UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| |
||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
As previously disclosed in the Current Report on Form 8-K filed on July 1, 2021 by MKS Instruments, Inc., a Massachusetts corporation (the “Company” or “MKS”), on July 1, 2021, the Company entered into a definitive agreement (the “Implementation Agreement”) with Atotech Limited, a Bailiwick of Jersey company (“Atotech”), providing for, subject to the terms and conditions of the Implementation Agreement, the acquisition (the “Acquisition”) of Atotech by the Company, which is expected to be implemented by means of a scheme of arrangement under the laws of Jersey (the “Scheme”). Pursuant to the Implementation Agreement, upon the effective date of the Acquisition (the “Closing”), the Company will acquire each issued and outstanding common share of Atotech (the “Atotech Shares”) in exchange for per share consideration of $16.20 in cash and 0.0552 of a share of MKS common stock. At the time of the announcement of the Acquisition, the total value of the aggregate cash and stock consideration was approximately $5.1 billion.
Item 1.01 Entry into a Material Definitive Agreement.
On October 29, 2021, the Company, Atotech and Atotech Manufacturing, Inc., a Delaware corporation that is an indirect wholly owned subsidiary of the Company (“Bidco”), entered into a letter agreement (the “Letter Agreement”), under which Bidco, acting as nominee for the Company, shall acquire the entire issued and to be issued share capital of Atotech pursuant to the terms of the Scheme.
The Letter Agreement also amends the provisions to Schedule 1 to the Implementation Agreement relating to the settlement of the outstanding time-based restricted stock units of Atotech (“Atotech RSUs”) and performance-based restricted stock units of Atotech (“Atotech PSUs”). As a result of the amendment, if Closing occurs on or before December 31, 2021, Atotech RSUs that are scheduled to vest on or before January 1, 2022 shall be accelerated and cash settled on or shortly following Closing. Additionally, the amendment provides that if Closing occurs on or before December 31, 2021, Atotech shall determine the number of Atotech PSUs that would have been earned at the end of the applicable performance period, based on the greater of (x) the target number of Atotech PSUs subject to the award or (y) the number of Atotech PSUs that would have been earned based on actual performance through the earlier of December 31, 2021 or the Closing date with respect to any EBITDA-based performance goals for calendar year 2021, and assuming the target level performance for the other performance calendar years and performance goals (the “Specified Number”). The Atotech PSU award would then be accelerated and cash settled on or shortly following Closing as to one-third of the Specified Number. Any Atotech RSUs or Atotech PSUs that are not cash settled in this way shall be dealt with in the context of Closing in the manner previously described in the Current Report on Form 8-K filed on July 2, 2021 by the Company.
The foregoing description of the material terms of the Letter Agreement is qualified in its entirety by reference to the full text of the Letter Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Management Change
On October 25, 2021, the Board of Directors (the “Board”) of the Company appointed James A. Schreiner, who currently serves as the Company’s Senior Vice President and Chief Operating Officer, to the position of Senior Vice President and Chief Operating Officer, Atotech Division, subject to and effective upon the Closing of the Acquisition.
On October 25, 2021, the Company and Mr. Schreiner entered into an amendment (the “Amendment”) to Mr. Schreiner’s employment agreement with the Company dated as of September 16, 2019 (the “Existing Employment Agreement”). Pursuant to the Amendment: (i) Mr. Schreiner’s base salary will be increased to $465,000 effective as of the Closing; (ii) Mr. Schreiner will be eligible for an expatriate service bonus equal to $500,000, which will be payable in a single lump sum within thirty days following Mr. Schreiner’s return to the United States following the completion of a two-year term of expatriate service (or such longer term of service as may be mutually agreed by the Company and Mr. Schreiner) as the Senior Vice President and Chief Operating Officer, Atotech Division (the “Expatriate Service Term”); and (iii) Mr. Schreiner will be eligible for Enhanced Severance Compensation (as such term is defined in the Existing Employment Agreement) in the event that he resigns his employment if the Company fails to return him to the position of Senior Vice President and Chief Operating Officer or a position of at least substantially similar duties and authority within six months after his return to the United States following the completion of the Expatriate Service Term.
The foregoing description of the material terms of the Amendment is qualified in its entirety by reference to the full text of the Amendment, which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Appointment of Director
On October 25, 2021, the Board elected Geoff Wild as a Class III Director, effective immediately following the Closing of the Acquisition, to fill the existing vacancy on the Board, and to serve until the 2023 Annual Meeting of Shareholders. Mr. Wild is currently the President and Chief Executive Officer and a director of Atotech.
