Whereas, MKS
Instruments, Inc. (“the “Company”) and Leo
Berlinghieri (“Employee”) have entered into an
employment agreement dated July 1, 2005, Appendix A of
which includes deferred compensation benefits, and
Whereas, such
deferred compensation benefits are subject to the provisions of
Internal Revenue Code Section 409A, and
Whereas
Appendix A has been administered in accordance with the
provisions of Section 409A as of January 1, 2005,
and
Whereas,
Appendix A must be formally amended in writing on or before
December 31, 2008, to incorporate applicable provisions of
Section 409A in order to avoid potentially adverse tax
consequences to Employee,
Now, therefore,
in accordance with Section 16 of Appendix A, the Company
and Employee hereby agree that Appendix A of the Agreement is
amended in its entirety to read as follows, effective as of
November 10, 2008:
APPENDIX A
Supplemental Retirement Benefits
1.
Purpose . (a)
General : The purpose of this Appendix A is to provide
Employee with supplemental retirement benefits to encourage his
continued employment with the Corporation. Benefits will be payable
only if Employee fully complies with all of the requirements of
this Appendix A.
(b)
For Benefit of Employee Only : Benefits under this
Appendix A are provided for the benefit of Employee only. No
other employee shall accrue any rights of any kind as a result of
the existence of the arrangement described in this Appendix A.
Supplemental retirement benefits may be provided to an employee
only as specifically authorized by the Board of Directors of the
Corporation.
(c)
Internal Revenue Code Section 409A : The provisions of
this Appendix A shall be interpreted in a manner consistent
with the requirements of Section 409A of the Internal Revenue
Code.
2.
Definitions . As
used in this Appendix A, the following terms have the meanings
set forth below, unless a different meaning is required by the
context:
2.1. “
Actuarially Equivalent ” means a benefit of equivalent
value to another benefit, determined on the following
basis:
Interest
Rate : The average annual
interest rate on 10-year Treasury securities as published by the
Federal Reserve for the calendar quarter immediately preceding the
calendar quarter in which the actuarially equivalent benefit is
being determined plus 25 basis points; and
Mortality : The most recent “applicable mortality
table” prescribed by Section 417(e)(3)(A)(ii) of the Internal
Revenue Code (or a successor provision as determined by the
Corporation).
2.2. “
Base salary ” means base salary as defined in the
Employment Agreement, before any pre-tax salary reductions for
participation in any benefits plan of the Corporation.
2.3. “
Beneficiary ” means one or more persons, trusts,
estates or other entities, designated by Employee to receive death
benefits under Section 6.1(b) of this Appendix A upon
Employee’s death. If Employee fails to designate a
Beneficiary or if all designated Beneficiaries predecease Employee,
then such death benefits shall be payable to the executor or
personal representative of Employee’s estate.
Employee shall
designate his Beneficiary by completing and signing a beneficiary
designation form prescribed by the Corporation, and returning it to
the Corporation or its designated agent. Employee shall have the
right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the beneficiary designation form and
the Corporation’s rules and procedures, as in effect from
time to time. Upon the acceptance by the Corporation of a new
beneficiary designation form, all Beneficiary designations
previously filed shall be canceled. The Corporation shall be
entitled to rely on the last beneficiary designation form filed by
Employee and accepted by the Corporation prior to his or her death.
No designation or change in designation of a Beneficiary shall be
effective until received and acknowledged in writing by the
Corporation or its designated agent. If the Corporation has any
doubt as to the proper Beneficiary to receive payments pursuant to
this Appendix A, the Corporation shall have the right,
exercisable in its discretion, to withhold such payments until this
matter is resolved to the Corporation’s
satisfaction.
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2.4. “
Bonus ” means a bonus paid under the
Corporation’s Management Incentive Program.
2.5. “
Change in Control ” means the first to occur of any of
the following events:
(a) Any
“person” (as that term is used in Section 13 and
14(d)(2) of the Securities Exchange Act of 1934 (“Exchange
Act”)) becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or indirectly, of
fifty percent (50%) or more of the Company’s capital stock
entitled to vote in the election of directors;
(b) The
shareholders of the Company approve any consolidation or merger of
the Company, other than a consolidation or merger of the Company in
which the holders of the common stock of the Company immediately
prior to the consolidation or merger hold more than fifty percent
(50%) of the common stock of the surviving corporation immediately
after the consolidation or merger;
(c) The
shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
(d) The
shareholders of the Company approve the sale or transfer of all or
substantially all of the assets of the Company to parties that are
not within a “controlled group of corporations” (as
defined in Code Section 1563) in which the Company is a
member.
