**Exhibit 10.21**

 

**EMPLOYMENT AGREEMENT**

 

This Employment Agreement (the “Agreement”) is made and entered intoeffective as of September 29, 2003, by and between Anthony Yen, (the“Employee”) and Cymer, Inc., a Nevada corporation (the “Company”).

 

**RECITALS**

 

A.            The Company may fromtime to time need to address the possibility of an acquisition transaction orchange of control event.  The Board ofDirectors of the Company (the “Board”) recognizes that such events can be a distractionto the Employee 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 believesthat it is in the best interests of the Company and its stockholders to providethe Employee with an incentive to continue his employment and to motivate theEmployee to maximize the value of the Company upon a Change of Control for thebenefit of its stockholders.

 

C.            The Board believesthat it is imperative to provide the Employee with certain benefits upon aChange of Control and, under certain circumstances, upon termination of theEmployee’s employment in connection with a Change of Control, which benefitsare intended to provide the Employee with financial security and providesufficient incentive and encouragement to the Employee to remain with theCompany notwithstanding the possibility of a Change of Control.

 

D.            To accomplish theforegoing objectives, the Board has directed the Company, upon execution ofthis Agreement by the Employee, to agree to the terms provided herein.

 

E.             Certain capitalizedterms used in this Agreement 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**.  The Company shall employ the Employee in theposition of Senior Vice President as such position has been defined in terms ofresponsibilities

 

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and compensation as of the effective date of this Agreement; provided,however, that the Board shall have the right, at any time prior to theoccurrence of a Change of Control, to revise such responsibilities andcompensation as the Board in its discretion may deem necessary orappropriate.  The Employee shall complywith and be bound by the Company’s operating policies, procedures and practicesfrom time to time in effect during his employment.  During the term of the Employee’s employment with the Company,the Employee shall continue to devote his full time, skill and attention to hisduties and responsibilities, 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.             Base Compensation**.  The Company shall pay the Employee ascompensation for his services a base salary at the annualized rate of$200,000.00 (“Base Compensation”).  Suchsalary shall be paid periodically in accordance with normal Company payrollpractices.  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’s current fiscalyear and for each fiscal year thereafter during the term of this Agreement, theEmployee shall be eligible to receive an annual bonus under the Company’sannual incentive plan (the “Annual Incentive”) based upon performance targetsapproved by the Compensation Committee of the Board (the “Target Incentive”) inits sole discretion.  The AnnualIncentive payable hereunder shall be payable in accordance with the Company’snormal practices and policies.

 

**4.             Employee Benefits**.  The Employee shall be eligible toparticipate in the employee benefit plans and executive compensa­tion programsmaintained by the Company applicable to other key executives of the Company,including (without limitation) retirement plans, savings or profit-sharingplans, stock option, incentive or other bonus plans, life, disability, health,accident and other insurance programs, paid vacations, and similar plans orprograms, subject in each case to the generally applicable terms and conditionsof the applicable plan or program in question and to the sole determination ofthe Board or any committee administering such plan or program.

 

**5.             Employment Relationship**.  The Company and the Employee acknowledgethat the Employee’s employment is and shall continue to be at-will, as definedunder applicable law.  If the Employee’semployment terminates for any reason, the Employee shall not be entitled to anypayments, benefits, damages, awards or compensation other than as provided bythis Agreement, or as may otherwise be available in accordance with any Companyplan or policy approved by the Board.

 

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

 

**(a)**           Subject to Sections 8 and 9 below, in theevent the Employee’s employment terminates as a result of an InvoluntaryTermination other than for Cause upon or within eighteen (18) months after aChange of Control, then the Employee shall be entitled to receive severance andother benefits as follows:

 

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**(i)**            **Pay Continuation. **The Employee shall be entitled to monthly payments equal tothe Employee’s monthly Base Compensation as in effect immediately prior to theChange of Control plus one-twelfth (1/12) of the average of the annual bonusamount paid to the Employee with respect to the three previous calendaryears.  Such monthly amounts shall bepaid according to the normal payroll practice of the Company for 12 monthsfollowing the date of termination (the “Termination Period”).

 

**(ii)**           **Annual Incentive.**  The Employee shall be entitled to receive a percentage of theEmployee’s Target Incentive for the calendar year in which such terminationoccurs. Such percentage shall equal a fraction, the numerator of which shall bethe number of days in such calendar year up to and including the date of suchtermination and the denominator of which shall be the number of days in suchcalendar year.  Such amount shall bepayable according to the normal practice of the Company with respect to thepayment of bonuses.

 

**(iii)**         **Options. **Theunvested portion of any stock option(s) held by the Employee under theCompany’s stock option plans shall vest and become exercisable in full upon thedate of such termination. Employee shall have one year from the date of suchtermination to exercise any vested options.