Upon the effectiveness of his appointment, Mr. Wild will be entitled to receive compensation for his Board and committee service in accordance with the Company’s standard compensation arrangements for non-employee directors, which are described under the caption “Director Compensation” in the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on March 26, 2021, as adjusted by the Board from time to time.
In connection with the Acquisition, Mr. Wild will be entitled to severance payments pursuant to the terms of his employment agreement with Alpha US Bidco, Inc., a subsidiary of Atotech (“Alpha US”) (as amended, the “Atotech Employment Agreement”). The Atotech Employment Agreement provides that in the event Mr. Wild’s employment is terminated by Alpha US without Cause or by Mr. Wild for Good Reason (as such terms are defined in the Atotech Employment Agreement) on the date of or within 12 months following a Change of Control (as defined in the Atotech Employment Agreement), Mr. Wild will be entitled to receive a lump sum payment equal to (i) 150% of Mr. Wild’s total remuneration (which includes Mr. Wild’s then-current base salary, target annual bonus, and company-funded pension contributions), plus (ii) a pro-rated portion of Mr. Wild’s annual bonus that he would have been entitled to if he had completed the then-current full fiscal year, based on actual performance results, as well as continued company-paid healthcare coverage for up to 18 months. The severance payment is contingent upon Mr. Wild’s timely execution and nonrevocation of a release of claims in favor of Atotech and its affiliates. The Atotech Employment Agreement also provides that if Mr. Wild’s employment is terminated by Alpha US without Cause or by Mr. Wild for Good Reason (as such terms are defined in the Atotech Employment Agreement), the notice period for termination would be at least 6 months, and Alpha US may elect to pay Mr. Wild his base salary for such period in lieu of such notice. Additionally, if Mr. Wild’s employment is terminated by Alpha US without Cause or by Mr. Wild for Good Reason (as such terms are defined in the Atotech Employment Agreement) in either case on the date of or within 12 months following a Change of Control (as defined in the Atotech Employment Agreement), then upon the 18-month anniversary of the date of termination, Mr. Wild will be entitled to receive 150% of the greater of (i) 50% of the total remuneration most recently received by Mr. Wild under the Atotech Employment Agreement and (ii) 100% of Mr. Wild’s most recently received annual base salary. The Acquisition will constitute a Change of Control for the purposes of the Atotech Employment Agreement. The approximate dollar value of the foregoing is not determinable at this time. An amendment to this 8-K will be filed when the dollar value of the foregoing payments is determinable.
There were no arrangements or understandings between Mr. Wild and any other persons pursuant to which Mr. Wild was appointed as a director.
Item 9.01. Exhibits.
(d) Exhibits
| Exhibit No. | Exhibit | |
| 10.1 | Letter Agreement, dated October 29, 2021, by and among MKS Instruments, Inc., Atotech Limited and Atotech Manufacturing, Inc. | |
| 10.2 | Amendment to Employment Agreement, dated October 25, 2021, by and between MKS Instruments, Inc. and James A. Schreiner | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MKS Instruments, Inc. | ||||||
| By: | /s/ Kathleen F. Burke | |||||
| Date: October 29, 2021 | Name: | Kathleen F. Burke | ||||
| Title: | Senior Vice President, General Counsel and Secretary | |||||
Exhibit 10.1
LETTER AGREEMENT
THIS AGREEMENT (the “Agreement”) is made on 29 October, 2021.
WHEREAS:
| (A) | The following parties entered into an Implementation Agreement on 1 July, 2021 (the “Implementation Agreement”): |
| 1) | ATOTECH LIMITED, a registered public company incorporated and existing under the laws of Jersey with registered number 127906 and whose registered office is at 3rd Floor, 44 Esplanade St, Helier Jersey JE4 9WG (the “Company”); and |
| 2) | MKS INSTRUMENTS, INC., a corporation incorporated in Massachusetts with registered number 042277512 and whose office is at 2 Tech Drive, Suite 201, Andover, Massachusetts 01810 (“MKS”), |
pursuant to which MKS has agreed to acquire the entire issued and to be issued share capital of the Company (the “Acquisition”).