2.6. “
Corporation ” means MKS Instruments, Inc. (the
“Company”) and any corporation, trust, association or
enterprise which is required to be considered, together with the
Corporation, as one employer pursuant to the provisions of
Sections 414(b), 414(c), 414(m) or 414(o) of the Code. For
purposes of applying Code sections 1563(a)(1), (2), and
(3) and regulation section 1.414(c)-2 to the determination of
companies under common control for purposes of this
Appendix A, 80% shall be used instead of “at least
80%” each place it appears in such sections.
2.7. “
Compensation ” for any calendar year means the sum of
Employee’s Base Salary for such year plus any Bonus paid in
such year.
2.8. “
Early Retirement Benefit ” means the Retirement
benefit determined under Section 5.2 of this Appendix A
upon Employee’s Retirement prior to his Normal Retirement
Date.
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2.9. “
Employment Agreement ” means the Employment Agreement
between Employee and the Corporation that contains this
Appendix A.
2.10. “
Final Average Pay ” means, for purposes of
Section 5 the average of Employee’s three
(3) highest years of Compensation during the ten
(10) calendar year period immediately preceding the calendar
year in which Employee Retires, and for purposes of determining
death benefits under Section 6 the average of Employee’s
three (3) highest years of Compensation during the ten
(10) calendar year period immediately preceding the calendar
year containing Employee’s date of death. The foregoing
notwithstanding, any calendar year in which Employee has no
Compensation from the Corporation shall be ignored in determining
such ten calendar year period.
2.11. “
Normal Retirement Age ” means Employee’s 65th
birthday or, if earlier, the date Employee is deemed to have
Retired in accordance with Section 2.15(b).
2.12. “
Normal Retirement Benefit ” means the Retirement
benefit determined under Section 5.1 of this Appendix A upon
Employee’s Retirement on or after his Normal Retirement
Date.
2.13. “
Normal Retirement Date ” means the first day of the
month in which Employee attains Normal Retirement Age.
2.14. “
Permanent and Total Disability ” means
(a) Employee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than
12 months, or (b) Employee is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an
accident and health plan covering employees of the Corporation.
Employee shall be conclusively presumed to be Permanently and
Totally Disabled upon determination that he is disabled by the
Social Security Administration.
2.15. “
Retirement ” or “ Retires ” or
“ Retired ” means the earlier of:
(a) Employee’s Separation from
Service with the Corporation upon or after satisfying the vesting
requirements of Section 4.1, or
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(b) Employee’s deemed Retirement.
Employee shall be deemed to have Retired with a fully vested Normal
Retirement Benefit on the earliest of (i) the date he becomes
Permanently and Totally Disabled, (ii) the date of
Employee’s Separation from Service as a result of the
Corporation’s termination of Employee’s employment with
the Corporation for any reason other than Termination for Cause as
defined in Section 2.21 of this Appendix A,
(iii) the date of Employee’s death while employed by the
Corporation, or (iv) the date of Employee’s qualifying
Separation from Service following a Change in Control in accordance
with the provisions of Section 7 of this
Appendix A.
2.16. “
Retirement Date ” means the date Employee Retires or
is deemed to have Retired in accordance with Section 2.15 of
this Appendix A. The term “Retirement Date” shall
include Employee’s Early Retirement Date as defined in
Section 5.2 of this Appendix A.
2.17. “
Section 409A ” means Section 409A of the
Internal Revenue Code, as the same may be amended from time to
time, and any successor statute thereto. References in this
Appendix A to Section 409A shall be deemed to mean and
include any published guidance, regulations, notices, rulings and
similar announcements issued by the Internal Revenue Service or by
the Secretary of the Treasury under or interpreting
Section 409A, decisions by any court of competent jurisdiction
involving a Participant or a beneficiary and any closing agreement
made under section 7121 of the Code that is approved by the
Internal Revenue Service and involves a Participant, all as
determined by the Corporation in good faith, which determination
may (but shall not be required to) be made in reliance on the
advice of such tax counsel or other tax professional(s) with whom
the Corporation from time to time may elect to consult with respect
to any such matter.
2.18. “
Separates from Service ” or “ Separation from
Service ” means Employee’s separation from service
with the Corporation as a result of death retirement, or any other
reason, except that for purposes of this section 2.18 the
employment relationship is treated as continuing intact while
Employee is on military leave, sick leave, or other bona fide leave
of absence if the period of such leave does not exceed six months,
or if longer, so long as Employee retains a right to reemployment
with the Corporation under an applicable statute or by contract.
For purposes of this Section 2.18 a leave of absence
constitutes a bona fide leave of absence only if there is a
reasonable expectation that the employee will return to perform
services for the employer. If the period of leave exceeds six
months and the individual does not retain a right
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to reemployment
under an applicable statute or by contract, the employment
relationship is deemed to terminate on the first date immediately
following such six-month period. Whether an Employee has a
Separation from Service shall be determined in accordance with the
provisions of Section 409A, and regulations thereunder, and
any other applicable guidance.
