EXHIBIT 10.1
MKS INSTRUMENTS, INC.
Performance Stock Agreement
Granted Under the Second Restated 1995 Stock Incentive Plan
AGREEMENT made this ____ day of___ ____, between MKS Instruments, Inc., a
Massachusetts corporation (the "Company"), and ______ (the "Participant").
For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Issuance of Shares.
The Company shall issue to the Participant, subject to the terms and
conditions set forth in this Agreement and in the Company's Second Restated 1995
Stock Incentive Plan (the "Plan"), up to [_____] shares (the "Shares") of common
stock, no par value, of the Company ("Common Stock"). This Agreement shall
evidence Participant's ownership of the Shares, and Participant acknowledges
that he/she will not receive a stock certificate representing the Shares. The
Participant agrees that the Shares shall be subject to forfeiture as set forth
in Section 2 of this Agreement and the restrictions on transfer set forth in
Section 3 of this Agreement. The Company or [broker] (or such other broker with
which the Company has established a relationship) ("[Broker]") shall retain
custody of the Shares until the Shares have vested in accordance with Section 2
of this Agreement. Upon vesting of the Shares, the Company shall instruct its
transfer agent to deposit the Vested Shares (as defined in Section 2(a) below)
into the Participant's existing stock option account at [Broker] (the
"Account"), subject to payment (through sale of a portion of the Shares in
accordance with Section 6) of all applicable withholding taxes.
2. Forfeiture.
(a) Definitions. "Forfeiture" shall mean any forfeiture of Shares
pursuant to Sections 2(b) or 2(c) below. "Unvested Shares" shall mean all Shares
that remain subject to Forfeiture pursuant to either Section 2(b) or 2(c) below
and "Vested Shares" shall mean all Shares that are no longer subject to any
Forfeiture. "Contingent Shares" shall mean those shares that are no longer
subject to Forfeiture pursuant to the terms of Section 2(b) below, but remain
subject to Forfeiture pursuant to Section 2(c) below. "Vesting Date" shall mean
the date that all Forfeiture provision lapses with respect to any Shares (or the
first business day thereafter if such date falls on a day when the market is
closed). For purposes of this Agreement, "employ" or "employment" with the
Company shall include employment with a parent or subsidiary of the Company.
(b) Performance Vesting. As set forth in the chart below, based upon
the way that the Company's actual annual pro forma(1) earnings per share for the
year ending December 31, [generally, the year following grant year] (the "20__
Actual EPS") relate to the Company's
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(1) Excludes certain non-operating items, as determined by the Company
internal target for 20__ annual pro forma earnings per share, [may be
established at a future date] (the "20__ Target EPS"), then all Shares that are
not Contingent Shares (as defined below) shall be automatically forfeited to the
Company, effective as of the date of the Company's public announcement of the
20__ Actual EPS.
IF THE 20__ "CONTINGENT
ACTUAL EPS IS: SHARES"(2) SHALL MEAN: EXAMPLE
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Less than 50% of 20__ 0 shares IF: Company's 20__ Actual EPS is 40% of 20__ Target EPS.
Target EPS
THEN: No shares are Contingent Shares.
50% to 100% of 20__ [_____] Shares multiplied IF: Company's 20__ Actual EPS is 60% of 20__ Target EPS.
Target EPS by the percentage that the
20__ Actual EPS bears to THEN: [_____] shares (60% x [_____]) are Contingent Shares.
the 20__ Target EPS
More than 100% of (1) [_____] Shares Example #1
20__ Target EPS
plus IF: Company's 20__ Actual EPS is 140% of 20__ Target EPS.
(2) (a) [_____] Shares THEN: [_____] shares are Contingent Shares, calculated as
multiplied by (b) the follows: (1) [_____] shares, plus (2) [_____] shares
percentage by which the (which is 40% x [_____] shares).
20__ Actual EPS exceeds
100% of the 20__
Target EPS Example #2
(up to a maximum IF: Company's 20__ Actual EPS is 180% of 20__ Target EPS.
aggregate of [_____]
shares) THEN: [_____] shares are Contingent Shares, calculated as
follows: (1) [_____] shares, plus (2) [_____] shares
(which is 80% x [_____] shares).