| (B) | The Acquisition is to be implemented by means of a members’ scheme of arrangement under Article 125 of the Companies (Jersey) Law 1991 (as amended) (the “Scheme”), which requires the approval of the registered members of the Company at a Court Meeting and a General Meeting and the sanction of the Royal Court of Jersey (the “Court”). |
| (C) | On 8 October, 2021, the following corporation was incorporated as an indirect, wholly owned subsidiary of MKS in connection with the Acquisition: |
| 1) | ATOTECH MANUFACTURING, INC., a corporation incorporated in Delaware with registered number 6271002 and whose office is at c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, which corporation is an indirect wholly-owned subsidiary of MKS (the “Bidco” and, together with the Company and MKS, the “Parties”). |
| (D) | The Parties wish to enter into this Agreement to set out certain additional terms relating to the implementation of the Acquisition including, in accordance with Section 16.3 of the Implementation Agreement, amending and restating Schedule 1 to the Implementation Agreement in order to authorize and direct the Company to take all actions required to partially accelerate the vesting of certain Company RSU Awards and Company PSU Awards, provided that the Effective Date occurs on or before 31 December 2021. |
| (E) | Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Implementation Agreement. |
IT IS AGREED:
| 1. | IMPLEMENTATION |
| 1.1 | MKS and the Company hereby agree that Bidco, acting as nominee for MKS, shall acquire the entire issued and to be issued share capital of the Company pursuant to the Scheme. |
1
| 1.2 | MKS shall remain liable for the performance (or for procuring the performance by Bidco) of its obligations under the Implementation Agreement and the Scheme. |
| 1.3 | Bidco shall provide any such undertakings, evidence or confirmations as may be required by the Court in connection with the Acquisition or the implementation of the Scheme. |
| 2. | AMENDMENT AND RESTATEMENT OF SCHEDULE 1 |
| 2.1 | Schedule 1 to the Implementation Agreement is hereby amended and restated in its entirety in the form attached hereto as Exhibit A. |
| 3. | COUNTERPARTS |
This Agreement may be executed in any number of counterparts. Each counterpart shall constitute an original of this Agreement, but all the counterparts together shall constitute but one and the same instrument.
2
This Agreement has been entered into on the date stated at the beginning of it.
| ATOTECH LIMITED
| ||||
| By: | /s/ Geoffrey Wild | |||
| Name: | Geoffrey Wild | |||
| Title: | Chief Executive Officer | |||
3
| MKS INSTRUMENTS, INC.
| ||||
| By: | /s/ John T.C. Lee | |||
| Name: | John T.C. Lee | |||
| Title: | President and Chief Executive Officer | |||
4
| ATOTECH MANUFACTURING, INC.
| ||||
| By: | /s/ Kathleen F. Burke | |||
| Name: | Kathleen F. Burke | |||
| Title: | Secretary | |||
5
EXHIBIT A
AMENDED AND RESTATED
SCHEDULE 1
TREATMENT OF COMPANY INCENTIVE PLANS
In this Amended and Restated Schedule 1, each of the following expressions shall have the following meaning:
“Acquirer RSU Award” means an award of restricted stock units granted to an Acquirer Stock Plan Eligible Participant pursuant to the Acquirer Stock Plan, which award (a) may be settled in Acquirer Shares and/or cash at the sole discretion of the Acquirer, (b) will not provide for dividend equivalent rights and (c) shall otherwise be subject to the terms and conditions of the appropriate form of award agreement evidencing restricted stock unit awards granted under the Acquirer Stock Plan, a copy of which must be accepted by such Acquirer Stock Plan Eligible Participant as a condition of such award.
“Acquirer Stock Plan” means the Acquirer’s 2014 Stock Incentive Plan or its successor.
“Acquirer Stock Plan Eligible Participant” means the former holder of a Company RSU Award, Company PSU Award or Company Shares acquired under the MSP who, immediately following the Effective Date, is eligible to participate in the Acquirer Stock Plan in accordance with its terms and to whom an award pursuant to the Acquirer Stock Plan may be granted in compliance with the applicable Law of the jurisdiction in which such former holder resides.
“Award Exchange Ratio” means a fraction, the numerator of which is the fair market value of the Consideration payable per Company Share and the denominator of which is the average closing price per Acquirer Share reported on the Nasdaq Stock Market on the 10 trading days immediately preceding the Effective Date. The fair market value of the Share Consideration component of the Consideration shall be determined by the average closing price per Acquirer Share reported on the Nasdaq Stock Market on the 10 trading days immediately preceding the Effective Date.
“Company Option” means an option award to purchase Company Shares granted pursuant to a Company Share Plan other than the MSP.
“Company PSU Award” means an award of restricted share units granted pursuant to a Company Share Plan that is subject to performance-based vesting conditions.
“Company PSU Grant Notice” means, with respect to a Company PSU Award, the Performance Restricted Share Unit Grant Notice evidencing such Company PSU Award.
“Company RSU Award” means an award of restricted share units granted pursuant to a Company Share Plan that is subject solely to time-based vesting conditions.