2.19. “
Specified Employee ” means, at any time when stock of
the Corporation is publicly traded on an established securities
market or otherwise (as determined in accordance with Section
409A), an employee who is a “specified employee” within
the meaning of Section 409A. The Corporation shall have the
discretion to use any alternative permitted under Section 409A
to determine whether Employee is a Specified Employee, and to take
any action necessary to make such alternative binding.
2.20. “
Termination of Employment ” means, for purposes of
Section 4.6 of this Appendix A, Termination for Cause, or
Employee’s voluntary severance from employment with the
Corporation (within the meaning of the Corporation’s normal
policies and procedures) for any reason other than
Retirement.
2.21. “
Termination for Cause ” means, solely for purposes of
this Appendix A, termination of Employee’s employment by
the Corporation as a result of Employee’s conviction for the
commission of a felony, material breach of any employment or other
agreements between Employee and the Corporation, or willful failure
to perform the material responsibilities of his position with the
Corporation.
2.22. “
Trust ” means a Trust established pursuant to
Section 10 of this Appendix A.
3.
Eligibility for Retirement Benefits .
3.1.
General : Subject to Sections 4.2, 4.3, 4.4, and 4.5
the Corporation shall pay the retirement benefits described in this
Appendix A only if Employee Retires from employment with the
Corporation upon or after satisfying the vesting requirements set
forth in Section 4.1, or upon Employee’s deemed
Retirement pursuant to Section 2.15(b).
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4.1
General : Except as provided in Sections 4.2, 4.3, 4.4,
and 4.5, and subject to Section 10.1, Employee’s
benefits under this Appendix A shall be fully vested and
nonforfeitable if Employee satisfies both (a) and
(b) while employed with the Corporation:
(b) has
25 years of service with the Corporation. Employee shall have
25 years of service on the 25 th anniversary of Employee’s original hire
date.
The foregoing
notwithstanding, Employee shall be fully vested in his benefit
under this Appendix A upon Employee’s deemed Retirement
pursuant to Section 2.15(b) of this
Appendix A.
4.2.
Termination for Cause : All benefits shall be forfeited, and
no amount shall be payable under this Appendix A, in the event
of Employee’s Termination for Cause.
4.3.
Compliance with Noncompete, Nondisclosure, and Nonsolicitation
Agreements . All benefits under this Appendix A are
expressly conditioned upon Employee’s compliance with the
terms of any noncompetition, nondisclosure, or nonsolicitation
provisions contained in the Employment Agreement, or in any other
agreement between Employee and the Corporation. All benefits
payable under this Appendix A shall be forfeited, and no
amount shall be payable, in the event Employee violates the terms
of any such provisions. If Employee violates the terms of any such
provisions, and benefit payments have commenced to Employee, any
such payments shall cease, and Employee shall repay all previously
paid benefits to the Corporation upon demand. If Employee fails to
repay such amounts upon demand, the Corporation shall have the
right to take any action necessary to recover such payments from
Employee.
4.4. Notice
of Intent to Retire . Benefits payable under this
Appendix A are specifically conditioned upon Employee
providing to the Corporation written notice of Employee’s
intent to Retire at least six months prior to Employee’s
Retirement date. In the event Employee fails to satisfy the notice
requirements of this Section 4.4, all benefits shall be
forfeited, and no amount shall be payable under this
Appendix A. The foregoing notwithstanding, the Corporation, in
its sole and absolute discretion, may elect to waive the notice
requirement of this Section 4.4. The foregoing
notwithstanding, this Section 4.4 shall not apply to
death
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benefits
payable under Section 6 of this Appendix A, or to
Retirement benefits payable under Section 5 as a result of
Employee’s deemed Retirement pursuant to
Section 2.15(b).
4.5.
Release . Benefits payable under this Appendix A (other
than death benefits payable under Section 6) are specifically
conditioned upon and provided in exchange for Employee signing a
separation agreement that releases the Corporation from any
liabilities that may have arisen as a result of Employee’s
employment and/or termination of employment with the Corporation.
In the event Employee terminates employment with the Corporation
for any reason other than death (including Retirement) without
satisfying the requirements of this Section 4.5 all benefits
shall be forfeited, and no amount shall be payable under this
Appendix A.
4.6.
Termination of Employment Prior to Satisfying Vesting
Requirements . No benefits are payable under this
Appendix A upon Employee’s Termination of Employment
with the Corporation prior to satisfying the vesting requirements
set forth in Section 4.1.
5.1. Normal
Retirement Benefit . This Section 5.1 describes the
Retirement benefit payable by the Corporation in the event Employee
Retires on or after his Normal Retirement Date. Employee’s
Normal Retirement Benefit shall be paid in the form of an
Actuarially Equivalent lump sum, as set forth in
Section 5.3.
(a)
Married on Retirement Date : If Employee is married on his
Retirement Date, Employee’s N
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