Contingent Shares shall remain "Unvested Shares" pursuant to this Agreement
until the Contingent Shares are no longer subject to Forfeiture pursuant to
Section 2(c) below.
(c) Vesting Period. In addition to any forfeiture pursuant to
Section 2(b) above, in the event that Participant ceases to be employed by the
Company for any reason or no reason (except for death or disability), with or
without cause, prior to [third anniversary from
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(2) Any fractional shares shall be rounded up to the next whole share. Maximum
number of Contingent Shares is [maximum number granted per Section 1].
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date of grant], then effective at the time of such cessation, all remaining
Shares shall automatically be forfeited to the Company. In the event that the
Participant ceases to be employed by the Company by reason of death or
disability prior to [third anniversary from date of grant], then, that
percentage of the Shares that had not been previously Forfeited pursuant to
Section 2(a) prior to the time of such death or disability, that is equal to
percentage of the period of time between the date of this Agreement and [third
anniversary from date of grant], that is remaining at the time of such death or
disability, shall automatically be forfeited to the Company. For the purpose of
this Section 2, "disability" shall mean disability as defined in Section
216(i)(1) of the Social Security Act.
(d) Change in Control. Notwithstanding the foregoing, if, prior to
[third anniversary from date of grant], and within two years of the
effectiveness of a Change in Control (as defined below), the Participant is (i)
terminated by the Company without Cause (as defined below) or (ii) terminates
his employment for Good Reason (as defined below), then, 100% of the
Participants Unvested Shares shall immediately become Vested Shares and shall no
longer be subject to the Forfeiture provisions under this Agreement. For
purposes of this section "Change in Control" means the first to occur of any of
the following events: (I) 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; (II) 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; or (III) 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. For purposes of
this Agreement, "Cause" shall mean conviction for the commission of a felony,
willful failure by the Participant to perform his responsibilities to the
Company, or willful misconduct by the Employee. For purposes of this section,
"Good Reason" shall mean termination of Participant's employment by Participant
within 90 days following (I) a material diminution in Participant's positions,
duties and responsibilities from those described in this Employment Agreement,
(II) a material reduction in Participant's base salary (other than a reduction
which is part of a general salary reduction program affecting senior executives
of the Company), (III) a material reduction in the aggregate value of the
pension and welfare benefits provided to Participant from those in effect prior
to the Change in Control (other than a reduction which is proportionate to the
reductions applicable to other senior executives pursuant to a cost-saving plan
that includes all senior executives), (IV) a material breach of any provision of
this Employment Agreement by the Company or (V) the Company's requiring
Participant to be based at a location that creates for Participant a one way
commute in excess of 60 miles from his primary residence, except for required
travel on the Company's business to an extent substantially consistent with the
business travel obligations of Participant under this Employment Agreement.
Notwithstanding the foregoing, a termination shall not be treated as a
termination for Good Reason (I) if Participant shall have consented in writing
to the occurrence of the event giving rise to the claim of termination for Good
Reason or (II) unless Participant shall have delivered a written notice to the
Company within 30 days of his having actual knowledge of the
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occurrence of one of such events stating that he intends to terminate his
employment for Good Reason and specifying the factual basis for such
termination, and such event, if capable of being cured, shall not have been
cured within 30 days of the receipt of such notice.
(e) Notice. Within 90 days after any Forfeiture, the Company shall
provide the Participant (or his estate) a written notice of forfeiture,
specifying the number of Shares forfeited. Failure to provide such notice on a
timely basis shall have no effect on the Forfeiture of the Shares.
3. Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, by operation of law or otherwise (collectively "transfer")
any Unvested Shares, or any interest therein, except that the Participant may
transfer such Unvested Shares (i) to or for the benefit of any spouse, children,
parents, uncles, aunts, siblings, grandchildren and any other relatives approved
by the Board of Directors (collectively, "Approved Relatives") or to a trust
established solely for the benefit of the Participant and/or Approved Relatives,
provided that such Unvested Shares shall remain subject to this Agreement
(including without limitation the terms of Forfeiture and the restrictions on
transfer set forth in this Section 3) and such permitted transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement or (ii) as part of the sale of all or substantially
all of the shares of capital stock of the Company (including pursuant to a
merger or consolidation), provided that, in accordance with the Plan, the
securities or other property received by the Participant in connection with such
transaction shall remain subject to this Agreement.
4. Restrictive Legends.
All certificates representing Shares shall have affixed thereto a legend
in substantially the following form, in addition to any other legends that may
be required under federal or state securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and to forfeiture as set forth in a certain
Performance Stock Agreement between the corporation and the
registered owner of these shares (or his predecessor in interest),
and such Agreement is available for inspection without charge at the
office of the Secretary of the corporation."
5. Provisions of the Plan.
(a) This Agreement is subject to the provisions of the Plan, a copy
of which is furnished to the Participant with this Agreement.
(b) Upon the occurrence of a merger of, or acquisition of, the
Company, the Forfeiture provision and other rights of the Company hereunder
shall inure to the benefit of any successor to the Company.
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6. Withholding Taxes; Section 83(b) Election.
(a) The Company's obligation to deliver Shares to Participant upon
the vesting of such shares shall be subject to the satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements ("Withholding Taxes"). In order to satisfy all Withholding Taxes
due upon vesting of Participant's Shares, Participant agrees to the following:
(b) As a condition to receiving any Vested Shares, on the date of
this Agreement, Participant must execute the Irrevocable Standing Order to Sell
Shares attached hereto, which authorizes the Company and [Broker] to take the
actions described in this subsection 6(b) (the "Standing Order"). Participant
authorizes [Broker] to sell, at the market price and on the applicable Vesting
Date the number of Vested Shares that the Company has instructed [Broker] is
necessary to obtain proceeds sufficient to satisfy the Withholding Taxes.
Participant understands and agrees that the number of Vested Shares that
[Broker] will sell will be based on the closing price of the Common Stock on the
last trading day before the Vesting Date. The Participant agrees to execute and
deliver such documents, instruments and certificates as may reasonably be
required in connection with the sale of the Vested Shares pursuant to this
Section 6.
(c) Participant agrees that the proceeds received from the sale of
Vested Shares pursuant to Section 6(b) will be used to satisfy the Withholding
Taxes and, accordingly, Participant hereby authorizes [Broker] to pay such
proceeds to the Company for such purpose. Participant understands that to the
extent that the proceeds obtained by such sale exceed the amount necessary to
satisfy the Withholding Taxes, such excess proceeds shall be deposited into the
Account. Participant further understands that any remaining Vested Shares shall
be deposited into the Account.
(d) Participant acknowledges and agrees that, in the event that
there is not a market in the Common Stock, the Company will have the right to
make other arrangements to satisfy the Withholding Taxes due upon vesting of
Participant's Shares, including, but not limited to, the right to deduct amounts
from payments of any kind otherwise due to the Participant.
(e) The Participant has reviewed with the Participant's own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Participant
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. The Participant understands that the
Participant (and not the Company) shall be responsible for the Participant's own
tax liability that may arise as a result of this investment or the transactions
contemplated by this Agreement. The Participant understands that it may be
beneficial in many circumstances to elect to be taxed at the time the Shares are
issued rather than when and as the Forfeiture provisions lapse by filing an
election under Section 83(b) of the Code with the I.R.S. within 30 days from the
date of purchase. THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PARTICIPANT
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REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE
PARTICIPANT'S BEHALF.
(f) The Participant represents to the Company that, as of the date
hereof, he is not aware of any material nonpublic information about the Company
or the Common Stock. The Participant and the Company have structured this
Agreement to constitute a "binding contract" relating to the sale of Common
Stock pursuant to this Section 5, consistent with the affirmative defense to
liability under Section 10(b) of the Securities Exchange Act of 1934 under Rule
10b5-1(c) promulgated under such Act.