“Company Share Plan” means each of (i) the Company’s 2021 Incentive Award Plan, as amended (the “Company 2021 Plan”), (ii) the Atotech UK Topco Limited Options Plan, as amended, and share options granted thereunder, as converted into share options subject to the terms and conditions of the Company 2021 Plan, and (iii) the MSP.
1
“In-the-Money Option” means a Company Option that has an exercise price per Company Share that is less than the Consideration per Company Share.
“MSP” means the Company’s Nonqualified Employee Stock Purchase and Matching Share Subplan, as amended, a subplan of the Company 2021 Plan.
“Per Share Consideration Cash Value” means the fair market value of the Consideration payable per Common Share, in connection with which the fair market value of the Share Consideration component of the Consideration shall be determined by the average closing price per Acquirer Share reported on the Nasdaq Stock Market on the 10 trading days immediately preceding the Effective Date.
| 1.1 | Treatment of Company Options. |
| (a) | No outstanding Company Option (whether vested or unvested) shall be assumed by, continued in effect, or replaced by the Acquirer pursuant to or in connection with the transactions contemplated by this Agreement. Prior to the Effective Date, the Company shall take all actions required to cause each Company Option that is outstanding and unexercised as of immediately prior to the Effective Date to become vested in full immediately prior to the Effective Date. Upon the Effective Date, pursuant to the terms of the Company Share Plans and subject to the terms and conditions of this Agreement, each Company Option that is outstanding and unexercised immediately prior to the Effective Date shall be (by virtue of the Acquisition and without any action on the part of any person) cancelled and extinguished. Each cancelled Company Option that is an In-the-Money Option shall be converted automatically and entirely into the right of the former holder thereof to receive an amount of consideration (the “Option Consideration”) in cash equal to the product obtained by multiplying (i) the number of Company Shares subject to such cancelled Company Option by (ii) the positive difference between (x) the Per Share Consideration Cash Value and (y) the exercise price per Company Share subject to such Company Option, in each case to be paid in accordance with Clause 1.1(b) of this Schedule 1. Each Company Option that is not an In-the-Money Option shall, in accordance with the terms of the Company Share Plans, be cancelled and extinguished without the payment of consideration with respect to such cancelled Company Option. |
| (b) | The Acquirer shall cause the applicable Option Consideration to be paid to each former holder of an In-the-Money Option on or about the first payroll date of the Company or applicable Affiliate thereof occurring at least 10 business days after the Effective Date. Such payment of Option Consideration (reduced by applicable Tax withholding) shall be made either (i) through the payroll systems of the Company or applicable Affiliate thereof to each former holder entitled to Option Consideration (other than any such holder with respect to which the Company and its Affiliates have no Tax withholding obligations), or (ii) in cash by the Company or applicable Affiliate thereof to each former holder entitled to Option Consideration with respect to which the Company and its Affiliates have no Tax withholding obligations. Conversion from United States Dollars to the currency used for the Company or applicable Affiliate shall follow established Company policy or practice. |
| 1.2 | Treatment of Company RSU Awards. |
| (a) | No outstanding Company RSU Award (whether vested or unvested) shall be assumed by or continued in effect by the Acquirer pursuant to or in connection with the transactions contemplated by this Agreement. Upon the Effective Date, pursuant to the terms of the Company Share Plans and subject to the terms and conditions of this Agreement, each Company RSU Award that is outstanding immediately prior to the Effective Date shall be (by virtue of the Acquisition and without any action on the part of any person) cancelled and extinguished without payment of consideration therefor, except as otherwise provided in accordance with Clause 1.2(c) of this Schedule 1. Prior to the Effective Date, the Company shall take all actions required to enable the cancellation of each Company RSU Award in accordance with the preceding sentence. |
2
| (b) | Prior to the Effective Date, the Company shall, with respect to each Company RSU Award that is outstanding and unvested in accordance with the terms of the grant notice and award agreement evidencing such Company RSU Award (together, the “Applicable RSU Agreement”): |
| (i) | determine the number of units (each an “RSU”) subject to such Company RSU Award that would vest in accordance with the terms of the Applicable RSU Agreement on any vesting date that would occur on or before January 1, 2022 if the Company RSU Award then remained outstanding and the holder thereof remained in a continuous employment or other service relationship with the Company or an Affiliate thereof through such vesting date; and |