 

**(iv)**          **Medical Benefits.** The Company shallreimburse the Employee for the cost of the Employee’s group health, vision and dentalplan coverage in effect until the end of the Termination Period.  The Employee may use this payment, as wellas any other payment made under this Section 6, for such continuation coverageor for any other purpose.  To the extentthe Employee pays the cost of such coverage, and the cost of such coverage isnot deductible as a medical expense by the Employee, the Company shall“gross-up” the amount of such reimbursement for all taxes payable by theEmployee on the amount of such reimbursement and the amount of such gross-up.

 

**(b)**           In the event the Employee voluntarilyresigns his employment with the Company within the 30-day period beginning oneyear after a Change of Control, the Employee shall receive the severance andother 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 personaldishonesty taken by the Employee in connection with his responsibilities as anemployee and intended to result in substantial personal enrichment of theEmployee, (ii) conviction of a felony that is injurious to the Company, (iii) awillful act by the Employee which constitutes gross misconduct and which isinjurious to the Company, or (iv) continued violations by the Employee of theEmployee’s obligations under Section 1 of this Agreement after there has beendelivered to the Employee a written demand for performance from the Companywhich describes the basis for the Company’s belief that the Employee has notsubstantially performed his duties.

 

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

 

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**(i)**            The acquisition by any “person” (as suchterm is used in Sections 13(d) and 14(d) of the Exchange Act) (other than theCompany or a person that directly or indirectly controls, is controlled by, oris under common control with, the Company) of the “beneficial ownership” (asdefined in Rule 13d-3 under said Act), directly or indirectly, of securities ofthe Company representing fifty percent (50%) or more of the total voting powerrepresented by the Company’s then outstand­ing voting securities; or

 

**(ii)**           A change in the composition of the Board ofDirectors of the Company occurring within a two-year period, as a result ofwhich fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directorswho either (A) are directors of the Company as of the date hereof, or (B) areelected, or nominated for election, to the Board of Directors of the Companywith the affirmative votes of at least a majority of the Incumbent Directors atthe time of such election or nomination (but shall not include an individualnot otherwise an Incumbent Director whose election or nomination is inconnection with an actual or threatened proxy contest relating to the electionof directors to the Company); or

 

**(iii)**         A merger or consolidation of the Company withany other corporation, other than a merger or consolidation which would resultin the voting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity) at least fifty percent (50%) ofthe total voting power represented by the voting securities of the Company orsuch surviving entity outstanding immediately after such merger orconsolidation.

 

**(c)**           **Disability.**  “Disability” shall mean that the Employee has been unable tosubstantially perform his duties under this Agreement as the result of hisincapacity due to physical or mental illness, and such inability, at least 26weeks after its commencement, is determined to be total and permanent by aphysician selected by the Company or its insurers and acceptable to theEmployee or the Employee’s legal representative (such agreement as toacceptability not to be unreasonably withheld).

 

**(d)**           **Exchange Act.**  “Exchange Act” shall mean the Securities Exchange Act of 1934, asamended.

 

**(e)**           **Involuntary Termination. **“Involuntary Termination” shall mean (i) without theEmployee’s express written consent, the significant reduction of the Employee’sduties or responsibilities relative to the Employee’s duties orresponsibilities in effect immediately prior to such reduction; provided,however, that a reduction in duties or responsibilities solely by virtue of theCompany being acquired and made part of a larger entity (as, for example, whenthe Chief Financial Officer of Company remains as such following a Change ofControl and is not made the Chief Financial Officer of the acquiringcorporation) shall not constitute an “Involuntary Termination”; (ii) withoutthe Employee’s express written consent, a substantial reduction, without goodbusiness reasons, of the facilities and perquisites (including office space andlocation) available to the Employee immediately prior to such reduction; (iii)without the Employee’s express written consent, a material reduction by theCompany in the Base Compensation or Target Incentive of the Employee as ineffect immediately prior to such reduction, or the ineligibility of theEmployee to continue to participate in any long-term incentive plan of the 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 the severance and otherbenefits provided for in this Agreement or otherwise payable to the Employee(i) constitute “parachute payments” within the meaning of Section 280G of theInternal Revenue Code of 1986, as amended (the “Code”) and (ii) but for thisSection 8 would be subject to the excise tax imposed by Section 4999 of theCode, then the Employee’s severance benefits under Section 6 shall be payableeither (i) in full, or (ii) as to such lesser amount which would result in noportion of such severance benefits being subject to excise tax under Section4999 of the Code, whichever of the foregoing amounts, taking into account theapplicable federal, state and local income taxes and the excise tax imposed bySection 4999, results in the receipt by the Employee on an after-tax basis, ofthe greatest amount of severance benefits under this Agreement, notwithstandingthat all or some portion of such severance benefits may be taxable underSection 4999 of the Code.

 

**(b)**           If a reduction in the payments and benefitsthat would otherwise be paid or provided to the Employee under the terms ofthis Agreement is necessary to comply with the provisions of Section 8(a), theEmployee shall be entitled to select which payments or benefits will be reducedand the manner and method of any such reduction of such payments or benefits(including but not limited to the number of options that would vest underSection 6(b) subject to reasonable limitations (including, for example, expressprovisions under the Company’s benefit plans) (so long as the requirements ofSection 8(a) are met).  Within thirty(30) days after the amount of any required reduction in payments and benefitsis finally determined in accordance with the provisions of Section 8(c), theEmployee shall notify the Company in writing regarding which payments orbenefits are to be reduced.  If nonotification is given by the Employee, the Company will determine which amountsto reduce.  If, as a result of anyreduction required by Section 8(a), amounts previously paid to the Employeeexceed the amount to which the Employee is entitled, the Employee will promptlyreturn the excess amount to the Company.

