of $250,000.00 (“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.****                                      AnnualIncentive**.  Beginning with theCompany’s current fiscal year and for each fiscal year thereafter during theterm of this Agreement, the Employee shall be eligible to receive an annualbonus under the Company’s annual incentive plan (the “Annual Incentive”) basedupon performance targets approved by the Compensation Committee of the Board(the “Target Incentive”) in its sole discretion.  The Annual Incentive payable hereunder shall be payable inaccordance with the Company’s normal practices and policies.

 

**4.****                                      EmployeeBenefits**.  The Employee shall beeligible to 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.****                                      EmploymentRelationship**.  The Company and theEmployee acknowledge that the Employee’s employment is and shall continue to beat-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employeeshall not be entitled to any payments, benefits, damages, awards orcompensation other than as provided by this Agreement, or as may otherwise beavailable in accordance with any Company plan or policy approved by the Board.

 

**6.****                                      TerminationBenefits.**

 

**(a)**                                  Subject to Sections 8and 9 below, in the event the Employee’s employment terminates as a result ofan Involuntary Termination other than for Cause upon or within eighteen (18)months after a Change of Control, then the Employee shall be entitled toreceive severance and other benefits as follows:

 

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**(i)**                                    **PayContinuation. **The Employeeshall be entitled to monthly payments equal to the Employee’s monthly BaseCompensation as in effect immediately prior to the Change of Control plusone-twelfth (1/12) of the average of the annual bonus amount paid to theEmployee with respect to the three previous calendar years.  Such monthly amounts shall be paid accordingto the normal payroll practice of the Company for eighteen (18) monthsfollowing the date of termination (the “Termination Period”).

 

**(ii)**                                **Annual Incentive.**  The Employee shall be entitled to receive apercentage of the Employee’s Target Incentive for the calendar year in whichsuch termination occurs. Such percentage shall equal a fraction, the numeratorof which shall be the number of days in such calendar year up to and includingthe date of such termination and the denominator of which shall be the numberof days in such calendar year.  Such amountshall be payable according to the normal practice of the Company with respectto the payment of bonuses.

 

**(iii)**                            **Options. **The unvested portion of any stock option(s) held bythe Employee under the Company’s stock option plans shall vest and become exercisablein full upon the date of such termination. Employee shall have one year fromthe date of such termination to exercise any vested options.

 

**(iv)**                               **Medical Benefits.** The Companyshall reimburse the Employee for the cost of the Employee’s group health,vision and dental plan coverage in effect until the end of the TerminationPeriod.  The Employee may use thispayment, as well as any other payment made under this Section 6, for suchcontinuation coverage or for any other purpose.  To the extent the Employee pays the cost of such coverage, andthe cost of such coverage is not deductible as a medical expense by theEmployee, the Company shall “gross-up” the amount of such reimbursement for alltaxes payable by the Employee on the amount of such reimbursement and theamount of such gross-up.

 

**(b)**                                  In the event theEmployee voluntarily resigns his employment with the Company within the 30-dayperiod beginning one year after a Change of Control, the Employee shall receivethe severance and other benefits set forth in Sections 6(a)(i)-(iv) above.

 

**7.****                                      Definitionof Terms.**  The following termsreferred to in 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 gross misconductand which is injurious to the Company, or (iv) continued violations by theEmployee of the Employee’s obligations under Section 1 of this Agreement afterthere has been delivered to the Employee a written demand for performance fromthe 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 meanthe occurrence of any of the following events:

 

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**(i)**                                    The acquisition byany “person” (as such term is used in Sections 13(d) and 14(d) of the ExchangeAct) (other than the Company or a person that directly or indirectly controls,is controlled by, or is under common control with, the Company) of the“beneficial ownership” (as defined in Rule 13d-3 under said Act), directly orindirectly, of securities of the Company representing fifty percent (50%) ormore of the total voting power represented by the Company’s then outstand­ingvoting securities; or

 

**(ii)**                                A change in thecomposition of the Board of Directors of the Company occurring within atwo-year period, as a result of which fewer than a majority of the directorsare Incumbent Directors.  “IncumbentDirectors” shall mean directors who either (A) are directors of the Company asof the date hereof, or (B) are elected, or nominated for election, to the Boardof Directors of the Company with the affirmative votes of at least a majorityof the Incumbent Directors at the time of such election or nomination (butshall not include an individual not otherwise an Incumbent Director whoseelection or nomination is in connection with an actual or threatened proxycontest relating to the election of directors to the Company); or

 

**(iii)**                            A merger or consolidationof the Company with any other corporation, other than a merger or consolidationwhich would result in the voting securities of the Company outstandingimmediately prior thereto continuing to represent (either by remainingoutstanding or by being converted into voting securities of the survivingentity) at least fifty percent (50%) of the total voting power represented bythe voting securities of the Company or such surviving entity outstandingimmediately after such merger or consolidation.

 

**(c)**                                  **Disability.**  “Disability” shall mean that the Employeehas been 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. **“Involuntary Termination” shallmean (i) without the Employee’s express written consent, the significantreduction of the Employee’s duties or responsibilities relative to theEmployee’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.