| (ii) | take all actions required to cause the number of RSUs determined in accordance with Clause 1.2(b)(i) to become vested in full (each, an “Accelerated RSU”) immediately prior to the Effective Date if, and only if, the Effective Date occurs on or before December 31, 2021 and the continuous employment or other service relationship of the holder of such Company RSU Award with the Company or an Affiliate thereof has not terminated prior to the Effective Date. |
| (c) | If the Effective Date occurs on or before December 31, 2021, the Company shall not settle the Accelerated RSUs subject to a Company RSU Award by issuing Company Shares to the holder thereof. Rather, provided that the Effective Date occurs on or before December 31, 2021, upon the Effective Date and cancellation of such Company RSU Award in accordance with Clause 1.2(a) of this Schedule 1, each Accelerated RSU shall be converted automatically and entirely into the right of the former holder thereof to receive an amount of consideration (the “Accelerated RSU Consideration”) in cash equal to the product obtained by multiplying (i) the number of Accelerated RSUs subject to such cancelled Company RSU Award by (ii) the Per Share Consideration Cash Value, in each case to be paid in accordance with Clause 1.2(d) of this Schedule 1. |
| (d) | The Acquirer shall cause the applicable Accelerated RSU Consideration to be paid to each former holder of an Accelerated RSU on or prior to the first payroll date of the Company or applicable Affiliate thereof occurring at least 10 business days after the Effective Date. Such payment of Accelerated RSU Consideration (reduced by applicable Tax withholding) shall be made either (i) through the payroll systems of the Company or applicable Affiliate thereof to each former holder entitled to Accelerated RSU Consideration (other than any such holder with respect to which the Company and its Affiliates have no Tax withholding obligations), or (ii) in cash by the Company or applicable Affiliate thereof to each former holder entitled to Accelerated RSU Consideration with respect to which the Company and its Affiliates have no Tax withholding obligations. Conversion from United States Dollars to the currency used for the Company or applicable Affiliate shall follow established Company policy or practice. |
| (e) | As soon as practicable following the Effective Date, the Acquirer shall grant to each former holder of a cancelled Company RSU Award who is an Acquirer Stock Plan Eligible Participant an Acquirer RSU Award with respect to a number of whole Acquirer Shares (rounded down to the nearest whole number) equal to the product obtained by multiplying (i) the number of RSUs subject to the cancelled Company RSU Award that remained unvested in accordance with the terms of the Applicable RSU Agreement as of immediately |
3
| prior to the Effective Date after deducting the number of Accelerated RSUs, if any, that were subject to such Company RSU Award by (ii) the Award Exchange Ratio. Each Acquirer RSU Award granted pursuant to this Clause 1.2(e) shall have the same vesting schedule as applied under the corresponding cancelled Company RSU Award to RSUs other than the Accelerated RSUs, if any. For the purposes of such vesting schedule, the holder of an Acquirer RSU Award granted pursuant to this Clause 1.2(e) will be credited with the period of employment or other service relationship of such holder with the Company or an Affiliate thereof during the vesting period of the corresponding cancelled Company RSU Award through the Effective Date, in addition to such holder’s continued employment or other service relationship with the Acquirer, the Company or an Affiliate thereof following the Effective Date. |
| (f) | Notwithstanding the foregoing, if either (i) a cancelled Company RSU Award was subject to the Law of a non-U.S. jurisdiction and the Acquirer reasonably determines that the cancelled Company RSU Award may not be replaced with an Acquirer RSU Award under the Law of such non-U.S. jurisdiction, or (ii) the former holder of a cancelled Company RSU Award is not an Acquirer Stock Plan Eligible Participant, then, in either such case, the Acquirer shall cause the grant to such former holder of a cash-based incentive award having such terms as the Acquirer reasonably determines will provide value substantially equivalent to the Acquirer RSU Award that would otherwise have been granted to such former holder. |
| 1.3 | Treatment of Company PSU Awards. |
| (a) | No outstanding Company PSU Award (whether vested or unvested) shall be assumed by or continued in effect by the Acquirer pursuant to or in connection with the transactions contemplated by this Agreement. Upon the Effective Date, pursuant to the terms of the Company Share Plans and subject to the terms and conditions of this Agreement, each Company PSU Award that is outstanding immediately prior to the Effective Date shall be (by virtue of the Acquisition and without any action on the part of any person) cancelled and extinguished without payment of consideration therefor, except as otherwise provided in accordance with Clause 1.3(c) of this Schedule 1. Prior to the Effective Date, the Company shall take all actions required to enable the cancellation of each Company PSU Award in accordance with the preceding sentence. |
| (b) | Prior to the Effective Date, the Company shall, with respect to each Company PSU Award that is outstanding and unvested in accordance with the terms of the Company PSU Grant Notice and award agreement evidencing such Company PSU Award (together, the “Applicable PSU Agreement”): |