 

**(c)**           Unless the Company and the Employeeotherwise agree in writing, any determination required under this Section 8shall be made in writing by the Company’s independent public accountants (the“Accountants”), whose determination shall be conclusive and binding upon theEmployee and the Company for all purposes. For purposes of making the calculations required by this Section 8, theAccountants may make reasonable assumptions and approximations concerningapplicable taxes and may rely on reasonable, good faith interpretationsconcerning the application of Sections 280G and 4999 of the Code. The Companyand the Employee shall furnish to the Accountants such information anddocuments as the Accountants may reasonably request in order to make adetermination under this Section.  TheCompany shall bear all costs the Accountants may reasonably incur in connectionwith 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 businesstransaction which requires as a condition to the closing of such transactionthat it be accounted for as a pooling of interests, then any such Section ofthis Agreement shall be null and void, but only if the absence of enforcementof such 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 andwhether by purchase, lease, merger, consolidation, liquidation or otherwise) toall or substantially all of the Company’s business and assets shall assume theobligations under this Agreement and agree expressly to perform the obligationsunder this Agreement in the same manner and to the same extent as the Companywould be required to perform such obligations in the absence of asuccession.  For all purposes under thisAgreement, the term “Company” shall include any successor to the Company’sbusiness and assets which executes and delivers the assumption agreementdescribed in this Section 10(a) or which becomes bound by the terms of thisAgreement by operation of law.

 

**(b)**           **Employee’s Successors. **The terms of this Agreement and all rights of theEmployee hereunder shall inure to the benefit of, and be enforceable by, theEmployee’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 be modified, waived ordischarged unless the modification, waiver or discharge is agreed to in writingand signed by the Employee and by an authorized officer of the Company (otherthan the Employee).  No waiver by eitherparty of any breach of, or of compliance with, any condition or provision ofthis Agreement by the other party shall be considered a waiver of any othercondition or provision or of the same condition or provision at another time.

 

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**(b)**           **Whole Agreement. **No agreements, representations or understandings (whetheroral or written and whether express or implied) which are not expressly setforth in this Agreement have been made or entered into by either party withrespect to the subject matter hereof.

 

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

 

**(d)**           **Severability. **Theinvalidity or unenforceability of any provision or provisions of this Agreementshall not affect the validity or enforceability of any other provision hereof,which shall remain in full force and effect.

 

**(e)**           **Arbitration. **Anydispute or controversy arising out of, relating to or in connection with thisAgreement shall be settled exclusively by binding arbitration in San Diego,California, in accordance with the National Rules for the Resolution ofEmployment Disputes of the American Arbitration Association then ineffect.  Judgment may be entered on thearbitrator’s award in any court having jurisdiction.  The arbitrator shall: a) have the authority to compel adequatediscovery for the resolution of the dispute and to award such relief as wouldotherwise be permitted by law; and (b) issue a written arbitration decisionincluding the arbitrator’s essential findings and conclusions and a statementof the award.  Both the Employee and theCompany shall be entitled to all rights and remedies they would have in a courtof law.  The Company shall pay all feesin excess of those which will be required if the dispute were decided in acourt of law.

 

**(f)**            **No Assignment of Benefits. **The rights of any person to payments or benefits underthis Agreement shall not be made subject to option or assignment, either byvoluntary or involuntary assignment or by operation of law, including (withoutlimitation) bankruptcy, garnishment, attachment or other creditor’s process,and any action in violation of this Section 12(g) shall be void.

 

**(g)**           **Assignment by Company. **The Company may assign its rights under this Agreementto an affiliate, and an affiliate may assign its rights under this Agreement toanother affiliate of the Company or to the Company; provided, however, that noassignment shall be made if the net worth of the assignee is less than the networth of the Company at the time of assignment.  In the case of any such assignment, the term “Company” when usedin a section of this Agreement shall mean the corporation that actually employsthe Employee.

 

**(h)**           **Counterparts. **ThisAgreement may be executed in counterparts, each of which shall be deemed anoriginal, but all of which together will constitute one and the sameinstrument.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, inthe case of the Company by its duly authorized officer, as of the day and yearfirst above written.

 

 
| COMPANY:  | CYMER, INC.       |
|-----------|-------------------|
|      |              |
|      |              |
|      | By:               | Hugh Grinolds |
|      |              |
|      | Title:            | Executive Vice President, Corporate Processes and Services |
|      |              |
|      | /s/ Hugh Grinolds |   |
|      |              |
|      |              |
| EMPLOYEE: | /s/ Anthony Yen   |   |
|      | Anthony Yen       |
|           |                   |  |  |

 

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