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**8.****                                      Limitationon Payments.**

 

**(a)**                                  In the event that theseverance and other benefits provided for in this Agreement or otherwisepayable to the Employee (i) constitute “parachute payments” within the meaningof 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 tax imposed bySection 4999 of the Code, then the Employee’s severance benefits under Section6 shall be payable either (i) in full, or (ii) as to such lesser amount whichwould result in no portion of such severance benefits being subject to excisetax under Section 4999 of the Code, whichever of the foregoing amounts, takinginto account the applicable federal, state and local income taxes and theexcise tax imposed by Section 4999, results in the receipt by the Employee onan after-tax basis, of the greatest amount of severance benefits under thisAgreement, notwithstanding that all or some portion of such severance benefitsmay be taxable under Section 4999 of the Code.

 

**(b)**                                  If a reduction in thepayments and benefits that would otherwise be paid or provided to the Employeeunder the terms of this Agreement is necessary to comply with the provisions ofSection 8(a), the Employee shall be entitled to select which payments orbenefits will be reduced and the manner and method of any such reduction ofsuch payments or benefits (including but not limited to the number of optionsthat would vest under Section 6(b) subject to reasonable limitations(including, for example, express provisions under the Company’s benefit 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 by Section 8(a), amountspreviously paid to the Employee exceed the amount to which the Employee isentitled, the Employee will promptly return the excess amount to the Company.

 

**(c)**                                  Unless the Companyand the Employee otherwise agree in writing, any determination required underthis Section 8 shall be made in writing by the Company’s independent publicaccountants (the “Accountants”), whose determination shall be conclusive andbinding upon the Employee and the Company for all purposes.  For purposes of making the calculationsrequired by this Section 8, the Accountants may make reasonable assumptions andapproximations concerning applicable taxes and may rely on reasonable, goodfaith interpretations concerning the application of Sections 280G and 4999 ofthe Code. The Company and the Employee shall furnish to the Accountants suchinformation and documents as the Accountants may reasonably request in order tomake a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur inconnection with any calculations contemplated by this Section 8.

 

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**9.****                                      CertainBusiness Combinations. **In the eventit is determined by the Board, upon receipt of a written opinion of theCompany’s independent public accountants, that the enforcement of any Sectionor subsection of this Agreement, including, but not limited to, Section 6(b)hereof, which allows for the acceleration of vesting of options to purchaseshares of the Company’s common stock upon a termination in connection with aChange 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’s determination shallrequire the unanimous approval of the disinterested Board members.

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

 

**(a)**                                  **Company’s Successors. **Any successor to the Company(whether direct or indirect and whether by purchase, lease, merger,consolidation, liquidation or otherwise) to all or substantially all of theCompany’s business and assets shall assume the obligations under this Agreementand agree expressly to perform the obligations under this Agreement in the samemanner and to the same extent as the Company would be required to perform suchobligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall includeany successor to the Company’s business and assets which executes and deliversthe assumption agreement described in this Section 10(a) or which becomes boundby the terms of this Agreement by operation of law.

 

**(b)**                                  **Employee’s Successors. **The terms of this Agreement andall rights of the Employee hereunder shall inure to the benefit of, and beenforceable by, the Employee’s personal or legal representatives, executors,administrators, successors, heirs, devisees and legatees.

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**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.

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**12.****                               MiscellaneousProvisions.**

 

**(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, constructionand performance of this Agreement shall be governed by the laws of the State ofCalifornia.

 

**(d)**                                  **Severability. **The invalidity or unenforceability of any provision orprovisions of this Agreement shall not affect the validity or enforceability ofany other provision hereof, which shall remain in full force and effect.

 

**(e)**                                  **Arbitration. **Any dispute or controversy arising out of, relating toor in connection with this Agreement shall be settled exclusively by bindingarbitration in San Diego, California, in accordance with the National Rules forthe Resolution of Employment Disputes of the American Arbitration Associationthen in effect.  Judgment may be enteredon the arbitrator’s award in any court having jurisdiction.  The arbitrator shall: a) have the authorityto compel adequate discovery for the resolution of the dispute and to awardsuch relief as would otherwise be permitted by law; and (b) issue a writtenarbitration decision including the arbitrator’s essential findings andconclusions and a statement of the award. Both the Employee and the Company shall be entitled to all rights andremedies they would have in a court of law. The Company shall pay all fees in excess of those which will be requiredif the dispute were decided in a court of law.

 

**(f)**                                    **NoAssignment of Benefits. **Therights of any person to payments or benefits under this Agreement shall not bemade subject to option or assignment, either by voluntary or involuntaryassignment or by operation of law, including (without limitation) bankruptcy,garnishment, attachment or other creditor’s process, and any action inviolation of this Section 12(g) shall be void.

 

**(g)**                                 **Assignment by Company. **The Company may assign its rightsunder this Agreement to an affiliate, and an affiliate may assign its rightsunder this Agreement to another affiliate of the Company or to the Company;provided, however, that no assignment shall be made if the net worth of theassignee 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 in counterparts, eachof which shall be deemed an original, but all of which together will constituteone 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:  Hugh Grinolds |
|      |                    |
|      |                    |
|      | Title:             | Exec. VP,  CPS |
|      |                    |
|      |                    | /s/ Hugh  Grinolds |   |
|      |                    |
|      |                    |
| EMPLOYEE: |                    | /s/ Nancy J.  Baker |   |

 

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