| (i) | determine the number of units (each a “PSU”) subject to such Company PSU Award that would be earned in accordance with the terms of the Applicable PSU Agreement upon the completion of the “Performance Period” (as defined in the Applicable PSU Agreement) if the Company PSU Award then remained outstanding and the holder thereof remained in a continuous employment or other service relationship with the Company or an Affiliate thereof through completion of such Performance Period, assuming for this purpose that the number of earned PSUs would be the greater of (x) the “Target Number of PSUs” set forth in the Applicable PSU Agreement as of immediately prior to the Effective Date or (y) the number of PSUs that would have been earned based on actual performance through the earlier of December 31, 2021 or the Effective Date with respect to any |
4
| EBITDA-based performance goals for calendar year 2021, and assuming the target level of performance for any EBITDA-based performance goals for calendar years 2022 and 2023 and assuming the target level performance for any total shareholder return-based goals as described in the Applicable PSU Agreement for the Performance Period described in the Applicable PSU Agreement; and |
| (ii) | take all actions required to cause a number of PSUs equal to one-third (1/3) of the number of PSUs determined in accordance with Clause 1.3(b)(i) to become vested in full (each an “Accelerated PSU”) immediately prior to the Effective Date if, and only if, the Effective Date occurs on or before December 31, 2021 and the continuous employment or other service relationship of the holder of such Company PSU Award with the Company or an Affiliate thereof has not terminated prior to the Effective Date. |
| (c) | If the Effective Date occurs on or before December 31, 2021, the Company shall not settle the Accelerated PSUs subject to a Company PSU Award by issuing Company Shares to the holder thereof. Rather, provided that the Effective Date occurs on or before December 31, 2021, upon the Effective Date and cancellation of such Company PSU Award in accordance with Clause 1.3(a) of this Schedule 1, each Accelerated PSU shall be converted automatically and entirely into the right of the former holder thereof to receive an amount of consideration (the “Accelerated PSU Consideration”) in cash equal to the product obtained by multiplying (i) the number of Accelerated PSUs subject to such cancelled Company PSU Award by (ii) the Per Share Consideration Cash Value, in each case to be paid in accordance with Clause 1.3(d) of this Schedule 1. |
| (d) | The Acquirer shall cause the applicable Accelerated PSU Consideration to be paid to each former holder of an Accelerated PSU on or prior to the first payroll date of the Company or applicable Affiliate thereof occurring at least 10 business days after the Effective Date. Such payment of Accelerated PSU Consideration (reduced by applicable Tax withholding) shall be made either (i) through the payroll systems of the Company or applicable Affiliate thereof to each former holder entitled to Accelerated PSU Consideration (other than any such holder with respect to which the Company and its Affiliates have no Tax withholding obligations), or (ii) in cash by the Company or applicable Affiliate thereof to each former holder entitled to Accelerated PSU Consideration with respect to which the Company and its Affiliates have no Tax withholding obligations. Conversion from United States Dollars to the currency used for the Company or applicable Affiliate shall follow established Company policy or practice. |
| (e) | As soon as practicable following the Effective Date, the Acquirer shall grant to each former holder of a cancelled Company PSU Award who is an Acquirer Stock Plan Eligible Participant an Acquirer RSU Award with respect to a number of whole Acquirer Shares (rounded down to the nearest whole number) equal to the product obtained by multiplying (i) the number of PSUs determined with respect to such cancelled Company PSU Award in accordance with Clause 1.3(b)(i) of this Schedule 1 that remained unvested in accordance with the terms of the Applicable PSU Agreement as of immediately prior to the Effective Date after deducting the number of Accelerated PSUs, if any, that were subject to such Company PSU Award by (ii) the Award Exchange Ratio. Each Acquirer RSU Award granted pursuant to this Clause 1.3(e) shall vest based upon the holder’s continued employment or other service relationship in three (3) substantially equal annual installments (or two (2) substantially equal installments if a portion of the PSUs subject to the corresponding Company PSU Award became Accelerated PSUs in accordance with |
5
| Clause 1.3(b)(ii) of this Schedule 1) upon the 1st day of January immediately following the last day of each calendar year contained in the Performance Period described in the applicable Company PSU Grant Notice (or the final two calendar years of such Performance Period if a portion of the PSUs subject to the corresponding Company PSU Award became Accelerated PSUs in accordance with Clause 1.3(b)(ii) of this Schedule 1), but without regard to the performance goals to which the Company PSU Award was subject prior to the Effective Date. For the purposes of such vesting schedule, the holder of an Acquirer RSU Award granted pursuant to this Clause 1.3(e) will be credited with the period of employment or other service relationship of such holder with the Company or an Affiliate thereof during the Performance Period of the corresponding cancelled Company PSU Award through the Effective Date, in addition to such holder’s continued employment or other personal service relationship with the Acquirer, the Company or an Affiliate thereof following the Effective Date. |