7. Miscellaneous.
(a) No Rights to Employment. The Participant acknowledges and agrees
that the vesting of the Shares pursuant to Section 2 hereof is earned only in
accordance with the terms of such section. The Participant further acknowledges
and agrees that the transactions contemplated hereunder and the vesting schedule
set forth herein do not constitute an express or implied promise of continued
engagement as an employee or consultant for the vesting period, for any period,
or at all.
(b) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.
(c) Waiver. Any provision for the benefit of the Company contained
in this Agreement may be waived, either generally or in any particular instance,
by the Board of Directors of the Company.
(d) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Sections3 and 4 of this
Agreement.
(e) Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or five days after
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 7(e).
(f) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(g) Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties, and supersedes all prior agreements and
understandings, relating to the subject matter of this Agreement.
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(h) Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Participant.
(i) Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the internal laws of the State of Massachusetts
without regard to any applicable conflicts of laws.
(j) Participant's Acknowledgments. The Participant acknowledges that
he or she: (i) has read this Agreement; (ii) has been represented in the
preparation, negotiation, and execution of this Agreement by legal counsel of
the Participant's own choice or has voluntarily declined to seek such counsel;
and (iii) understands the terms and consequences of this Agreement; and (iv) is
fully aware of the legal and binding effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MKS INSTRUMENTS, INC.
By:___________________________
Title:_______________________
00 Xxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
_________________________________
[Participant's Name]
Address: _________________
_________________
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Exhibit A
IRREVOCABLE STANDING ORDER TO SELL SHARES
I, ___________________________________, have been granted _____________
shares of performance stock by MKS Instruments, Inc. ("MKS"), which is evidenced
by a restricted stock agreement between me and MKS (the "Agreement," copy
attached). Provided that I remain employed by MKS on each vesting date, the
shares vest according to the schedule set forth in the Performance Stock
Agreement executed between me and MKS, dated [date of grant], a copy of which
has been provided to you.
I understand that on each vesting date, the vested shares (the "Shares")
will be deposited into my account no. _____________ at [broker] ("[Broker]") and
that I will recognize taxable ordinary income as a result. Pursuant to the terms
of the Agreement and as a condition of my receipt of the Shares, I understand
and agree that, for each vesting date, I must sell a number of shares sufficient
to satisfy all withholding taxes applicable to that ordinary income. Therefore,
I HEREBY DIRECT [BROKER] TO SELL, AT THE MARKET PRICE AND ON EACH VESTING DATE
LISTED ABOVE (OR THE FIRST BUSINESS DAY THEREAFTER IF A VESTING DATE SHOULD FALL
ON A DAY WHEN THE MARKET IS CLOSED), THE NUMBER OF SHARES THAT MKS INFORMS
[BROKER] IS SUFFICIENT TO SATISFY THE APPLICABLE WITHHOLDING TAXES, WHICH SHALL
BE CALCULATED BASED ON THE CLOSING PRICE OF MKS'S COMMON STOCK ON THE LAST
TRADING DAY BEFORE EACH VESTING DATE. I understand that [Broker] will remit the
proceeds to MKS for payment of the withholding taxes.
I hereby agree to indemnify and hold [Broker] harmless from and against
all losses, liabilities, damages, claims and expenses, including reasonable
attorneys' fees and court costs, arising out of any (i) negligent act, omission
or willful misconduct by MKS in carrying out actions pursuant to the third
sentence of the preceding paragraph and (ii) any action taken or omitted by
[Broker] in good faith reliance upon instructions herein or upon instructions or
information transmitted to [Broker] by MKS pursuant to the third sentence of the
preceding paragraph.
I understand and agree that by signing below, I am making an Irrevocable
Standing Order to Sell Shares which will remain in effect until all of the
shares have vested. I also agree that this Irrevocable Standing Order to Sell
Shares is in addition to and subject to the terms and conditions of any existing
Account Agreement that I have with[Broker].
________________________________ _______________________________________
Signature Signature (Additional Account Holder)
Print name: ____________________ Print name: __________________________
Dated: _______ __, 20__ Dated: ________ __, 20__
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