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