| (f) | Notwithstanding the foregoing, if either (i) a cancelled Company PSU Award was subject to the Law of a non-U.S. jurisdiction and the Acquirer reasonably determines that the cancelled Company PSU Award may not be replaced with an Acquirer RSU Award under the Law of such non-U.S. jurisdiction, or (ii) the former holder of a cancelled Company PSU Award is not an Acquirer Stock Plan Eligible Participant, then the Acquirer shall cause the grant to such former holder of a cash-based incentive award having such terms as the Acquirer reasonably determines will provide value substantially equivalent to the Acquirer RSU Award that would otherwise have been granted to such former holder. |
| 1.4 | Treatment of MSP. |
| (a) | As soon as practicable following the date of this Agreement, the Company shall take all actions required to cause, effective as of the date of this Agreement, all offerings under the MSP as to which an acquisition date has not previously occurred to be terminated without the purchase of Company Shares and to suspend the MSP so that no further offerings commence under the MSP prior to the Effective Date. Further, prior to the Effective Date, the Company shall take all actions required to cause (i) the vesting in full, as of immediately prior to the Effective Date, of all outstanding and non-forfeited interests of MSP participants in “Matching Shares” (as defined in the MSP) as to which the applicable “Blocking Period” (as defined in the MSP) has not previously lapsed, and (ii) the issuance for the benefit of the applicable MSP participants of Company Shares with respect to such vested Matching Shares (if such Company Shares are not then otherwise issued and outstanding). |
| (b) | Upon the Effective Date, each participant in the MSP who then continues to hold Company Shares acquired pursuant to the MSP shall be entitled to receive with respect to such Company Shares the Consideration pursuant to the Acquisition upon the same terms and conditions as Company Shareholders generally. Notwithstanding the foregoing, if the delivery of Share Consideration is subject to the Law of a non-U.S. jurisdiction and the Acquirer reasonably determines that such Share Consideration may not be delivered under the Law of such non-U.S. jurisdiction, then, in lieu of such Share Consideration, the Acquirer shall provide for payment to holders in such non-U.S. jurisdiction of the fair market value of such Share Consideration determined by the average closing price per Acquirer Share reported on the Nasdaq Stock Market on the 10 trading days immediately preceding the Effective Date. |
6
| 1.5 | Termination of Company Share Plans. |
On or prior to the Effective Date, the Company Board (or an authorized committee thereof) shall take all actions necessary to ensure that (a) the Company Share Plans shall be terminated as of the Effective Date (including by amending such Company Share Plans), (b) the provisions in any other plan or agreement providing for the issuance, transfer or grant of any interests in Company Shares shall terminate as of the Effective Date, and (c) no holder of a Company Option, Company RSU Award, Company PSU Award or any participant in any Company Share Plan or other plan or contract shall have any right thereunder to acquire any Company Shares after the Effective Date.
| 1.6 | Withholding Taxes. |
The Company, and on its behalf Acquirer, shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any current or former holder of an interest under a Company Share Plan such Tax amounts as may be required to be deducted or withheld therefrom under any Tax Law. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.
| 1.7 | Foreign Exchange. |
All cash payments by the Acquirer pursuant to this Schedule 1, including the Acquirer’s determination of the fair market value of Acquirer Shares as of any date for purposes of payments to be made pursuant to this Schedule 1, will be determined in United States Dollars. The Acquirer will not be liable for changes in the value of such payments made in local currencies as a result of foreign exchange variations.
| 1.8 | No Third-Party Beneficiaries. |
The provisions of this Schedule 1 are solely for the benefit of the parties to this Agreement, and no holder of an interest in any Company Share Plan (including any beneficiary or dependent thereof) shall be regarded for any purpose as a third-party beneficiary of this Agreement, and no provision of this Schedule 1, express or implied, is intended to or shall confer upon any such persons any right, benefit or remedy of any nature whatsoever under or by reason of the provisions of this Schedule 1.
7
Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT (the “Amendment”) to the Employment Agreement (as defined below) is made this 25th day of October 2021, by and between MKS Instruments, Inc., a Massachusetts Corporation (“MKS”), and James A. Schreiner (“Employee”).
