EXHIBIT 99.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of July 1, 2005 ("Employment Agreement"), by and
between MKS Instruments, Inc., a Massachusetts Corporation (the "Corporation"),
and Xxxxxx X. Xxxxxxx, of Sudbury, MA (the "Employee").
WHEREAS, the Corporation and the Employee entered into an Amended and Restated
Employment Agreement dated July 30, 2004 (the "Original Employment Agreement");
and
WHEREAS, the Corporation intends to provide certain retiree medical benefits to
the Employee as more particularly set forth herein; and
WHEREAS, the Corporation and the Employee intend that this Employment Agreement
shall supercede the Original Employment Agreement and that as of the date
hereof, the Original Employment Agreement shall be of no further force and
effect;
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the Corporation and the Employee hereby agree as follows:
(1) Term of Employment: The Corporation hereby employs the Employee, and
the Employee hereby accepts employment with the Corporation, for a period
commencing as of July 1, 2005 and continuing from month to month thereafter
until terminated as provided in this Section (1). Either the Corporation or the
Employee may terminate the employment of the Employee under this Employment
Agreement at any time after July 1, 2005 by giving written notice to the other
party stating its or his election to terminate the employment of the Employee
under this Employment Agreement. The employment of the Employee under this
Employment Agreement shall terminate thirty (30) days after the date of receipt
by the other party of such notice; provided, however, that the employment of the
Employee under this Employment Agreement is subject to prior termination as
hereinafter provided in Section (5). Notwithstanding the above, the Corporation
shall be entitled, at its sole discretion, to waive the obligation of the
Employee to continue to work during the thirty (30) day notice period.
(2) Capacity: The Employee shall serve as Vice President and Chief
Financial Officer of the Corporation and shall have such authority and will
perform such duties as are delegated to him by the CEO & President of the
Corporation or his designee that are consistent with this position and his
training and experience for the term of employment under this Employment
Agreement.
(3) Extent of Services: During the term of employment of the Employee
under this Employment Agreement, the Employee shall devote his full time to, and
use his best efforts in the furtherance of, the business of the Corporation and
shall not engage in any other business activity, whether or not such business
activity is pursued for gain or any other pecuniary advantage, without the prior
written consent of the Corporation.
(4) Compensation: In consideration of the services to be rendered by the
Employee under this Employment Agreement, the Corporation agrees to pay, and the
Employee agrees to accept, the following compensation:
(a) Base Salary: A base salary at the rate of two hundred forty
thousand and eleven dollars ($240,011) per year for the term of employment of
the Employee under this Employment Agreement. The base salary shall be payable
in equal biweekly installments, subject to usual withholding requirements, and
will be subject to any changes in pay policies that may be established by the
Corporation. The base salary will be reviewed regularly according to the
practices of the Corporation. No overtime pay will be paid to the Employee by
the Corporation.
(b) Incentive: For each calendar year of the corporation during
the term of employment of the Employee under this Employment Agreement, the
Employee shall be entitled to participate in a Management Incentive Program
pursuant to the terms of which the Employee may receive compensation in addition
to his base salary if the Corporation attains its consolidated financial goals
during such calendar year of the Corporation. The "targeted" additional
compensation goal for the Employee shall be 40% of his base annual earnings. The
Management Incentive Program, including the consolidated financial goals
established by the Corporation for the calendar year and the formula to be used
to determine the payment of amounts under the Management Incentive Program, will
be communicated to the Employee in writing prior to the beginning of each
calendar year of the Corporation. If there shall be any disagreement between
the Corporation and the Employee as to the calculation of the Management
2
Incentive Bonus in any calendar year of the Corporation during the term of
employment of the Employee under this Employment Agreement, the decision of the
independent Public Accounting firm of the corporation as to the amount of the
Management Incentive Bonus of the Corporation shall be conclusive and binding on
the Corporation and the Employee. The Employee shall have no right to inspect
any of the books, papers or records of the Corporation, except that the Employee
shall be entitled to inspect any certificate of such independent public
accounting firm as to the calculation of the Management Incentive Bonus of the
Corporation in any calendar year of the Corporation during the term of
employment of the Employee under this Employment Agreement. Incentive payments
shall be payable to the Employee on or before March 31 after the end of each
calendar year of the Corporation during the term of employment of the Employee
under this Employment Agreement. The Employee will not receive any payment under
the Management Incentive Program for any calendar year in which the Employee is
not actively employed on the last day of that calendar year.
(c) MKS Instruments Profit Sharing and Retirement Savings Plan: The
Employee shall be eligible to become a participant under the profit sharing plan
of the Corporation on fulfilling the conditions set forth in the MKS Instruments
Profit Sharing and Retirement Savings Plan.
(d) Vacation: The Employee shall be entitled to an annual vacation
leave of twenty-five (25) days at full pay during each year of this Employment
Agreement, subject to the Employee arranging such vacation so as not to affect
adversely the ability of the Corporation to transact its necessary business.
(e) Life Insurance: The Corporation shall provide, and pay all of
the premiums for, term life insurance for the Employee during the term of
employment of the Employee under this Employment Agreement in accordance with
the term life insurance plan of the Corporation.
(f) Medical/Dental Insurance: The Corporation shall provide group
medical/dental insurance for the Employee under the plans of the Corporation
applicable to the Employee during the term of employment of the Employee under
this Employment Agreement.
3
(g) Retirement Benefits: The Employee shall be eligible to
participate in supplemental retirement benefits according to the terms and
conditions set forth in Appendix A of this Employment Agreement.
(h) Other Benefits: The Corporation shall provide other benefits for
the Employee under the plans of the Corporation applicable to the Employee
during the term of employment of the Employee under this Employment Agreement.
(5) Termination: The employment of the Employee under this Employment
Agreement shall terminate:
(a) On the expiration of the period of employment as provided in
Section (1).
(b) Upon the death of the Employee.
(c) At the election of the Corporation (i) if the Employee shall
refuse to perform the services required of him under this Employment Agreement,
or (ii) if the Employee shall fail, or refuse, to perform the other covenants
and agreements required of him under this Employment Agreement, or (iii) for
"cause", which term shall mean conviction for the commission of a felony,
willful failure by the Employee to perform his responsibilities to the
Corporation, or willful misconduct by the Employee.
(6) Payment Upon Termination:
(a) If the employment of the Employee is terminated by the
Corporation other than pursuant to Section 5 (c) hereof, the Corporation (i)
shall continue to pay Employee the Base Salary in effect immediately prior to
the time of such termination for six (6) months after the last full day Employee
works under this Agreement at its normal payroll payment dates; (ii) shall
reimburse Employee for the premiums (if any) he pays for continuation of life
insurance should he elect to exercise the conversion feature of the
Corporation's group life policy then in effect for six (6) months after the last
full day Employee works under this Agreement; and (iii) continue to pay for such
dental/vision insurance as Employee may then receive for six (6) months after
the last full day Employee works under this Agreement, and (iv) to the extent
the Employee is eligible pursuant to Section 6(e) hereof, shall provide Retiree
Medical Benefits (such payments of Base Salary and payments or reimbursements of
insurance premiums and Retiree
4
Medical Benefits by the Corporation, the "Severance Benefits).Employee agrees
that, (a) his eligibility for or entitlement to the foregoing Severance Benefits
shall be subject to Employee's execution and delivery of a release, in such form
as the Corporation may require, that, among other things, may be a general
release of any and all claims Employee may have against Employer, (b) Employee
shall have no rights or remedies in the event of his or her termination by the
Corporation without Cause and other than as a result of Disability or death
except for those set forth in this Agreement and (c) Employee's right to receive
any of the foregoing Severance Benefits shall be expressly conditioned upon
Employee's full compliance with the Confidentiality Agreement, pursuant to its
continued effectiveness, and Employee's full cooperation with the Corporation in
both fulfilling the terms of this Agreement and the Confidentiality Agreement
and otherwise performing such actions as the Corporation may request in
transitioning Employee from his employment with the Corporation and upon any
breach of either such agreement by Employee, Employee's rights to any continued
payment of Severance Benefits shall immediately cease and Employee shall be
obligated to repay to the Corporation all amounts paid by the Corporation for
the Severance Benefits except for the amount of $1,000, which Employee shall be
entitled to retain.
(b) If the employment of the Employee is terminated by death, the
Corporation shall pay to the estate of the Employee the compensation which would
otherwise be payable to the Employee at the end of the month in which his death
occurs.
(c) In the event the employment of the Employee is terminated at the
election of the Corporation pursuant to Section (5) (c) hereof, the Employee
shall only be entitled to his base salary through the last day of actual
employment or the date of termination, whichever is earlier.
(d) In the event the Employee voluntarily terminates his employment
on the expiration of the period of employment as provided in Section (1), the
Employee shall not be entitled to any compensation, and the Corporation shall
have no obligation to pay the Employee any compensation, except as is provided
in this Employment Agreement.
5
(e) Retiree Medical Benefits.
(i) Eligibility. The Employee's eligibility to receive the retiree
medical benefits set forth hereunder (the "Retiree Medical Benefits") is
contingent upon (a) the Employee's compliance with all of the material terms and
conditions contained in this Employment Agreement, (b) the Employee's execution,
upon termination of employment (except in the case of death), of a separation
agreement that releases the Corporation from any liabilities that may have
arisen from employment or termination of employment with the Corporation, and
(c) the occurrence of any of the following:
(A) the Employee retires from the Corporation when Employee
is at least 62 years old, provided that, if Employee is under 65 at the time of
such retirement, the terms of the benefits shall be subject to subsection
6(e)(iii) hereof; or
(B) the Employee is terminated by the Corporation other than
for "cause" or if Employee terminates his employment for Good Reason (as defined
in Appendix A of this Employment Agreement within 3 years of a change in control
(as defined in Appendix A of this Employment Agreement)); provided that if the
Employee is eligible at any time to receive comparable medical benefits from any
subsequent employer, then the Employee shall not be eligible to receive the
Retiree Medical Benefits during the time that he is eligible to receive such
benefits from a subsequent employer, but will be eligible to receive the Retiree
Medical Benefits thereafter; or
(C) prior to retirement, the Disability (which shall mean
disability as defined in Section 216(i)(1) of the Social Security Act) or death
of the Employee.
If the Employee meets the eligibility criteria described above, he shall
be considered an "Eligible Employee" hereunder. The Spouse of the Eligible
Employee ("Eligible Spouse") shall also receive Medical Retirement Benefits. The
Employee shall not be eligible for Medical Retirement Benefits if Employee is
terminated by the Corporation for "cause".
6
(ii) Benefit Period and Types of Coverage. Eligible Employees and
Eligible Spouses will each receive Retiree Medical Benefits for their respective
lifetimes. During the 18 months immediately following termination of employment
from the Corporation, Retiree Medical Benefits will be provided to the Eligible
Employee and Eligible Spouse through the Corporation's COBRA medical plan.
Thereafter, the Corporation shall purchase fully insured non-group medical plans
for the Eligible Employee and Eligible Spouse. The insurance plans purchased for
the Eligible Employee and/or Eligible Spouse who are less than 65 years old
shall be a high benefit plan comparable to the Corporation's group medical plan
selected by the Employee immediately prior to termination of employment. The
insurance plans purchased for the Eligible Employee and/or Eligible Spouse who
are 65 or more years old shall be Blue Cross/ Blue Shield's Medex Gold or other
comparable high benefit medical plan.
(iii) Cost. The Eligible Employee (or surviving Eligible Spouse)
will be required to contribute a fixed annual amount of $1,500 for each year
that he (or surviving Eligible Spouse) remains eligible for Retiree Medical
Benefits. In addition to such $1,500, if the Employee became an Eligible
Employee pursuant to Section (a)(i) above, then in addition to the $1,500, the
Employee (or surviving Eligible Spouse) shall be required to pay a portion of
the expenses of the Retiree Medical Benefit as follows, based upon the age of
the Eligible Employee:
Percentage of Retiree Medical Benefit Costs to be Paid
Age by Employee (or surviving spouse) for Such Year
---- ------------------------------------------------------
62 30%
63 20%
64 10%
65 or more 0%
(7) Trade Secrets: The Employee covenants and agrees that he will
communicate to the Corporation, and will not divulge or communicate to any other
person, partnership, corporation or other entity without the prior written
consent of the Corporation, any trade secrets of the Corporation or confidential
information relating to the business of the Corporation or any one connected
with the Corporation, and that such trade secrets and confidential information
shall not be used by the Employee either on his own behalf or for the benefit of
others or disclosed by the Employee to any one, except to the Corporation,
during or after the term of employment of the Employee under this Employment
Agreement.
7
(8) Inventions and Patents:
(a) The Employee shall make prompt full disclosure in writing to the
Corporation of all inventions, improvements and discoveries, whether or not
patentable, which the Employee conceives, devises, makes, discovers, develops,
perfects or first reduces to practice, either alone or jointly with others,
during the term of employment of the Employee under this Employment Agreement,
which relate in any way to the fields, products or business of the Corporation,
including development and research, whether during or out of the usual hours of
work or on or off the premises of the Corporation or by use of the facilities of
the Corporation or otherwise and whether at the request or suggestion of the
Corporation or otherwise (all such inventions, improvements and discoveries
being hereinafter called the "Inventions"), including any Inventions, whether or
not patentable, conceived, devised, made, discovered, developed, perfected or
first reduced to practice by the Employee after the employment of the Employee
under this Employment Agreement is terminated if the Inventions were conceived
by the Employee during the term of employment of the Employee under this
Employment Agreement. Any Inventions, whether or not patentable, conceived,
devised, made, discovered, developed, perfected or first reduced to practice by
the Employee within six (6) months of the date of termination of the employment
of the Employee under this Employment Agreement shall be conclusively presumed
to have been conceived during the term of employment of the Employee under this
Employment Agreement.
(b) The Employee agrees that the Inventions shall be the sole and
exclusive property of the Corporation.
(c) The Employee agrees to assist the Corporation and its nominees
in every reasonable way (entirely at its or their expense) to obtain for the
benefit of the Corporation letters patent for the Inventions and trademarks,
trade names and copyrights relating to the Inventions, and any renewals,
extensions or reissues thereof, in any and all countries, and agrees to make,
execute, acknowledge and deliver, at the request of the Corporation, all written
applications for letters patent, trademarks, trade names and copyrights relating
to the Inventions and any renewals, extensions or reissues thereof, in any and
all countries, and all documents with respect thereto, and
8
all powers of attorney relating thereto and, without further compensation, to
assign to the Corporation or its nominee all the right, title and interest of
the Employee in and to such applications and to any patents, trademarks, trade
names or copyrights which shall thereafter issue on any such applications, and
to execute, acknowledge and deliver all other documents deemed necessary by the
Corporation to transfer to or vest in the Corporation all of the right, title
and interest of the Employee in and to the Inventions, and to such trademarks,
trade names, patents and copyrights together with exclusive rights to make, use,
license and sell them throughout the world.
(d) The Employee agrees that even though his employment is
terminated under this Employment Agreement he will, at any time after such
termination of employment, carry out and perform all of the agreements of
Subsections (8) (a) and (8) (c) above, and will at any time and at all times
cooperate with the Corporation in the prosecution and/or defense of any
litigation which may arise in connection with the Inventions, provided, however,
that should such services be rendered after termination of employment of the
Employee under this Employment Agreement, the Employee shall be paid reasonable
compensation on a per diem basis.
(e) The Employee agrees to make and maintain adequate and current
written records of all Inventions in the form of notes, sketches, drawings, or
reports relating thereto, which records shall be and remain the property of, and
available to, the Corporation at all times.
(f) The Employee agrees that he will, upon leaving the employment of
the Corporation, promptly deliver to the Corporation all originals and copies of
disclosures, drawings, prints, letters, notes, and reports either typed,
handwritten or otherwise memorialized, belonging to the Corporation which are in
his possession or under his control and the Employee agrees that he will not
retain or give away or make copies of the originals or copies of any such
disclosures, drawings, prints, letters, notes or reports.
(9) Property of Corporation: All files, records, reports, documents,
drawings, specifications, equipment, and similar items relating to the business
of the Corporation, whether prepared by the Employee or otherwise coming into
his possession, shall remain the exclusive property of the Corporation and shall
not be removed by the Employee from the premises of the Corporation under any
circumstances whatsoever
9
without the prior written consent of the Corporation.
(10) Non-Competition:
(a) During the term of employment of the Employee under this
Employment Agreement, and during a period of one (1) year after termination of
employment of the Employee under this Employment Agreement if such termination
of employment was caused by the Corporation, (or by the Employee for Good
Reason), or two (2) years after termination of employment of the Employee under
this Employment Agreement if such termination of employment was caused by the
Employee (other than for Good Reason), (i) the Employee shall not engage, either
directly or indirectly, in any manner or capacity, in any business or activity
which is competitive with any business or activity conducted by the Corporation;
(ii) the Employee shall not work for or employ, directly or indirectly, or cause
to be employed by another, any person who was an employee, officer or agent of
the Corporation or of any of its subsidiaries at any time during a period of
twelve (12) months prior to the termination of the employment of the Employee
under this Employment Agreement nor shall the Employee form any partnership
with, or establish any business venture in cooperation with, any such person
which is competitive with any business or activity of the Corporation; and (iii)
the Employee shall not have any material financial interest, or participate as a
director, officer, 1% stockholder, partner, employee, consultant or otherwise,
in any corporation, partnership or other entity which is competitive with any
business or activity conducted by the Corporation.
(b) The Corporation and the Employee agree that the services of the
Employee are of a personal, special, unique and extraordinary character, and
cannot be replaced by the Corporation without great difficulty, and that the
violation by the Employee of any of his agreements under this Section (10) would
damage the goodwill of the Corporation and cause the Corporation irreparable
harm which could not reasonably or adequately be compensated in damages in an
action at law, and that the agreements of the Employee under this Section (10)
may be enforced by the Corporation in equity by an injunction or restraining
order in addition to being enforced by the Corporation at law.
(c) In the event that this Section (10) shall be determined by any
court of competent jurisdiction to be unenforceable by reason of its extending
for too long a
10
period of time or over too great a range of activities, it shall be interpreted
to extend only over the maximum period of time or range of activities as to
which it may be enforceable.
(11) Non-Solicitation: The Employee shall not, on his own behalf or in the
service or on behalf of others, directly or indirectly:
(a) solicit, entice or induce any Customer (as defined below) to
become a customer, distributor or supplier of any other person, firm or
corporation with respect to products and/or services sold or under development
by the Corporation during his employment at the Corporation, or to cease doing
business with the Corporation, and the Employee shall not contact or approach
any such person, firm or corporation for such purpose or authorize or knowingly
approve the taking of such actions by any other person for a period of two (2)
years from the date of the termination of employment of the Employee under
this Employment Agreement; or
(b) solicit, recruit or hire (or attempt to solicit, recruit or
hire) any employee, officer or agent of the Corporation or contractor engaged by
the Corporation (whether or not such person is a full-time employee or whether
or not such employment is pursuant to a written agreement or at-will) to
terminate such person's employment or engagement with the Corporation or work
for a third party other than the Corporation for a period of two (2) years
after the date of the termination of employment of the Employee under this
Employment Agreement, or engage in any activity that would cause such employee
or contractor to violate any agreement with the Corporation, nor shall the
Employee form any partnership with, or establish any business venture in
cooperation with, any such person.
(c) For the purposes of this Section (11), a "Customer" means any
person or entity which as of the date of the termination of employment of the
Employee under this Employment Agreement was, within two (2) years prior to such
time, a customer, distributor or supplier of the Corporation, and references to
the Corporation shall be deemed to include any affiliate or subsidiary of the
Corporation.
(12) Notice: Any and all notices under this Employment Agreement shall be
in writing and, if to the Corporation, shall be duly given if sent to the
Corporation by registered or certified mail, postage prepaid, return receipt
requested, at the address of
11
the Corporation set forth under its name below or at such other address as the
Corporation may hereafter designate to the Employee in writing for the purpose,
and, if to the Employee, shall be duly given if delivered to the Employee by
hand or if sent to the Employee by registered or certified mail, postage
prepaid, return receipt requested, at the address of the Employee set forth
under his name below or at such other address as the Employee may hereafter
designate to the Corporation in writing for the purpose.
(13) Assignment: The rights and obligations of the Corporation under this
Employment Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Corporation. The rights and obligations of the
Employee under this Employment Agreement shall inure to the benefit of, and
shall be binding upon, the heirs, executors and legal representatives of the
Employee.
(14) Entire Agreement and Severability:
(a) This Employment Agreement, and the attached Appendix A,
supersedes any and all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of the Employee by the Corporation
and contains all of the covenants and agreements between the parties with
respect to such employment. Each party to this Employment Agreement acknowledges
that no representations, inducements, promises or agreements, oral or otherwise,
have been made by any party, or any one acting on behalf of any party, which are
not embodied herein, and that no other agreement, statement or promise not
contained in this Employment Agreement, and the attached Appendix A, shall be
valid and binding. Any modification of this Employment Agreement, and the
attached Appendix A, will be effective only if it is in writing signed by both
parties to this Employment Agreement.
(b) If any provision in this Employment Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(c) All pronouns used herein shall include the masculine, feminine,
and neuter gender as the context requires.
12
(15) Governing Law: This Employment Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts
applicable to contracts made and to be performed entirely within The
Commonwealth of Massachusetts without regard to its conflict of laws principles.
(16) Arbitration. Any controversy or claim arising out of, or relating
to, this Employment Agreement, or the breach hereof shall be settled by binding
arbitration in accordance with the American Arbitration Association National
Rules for Resolution of Employment Disputes then in effect in the Commonwealth
of Massachusetts, and judgment upon any arbitration award may be entered into in
any court having jurisdiction thereof. The arbitration shall be held in
Wilmington, Massachusetts. The Company shall bear the cost of any such
arbitration.
IN WITNESS WHEREOF, the parties hereto have executed, in The Commonwealth of
Massachusetts, this Employment Agreement as a sealed instrument, all as of the
day, month and year first written above.
MKS INSTRUMENTS, INC.
By: /s/ Xxx Xxxxxxxxxxxx
---------------------------
CEO & President
00 Xxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Legal Signature
Xxxxxx X. Xxxxxxx
Address:
00 Xxxxxx Xxxx
----------------------------
Xxxxxxx, XX 00000
----------------------------
13
_____RONALD XXXXXXX
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.
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 in the Internal Revenue Bulletin 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 Sections 5.1(b), 5.2(b)
or 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
or die prior to complete distribution of Employee's benefits under Section
5.1(b) or 5.2(b), 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.
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
Corporation's capital stock entitled to vote in the election of directors;
(b) The shareholders of the Corporation approve any consolidation or
merger of the Corporation, other than a consolidation or merger of the
Corporation in which the holders of the common stock of the Corporation
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 Corporation approve any plan or proposal for
the liquidation or dissolution of the Corporation; or
(d) The shareholders of the Corporation approve the sale or transfer of
all or substantially all of the assets of the Corporation to parties that
are not within a "controlled group of corporations" (as defined in Code
Section 1563) in which the Corporation is a member.
2.6. "Corporation" means MKS Instruments, Inc.. 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.
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.
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
2
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.
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 disability as defined in Section
216(i)(1) of the Social Security Act (in general, the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or has lasted or can
be expected to last for a continuous period of not less than 12 months, or
blindness). Employee shall be conclusively presumed to be Permanently and
Totally Disabled upon determination that he is disabled by the Social Security
Administration.
2.15. "Retires" or "Retired" means Employee's termination of employment with the
Corporation upon or after satisfying the vesting requirements of Section 4.1.
Employee shall be deemed to have Retired with a fully vested Normal Retirement
Benefit on the earliest of the date he becomes Permanently and Totally Disabled,
the date the Corporation terminates Employee's employment with the Corporation
for any reason other than Termination for Cause, the date of Employee's death
while employed by the Corporation, or the date of Employee's qualifying
termination of employment in connection with 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. "Termination of Employment" means Termination for Cause, or Employee's
voluntary severance from employment with the Corporation for any reason other
than Retirement.
2.18. "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.
2.19. "Trust" means the Trust established pursuant to Section 10 of this
Appendix A.
3
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 if Employee Retires
from employment with the Corporation upon or after satisfying the vesting
requirements set forth in Section 4.1.
3.2. Disability: Solely for purposes of determining eligibility for benefits
payable under this Appendix A, Employee shall be deemed to be an employee of the
Corporation during any period for which Employee receives benefits under any
short term or long term disability plan of the Corporation but is not
Permanently and Totally Disabled, and during such period Employee shall continue
to accrue service for purposes of the vesting requirements set forth in
Section 4.1. If Employee remains disabled on the date he satisfies the vesting
requirements set forth in Section 4.1, he shall be deemed to have Retired from
employment from the Corporation on that date for purposes of this Appendix A.
This Section 3.2 shall have no bearing on whether Employee remains an employee
of the Corporation for any other purpose.
4. VESTING.
4.1 General: Except as provided in Sections 4.2, 4.3, 4.4, and 4.5, and subject
to Section 10.2, 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:
(a) attains age 60, and
(b) has 25 years of service with the Corporation. Employee shall have 25
years of service on the 25th anniversary of Employee's original hire date.
The foregoing notwithstanding, Employee shall be fully vested in his benefit
under this Appendix A on the earliest of the date (a) Employee dies while
employed by the Corporation, (b) Employee becomes Permanently and Totally
Disabled, (c) the Corporation terminates Employee's employment with the
Corporation for any reason other than Termination for Cause as defined in
Section 2.18 of this Appendix A, or (d) of Employee's qualifying termination of
employment in connection with a Change in Control in accordance with the
requirements of Section 7 of this Appendix A. Death benefits shall be determined
in accordance with Section 6.
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
4
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 terminates employment with the
Corporation for any reason other than death without satisfying 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 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 under Section 2.15 or Section 7 of this Appendix A.
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 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. RETIREMENT BENEFITS.
5.1. Normal Retirement Benefit. This Section 5.1 describes the Retirement
benefit payable by the Corporation in the event Employee Retires (or is deemed
to have Retired in accordance with Section 2.15 or Section 7 of this Appendix A)
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), unless Employee makes the election described in Section 5.3(b).
(a) Married on Retirement Date: If Employee is married on his Retirement Date,
Employee's Normal Retirement Benefit shall be:
50% times Final Average Pay
payable annually for the life of Employee with 50% of such amount continuing
after Employee's death to his spouse for her life. Payments shall commence as
soon as administratively practicable following Employee's Retirement Date, and
subsequent payments shall be made as soon as administrative practicable
following each anniversary of Employee's Retirement Date (payments shall not,
however, commence earlier than the date permitted by federal law). Solely for
purposes of this Section 5.1, "Spouse" shall mean the spouse to whom Employee is
married on his Retirement Date (regardless of whether that is the same spouse to
whom he is married on
5
his date of death), unless the Corporation is directed by a court of competent
jurisdiction to treat someone else as Employee's "spouse." If the spouse to whom
Employee is married on his Retirement Date does not survive Employee, no
survivor death benefit shall be payable under this Section 5.1, without regard
to whether employee is married on his date of death.
(b) Not Married on Retirement Date: If Employee is not married on his Retirement
Date, Employee's Normal Retirement Benefit shall be:
50% times Final Average Pay
payable annually for the life of Employee with a ten year certain guarantee.
Payments shall commence as soon as administratively practicable following
Employee's Retirement Date, and subsequent payments shall be made as soon as
administrative practicable following each anniversary of Employee's Retirement
Date (payments shall not, however, commence earlier than the date permitted by
federal law). If Employee dies before receiving 10 annual installments, the
Corporation shall pay a lump sum benefit to Employee's Beneficiary that is
Actuarially Equivalent to the additional benefit that would have been payable to
Employee had he continued to receive annual installments up to a total of 10
annual installments.
5.2. Early Retirement Benefit. This Section 5.2 describes the Retirement benefit
payable by the Corporation in the event Employee Retires prior to his Normal
Retirement Date. Employee may Retire from employment with the Corporation prior
to his Normal Retirement Date on the first day of any month coincident with or
next following the date he satisfies the vesting requirements of section 4.1.
The date on which Employee Retires under this Section 5.2 shall be his Early
Retirement Date. Employee's Early Retirement Benefit shall be paid in the form
of an Actuarially Equivalent lump sum, as set forth in Section 5.3(a), unless
Employee makes the election described in Section 5.3(b).
(a) Married on Early Retirement Date: If Employee is married on his Early
Retirement Date, Employee's Early Retirement Benefit shall be:
50% times Final Average Pay
multiplied by the applicable percentage as set forth in the following schedule:
Age at which 64 63 62 61 60
Early Retirement
Benefits Commence
Applicable Percentage 90% 80 60 40 20
payable annually for the life of Employee with 50% of such amount continuing
after Employee's death to his spouse for her life. Payments shall commence as
soon as administratively practicable following Employee's Early Retirement Date,
and subsequent payments shall be made as soon as administrative practicable
following each anniversary of Employee's Early Retirement Date (payments shall
not, however, commence earlier than the date permitted by
6
federal law). Solely for purposes of this Section 5.2, "Spouse" shall mean the
spouse to whom Employee is married on his Early Retirement Date (regardless of
whether that is the same spouse to whom he is married on his date of death),
unless the Corporation is directed by a court of competent jurisdiction to treat
someone else as Employee's "spouse." If the spouse to whom Employee is married
on his Early Retirement Date does not survive Employee, no survivor death
benefit shall be payable under this Section 5.2, without regard to whether
employee is married on his date of death.
(b) Not Married on Early Retirement Date: If Employee is not married on his
Early Retirement Date, Employee's Early Retirement Benefit shall be:
50% times Final Average Pay
multiplied by the applicable percentage as set forth in the following schedule:
Age at which 64 63 62 61 60
Early Retirement
Benefits Commence
Applicable Percentage 90% 80 60 40 20
payable annually for the life of Employee with a ten year certain guarantee.
Payments shall commence as soon as administratively practicable following
Employee's Early Retirement Date, and subsequent payments shall be made as soon
as administrative practicable following each anniversary of Employee's Early
Retirement Date (payments shall not, however, commence earlier than the date
permitted by federal law). If Employee dies before receiving 10 annual
installments, the Corporation shall pay a lump sum benefit to Employee's
Beneficiary that is Actuarially Equivalent to the additional benefit that would
have been payable to Employee had he continued to receive annual installments up
to a total of 10 annual installments.
5.3. Form of Payment:
(a) Unless Employee makes the election described in Section 5.3(b) below,
Employee's Normal Retirement Benefit or Early Retirement Benefit, determined in
accordance with section 5.1 or 5.2 as applicable, shall be paid in the form of a
single lump sum that is Actuarially Equivalent to such Normal Retirement Benefit
or Early Retirement Benefit. Such lump sum shall be paid as soon as
administratively practicable following Employee's retirement (or, if later, the
earliest date permitted by Federal law).
(b) In lieu of payment of his Normal Retirement Benefit or Early Retirement
Benefit in the form of a lump sum as described in Section 5.3(a), Employee may
elect, in the manner prescribed by the Corporation, to receive payment of his
retirement benefit in the form described in Section 5.1 or 5.2 as applicable.
Any such election must be submitted to and accepted by the Corporation no later
than the 13th month prior to Employee's Retirement Date.
7
5.4. Death While Employed by the Corporation. In the event Employee dies while
employed by the Corporation, any benefits payable under this Appendix A shall be
determined in accordance with Section 6.
6. DEATH WHILE EMPLOYED BY THE CORPORATION.
6.1. General. In the event Employee dies while employed by the Corporation the
death benefit payable under this Appendix A shall be as follows:
(a) if Employee is married on his date of death, 50% of the lump sum that
is Actuarially Equivalent to the Normal Retirement Benefit determined
under Section 5.1(a) of this Appendix A, such lump sum benefit to be
determined as if Employee Retired on his date of death after reaching
Normal Retirement Age; or
(b) if Employee is not married on his date of death, 50% of the lump sum
that is Actuarially Equivalent to the Normal Retirement Benefit determined
under Section 5.1(b) of this Appendix A, such lump sum benefit to be
determined as if Employee Retired on his date of death after reaching
Normal Retirement Age.
The death benefit shall be payable in a lump sum as soon as administratively
practicable following Employee's date of death.
6.2. Payee. This death benefit shall be payable to Employee's (a) surviving
spouse if Employee is married on his date of death, or (b) Beneficiary if
Employee is not married on his date of death. "Surviving spouse" for purposes of
this Section 6.2 means the spouse to whom Employee is married on his date of
death.
7. EFFECT OF A CHANGE IN CONTROL OF THE CORPORATION. Anything in this Appendix A
to the contrary notwithstanding, this Section 7 shall apply in the event of a
Change in Control. If, within three years after the date of a Change in Control
Employee's employment with the Corporation is involuntarily terminated by the
Corporation for any reason (other than Cause), or Employee voluntarily
terminates employment with the Corporation for Good Reason, and employee is not
otherwise eligible for Retirement, then Employee shall be deemed to have Retired
with a fully vested Normal Retirement Benefit on the date of such termination of
employment. Employee's Normal Retirement Benefit shall be determined as of such
deemed Retirement Date, and shall be payable in a lump sum, calculated pursuant
to Sections 5.1 and 5.3, as soon as administratively practicable following such
deemed Retirement Date.
Solely for purposes of this Section 7, "Good Reason" shall mean termination of
Employee's employment by Employee within 90 days following (i) a material
diminution in Employee's positions, duties and responsibilities from those
described in this Employment Agreement (ii) a reduction in Employee's Base
Salary (other than a reduction which is part of a general salary reduction
program affecting senior executives of the Corporation) (iii) a material
reduction in the aggregate value of the pension and welfare benefits provided to
Employee 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
8
executives), (iv) a material breach of any provision of this Employment
Agreement by the Corporation, (v) the Corporation's requiring Employee to be
based at a location that creates for Employee a one way commute in excess of 60
miles from his primary residence, except for required travel on the
Corporation's business to an extent substantially consistent with the business
travel obligations of Employee under this Employment Agreement. Notwithstanding
the foregoing, a termination shall not be treated as a termination for Good
Reason (i) if Employee shall have consented in writing to the occurrence of the
event giving rise to the claim of termination for Good Reason or (ii) unless
Employee shall have delivered a written notice to the Corporation within 30 days
of his having actual knowledge of the 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.
8. EFFECT OF TERMINATION OF EMPLOYMENT AND REHIRE. Upon Employee's termination
of employment with the Corporation the benefit payable under this Appendix A, if
any, shall be determined by the Corporation and such determination shall be
conclusive and binding (subject to Section 14). If Employee is subsequently
reemployed by the Corporation such reemployment, additional service, and
additional compensation shall not result in a re-determination of the benefits
due under this Appendix A. If, upon reemployment, Employee is receiving
installment payments pursuant to Section 5 those payments shall not be suspended
during any period of reemployment.
9. ADMINISTRATION.
9.1. Powers of the Corporation: The Board of Directors of the Corporation (the
"Board") shall have the sole authority to act on behalf of the Corporation under
this Appendix A (subject to Section 9.3), and shall have all the powers
necessary to administer the benefits under this Appendix A, including, without
limitation, the power to interpret the provisions of this Appendix A and to
establish rules and prescribe any forms required to administer benefits under
this Appendix A
9.2. Actions of the Board: All determinations, interpretations, rules, and
decisions of the Board shall be conclusive and binding upon all persons having
or claiming to have any interest or right under this Appendix A.
9.3. Delegation: The Board shall have the power to delegate specific duties and
responsibilities to officers or other employees of the Corporation or other
individuals or entities. Any delegation by the Board may allow further
delegations by the individual or entity to whom the delegation is made. Any
delegation may be rescinded by the Board at any time. Each person or entity to
whom a duty or responsibility has been delegated shall be responsible for the
exercise of such duty or responsibility and shall not be responsible for any act
or failure to act of any other person or entity.
9.4. Reports and Records: The Board and those to whom the Board has delegated
duties under Section 9.3 shall keep records of all their proceedings and actions
and shall maintain books of
9
account, records, and other data as shall be necessary for the proper
administration of this Appendix A and for compliance with applicable law.
9.5. Costs: The costs of providing and administering the benefits under this
Appendix A shall be borne by the Corporation.
10. UNFUNDED BENEFITS; ESTABLISHMENT OF TRUST.
10.1. Unfunded Status. This Appendix A shall be unfunded for tax purposes and
for purposes of Title 1 of ERISA.
10.2. Establishment of Trust. The Corporation shall not be required to set aside
any funds to discharge its obligations hereunder, but may set aside such funds
to informally fund all or part of its obligations hereunder if it chooses to do
so, including without limitation the contribution of assets to a "rabbi trust"
(the Trust). Any setting aside of amounts, or acquisition of any insurance
policy or any other asset, by the Corporation with which to discharge its
obligations hereunder in trust or otherwise, shall not be deemed to create any
beneficial ownership interest in Employee, his surviving spouse, or Beneficiary,
and legal and equitable title to any funds so set aside shall remain in the
Corporation, and any recipient of benefits hereunder shall have no security or
other interest in such funds. The rights of Employee and his surviving spouse
and Beneficiary(ies) under this Appendix A shall be no greater than the rights
of a general unsecured creditor of the Corporation. Any and all funds so set
aside by the Corporation shall remain the general assets of the Corporation, and
subject to the claims of its general creditors, present and future.
10.3. Interrelationship of this Appendix A and the Trust. The provisions of this
Appendix A shall govern the rights of Employee to receive distributions pursuant
to the provisions of this Appendix A. The provisions of the Trust shall govern
the rights of the Corporation, Employee, and creditors of the Corporation to the
assets transferred to the Trust. The Corporation shall at all times remain
liable to carry out its obligations under this Appendix A.
10.4. Distributions from the Trust. The Corporation's obligations under this
Appendix A may be satisfied with Trust assets distributed pursuant to the terms
of the Trust, and any such distribution shall reduce the Corporation's
obligation under this Appendix A.
11. PAYMENT OF BENEFIT FOR DISABLED OR INCAPACITATED PERSON. If the Corporation
determines, in its discretion, that Employee or Employee's Beneficiary or
surviving spouse is under a legal disability or is incapacitated in any way so
as to be unable to manage his financial affairs, the Corporation shall make
payment to such person or to his legal representative or to a friend or relative
of such person as the Corporation considers advisable. Any payment under this
Section 11 shall be a complete discharge of any liability for the making of such
payment under this Appendix A. Nothing contained in this Section 11 however,
should be deemed to impose upon the Corporation any liability for paying a
benefit to any person who is under such a legal disability or is so
incapacitated unless it has received notice of such disability or incapacity
from a competent source.
12. NONASSIGNABILITY. Neither Employee nor any other person shall have any right
to commute,
10
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate, alienate or convey in advance of actual receipt, the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are expressly declared to be, unassignable and non-transferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by Employee or any other person,
be transferable by operation of law in the event of Employee's or any other
person's bankruptcy or insolvency or be transferable to a spouse as a result of
a property settlement or otherwise. The Corporation is authorized to make any
payments directed by court order.
13. CLAIM PROCEDURE.
13.1. