Form of the Registrants RSU Assumption Agreement (with time-based vesting) for U.S. Employees Relating to Electro Scientific Industries, Inc.s 2004 Stock Incentive Plan
MKS INSTRUMENTS, INC.
RSU ASSUMPTION AGREEMENT
FOR U.S. EMPLOYEES
Holder: [ ]
RESTRICTED STOCK UNIT ASSUMPTION AGREEMENT effective as of February __, 2019 (the RSU Assumption Agreement).
WHEREAS, MKS Instruments, Inc., a Massachusetts corporation (MKS), has acquired Electro Scientific Industries, Inc., an Oregon corporation (ESI), through the merger of a wholly owned MKS subsidiary into ESI (the Merger), pursuant to the Agreement and Plan of Merger by and among MKS, ESI and such subsidiary dated as of October 29, 2018, as may have been amended from time to time (the Merger Agreement).
WHEREAS, before the consummation of the Merger, you held one or more outstanding awards of restricted stock units (RSUs) with respect to shares of the common stock of ESI, no par value per share (ESI Common Stock), that you received either under the Electro Scientific Industries, Inc. 2004 Stock Incentive Plan, as such plan has been amended from time to time, most recently on August 18, 2016 (the ESI Plan), or outside of the ESI Plan as a material inducement to commence employment with ESI, each of which is evidenced by a Restricted Stock Units Award Agreement, as each such agreement may have been amended from time to time (an RSU Agreement).
WHEREAS, the provisions of the Merger Agreement required MKS to assume, at the effective time of the Merger (the Effective Time), each RSU award that was outstanding as of immediately prior to the Effective Time. Under the assumption, MKS has converted the number of shares of ESI Common Stock covered by each such RSU award into shares of MKS common stock, no par value per share (MKS Common Stock), using an exchange ratio (the Equity Award Exchange Ratio) determined based on the Merger consideration and pre-closing trading prices for the MKS Common Stock pursuant to a method specified in the Merger Agreement. MKS has provided you the actual Equity Award Exchange Ratio in the employee communication to you regarding the conversion.
WHEREAS, the purpose of this RSU Assumption Agreement is to evidence MKSs assumption of your outstanding RSU award identified on Annex A hereto at the Effective Time and to reflect certain adjustments to such RSU award that were necessary or advisable in connection with their assumption by MKS.
NOW, THEREFORE, MKS and you agree as follows:
1. MKS has assumed, as of the Effective Time, all the duties and obligations of ESI under the RSU award identified on Annex A hereto (the ESI RSUs and, as assumed, the Assumed ESI RSUs) and will issue from the MKS Instruments, Inc. 2014 Stock Incentive Plan, as it may be amended or replaced from time to time (the MKS Incentive Plan), any shares that become distributable with respect to the Assumed ESI RSUs. In connection with such assumption, the number of shares of MKS Common Stock under the Assumed ESI RSU award covered by this RSU Assumption Agreement reflects the Equity Award Exchange Ratio, resulting in Assumed ESI RSUs for the number of shares of MKS Common Stock indicated on Annex A hereto. If you also held other ESI equity compensation awards at the Effective Time, including other RSUs that were granted subject to vesting based solely on the satisfaction of service conditions, those other awards are covered under one or more separate assumption agreements.
2. By clicking acceptance of this RSU Assumption Agreement, you hereby acknowledge receipt of this RSU Assumption Agreement and understand that all rights and liabilities with respect to your Assumed ESI RSU award are as set forth in the applicable RSU Agreement, the ESI Plan (to the extent incorporated into the RSU Agreement) and this RSU Assumption Agreement.
3. The intent of the foregoing adjustments to your ESI RSUs is to preserve their value as determined in connection with the Merger, and you agree that this assumption satisfies Section 12.2-2 of the ESI Plan, if applicable, and the relevant provision of the applicable RSU Agreement.
4. The following provisions will govern the Assumed ESI RSU award:
(a) Unless the context otherwise requires, all references in the applicable RSU Agreement and the ESI Plan (to the extent incorporated into such RSU Agreement) are adjusted as follows: (i) all references to the Company mean ESI (after the merger with a subsidiary of MKS) and any successor entity into which ESI is subsequently merged subject to subsection (d) below, and, for purposes of Reorganization Event under the MKS Incentive Plan, MKS, (ii) all references to Stock, Common Stock or Shares mean shares of MKS Common Stock, (iii) all references to the Board mean the Board of Directors of MKS or the Compensation Committee of such Board and (iv) any interpretation of corporate law for purposes of the Assumed ESI RSU award will be under Massachusetts law rather than Oregon law.
(b) All other provisions governing the vesting and termination of the Assumed ESI RSU award, including any post-Effective Time rights to acceleration you may have under the applicable RSU Agreement or otherwise, remain the same as set forth in the applicable RSU Agreement (or other applicable agreement), and those provisions (and any related provisions of the ESI Plan incorporated by reference into such RSU Agreement) will accordingly govern and control your rights under this RSU Assumption Agreement to receive MKS Common Stock under the Assumed ESI RSUs covered by this RSU Assumption Agreement.
(c) No accelerated vesting of the shares to be received under the ESI RSU awards has occurred solely by reason of the Merger or MKSs assumption of those RSUs. Accordingly, the Assumed ESI RSU award represented by this RSU Assumption Agreement will continue to vest in accordance with the same installment vesting schedule in effect for the shares covered by the applicable ESI RSUs (as set forth in the applicable RSU Agreement) immediately prior to the Effective Time except that the number of shares of MKS Common Stock subject to each installment of such vesting schedule has been adjusted to reflect the Equity Award Exchange Ratio. This statement is not intended to override any post-Effective Time rights to acceleration you may have under the RSU Agreement or any other agreement with ESI. For the avoidance of doubt and notwithstanding anything to the contrary in the applicable RSU Agreement, any pro-rata acceleration provisions in any Assumed ESI RSU award (such as in connection with death or disability, as applicable) shall take into account the Equity Award Exchange Ratio and any shares that vested before the Effective Time.
(d) For purposes of applying any and all provisions of the applicable RSU Agreement and the ESI Plan relating to your status as an employee of ESI or its parent or subsidiaries for purposes of determining your continuous employment, you will be deemed to be continuously employed for as long as you continue to render services as an employee to MKS or any present or future parent company or majority-owned subsidiary of MKS. Accordingly, the provisions of the applicable RSU Agreement governing the termination of the Assumed ESI RSUs in connection with your ceasing to be an employee will, after the Effective Time, be applied on the basis of your cessation of employee status with MKS and its parent and majority-owned subsidiaries.
(e) Shares of MKS Common Stock delivered to you upon settlement of your Assumed ESI RSU shall not be rounded down to the nearest whole share. Rather, fractional shares of MKS Common Stock, if any, shall be delivered to you.
(f) Tax Withholding. MKSs obligation to deliver Shares to you upon the vesting of the RSUs shall be subject to the satisfaction of all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding requirements (Tax Withholding). In order to satisfy all Tax Withholding related to your RSUs, you agree to the following:
(i) MKS shall determine the amount of any taxes that MKS or any affiliated company may be obligated to withhold with respect to the grant, vesting, or other event with respect to the RSUs. MKS expects to withhold a sufficient number of shares of MKS Common Stock in connection with such event to satisfy the amount of any such Tax Withholding that arises. The amount of taxable compensation that you will recognize in connection with any such event and the fair market value of such withheld Shares will be based on the closing price of MKS Common Stock on the respective vesting date, provided, however, that if such date is not a trading day, MKS will use the closing price on the first trading day following such date. MKS may take such action without notice to you and will then remit to you the
balance of any proceeds from withholding such shares in excess of the amount reasonably determined to be necessary to satisfy such Tax Withholding obligations. You will have no discretion as to the satisfaction of Tax Withholding obligations in such manner. If, however, MKS for any reason does not satisfy the Tax Withholding obligations with respect to the vesting of the RSUs as provided above in this Section 4(f)(i) or otherwise pays taxes on your behalf (that are your responsibility), MKS or its affiliate shall be entitled to require a cash payment by or on behalf of you and/or to deduct from other compensation payable to you the amount of any such Tax Withholding obligations or MKS-paid taxes that are your responsibility.
(ii) You acknowledge and agree that you have had an opportunity to review with your own tax advisors the federal, state, local and non-U.S. tax consequences of the Assumed ESI RSU award and the transactions contemplated by this RSU Assumption Agreement. You are relying solely on such advisors and not on any statements or representations of MKS, ESI, or any of their affiliates or agents. You understand that you (and not MKS, ESI or their affiliates) shall be responsible for your own tax liability that may arise as a result of the Assumed ESI RSU award or the transactions contemplated by this RSU Assumption Agreement.
5. Except to the extent specifically modified by this RSU Assumption Agreement, all of the terms and conditions of the applicable RSU Agreement as in effect immediately prior to the Effective Time continue in full force and effect and are not in any way amended, revised or otherwise affected by this RSU Assumption Agreement.
IN WITNESS WHEREOF, MKS Instruments, Inc. has caused this RSU Assumption Agreement to be delivered on its behalf by its duly-authorized officer or agent.
|MKS INSTRUMENTS, INC.|
|By:||[Insert electronic signature]|
|Gerald G. Colella, CEO|
|Name of RSU Holder||[ ]|
Number of shares of ESI
Number of shares of MKS
(The number of shares of MKS Common Stock following the conversion has been calculated by multiplying the number of shares of ESI Common Stock represented by the RSUs at the Effective Time by the Equity Award Exchange Ratio and rounding to the nearest whole share.)