WHEREAS, MKS and Employee are parties to an employment agreement dated September 16, 2019 (the “Employment Agreement”); and
WHEREAS, pursuant to Section 13 of the Employment Agreement, MKS and Employee wish to modify certain provisions of the Employment Agreement relating to Employee’s job title, base salary and terms of severance and to document Employee’s eligibility to earn an expatriate service bonus, in each case as described herein.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt whereof are hereby acknowledged, the parties agree as follows:
| 1. | Effective as of the closing date of the acquisition of Atotech Limited by MKS (the “Closing Date”), Section 1 to the Employment Agreement is deleted and replaced with the following: |
Employment. The Company is employing Employee on an at-will basis in the position of Senior Vice President and Chief Operating Officer of the Atotech Division of the Company. Employee agrees to comply with the Company’s policies.
| 2. | Effective as of the Closing Date, Section 4(a) to the Employment Agreement is deleted and replaced with the following: |
Base Salary. The Company will pay Employee base salary at the rate of $465,000 (the “Base Salary”), in accordance with the Company’s normal payroll practices. The Company may review and adjust the amount of the Base Salary from time to time in its sole discretion.
| 3. | Effective as of the Closing Date, a new Section 4(g) is added to the Employment Agreement as follows: |
Expatriate Service Bonus. Within thirty days following Employee’s return to the United States following the completion of Employee’s two-year term of expatriate service (or such longer term of service as may be mutually agreed by the Company and Employee following the date hereof) as the Senior Vice President and Chief Operating Officer of the Atotech Division of the Company, Employee shall receive an expatriate service bonus in an amount equal to $500,000, which bonus shall be paid in a single lump sum. For the avoidance of doubt, this Expatriate Service Bonus shall become payable only after Employee has completed at least two years of the expatriate assignment and shall not be payable to Employee upon an earlier return by him to employment in the United States, unless the Company directed that he return in less than two years.
| 4. | Effective as of the Closing Date, Section 6(f) to the Employment Agreement is deleted and replaced with the following: |
Eligibility for Enhanced Severance Compensation. Employee will become eligible for the “Enhanced Severance Compensation,” as described below, instead of Ordinary Severance Compensation under Section 6(d) and (e) above or under any other program or policy of the Company, if and only if all of the following conditions are satisfied: (i) (A) the Company terminates Employee’s employment without “Cause” (as defined below) or Employee resigns for “Good Reason” (as defined below) and the Employment End Date is within 24 months after the effective date of a Change in Control (as defined below) or (B) Employee resigns for Expatriate Service Good Reason (as defined below); (ii) Employee has complied with and continues to comply with all of Employee’s obligations under this Employment Agreement and the Confidential Information Agreement; and (iii) Employee executes, provides to the Company within 45 days after the Employment End Date and does not thereafter revoke or attempt to revoke, a General Release Agreement, as defined above. The Company’s good-faith determination that one or more of the conditions listed above has not been satisfied will be binding and conclusive.
| 5. | Effective as of the date of this Amendment, the following paragraph shall be added to the Employment Agreement as Section 6(l): |
“Expatriate Service Good Reason.” “Expatriate Service Good Reason” for Employee to resign will exist if, without Employee’s express written consent, the Company fails to return Employee to the position of Senior Vice President and Chief Operating Officer of the Company or a position of at least substantially similar duties and authority within six months after his return to the United States following the completion of Employee’s two-year term of expatriate service (or such longer term of service as may be mutually agreed by the Company and Employee following the date hereof) as the Senior Vice President and Chief Operating Officer of the Atotech Division of the Company, which failure the Company and Employee agree would constitute a material reduction of Employee’s position, duties or responsibilities. Notwithstanding the foregoing, the action described above will not constitute Good Reason unless: (A) Employee, within 30 days after he or she learns, or with reasonable diligence should have learned, of such action, delivers to the Company written notice identifying the action as Expatriate Service Good Reason and demanding its correction; (B) the Company fails to correct such event within 30 days after receipt of such notice; and (C) Employee resigns for Expatriate Service Good Reason within 90 days after the date Employee learned, or with reasonable diligence should have learned, of such action. For the avoidance of doubt, this Expatriate Service Good Reason is available only after Employee has completed at least two years of the expatriate assignment and does not apply upon an earlier return by him to employment in the United States, unless the Company directed that he return in less than two years.
| 6. | Except as modified in paragraphs 1-5 above, the Employment Agreement remains unchanged. |
In witness whereof, the parties hereto have executed, in the Commonwealth of Massachusetts, this Amendment as a sealed instrument, as of the day, month and year first written above.
| MKS INSTRUMENTS, INC. | ||
| By: | /s/ Jennifer J. Reilly | |
| Name: Jennifer J. Reilly | ||
| Title: Senior Vice President, | ||
| Chief Human Resources Officer | ||
| /s/ James A. Schreiner |
| James A. Schreiner |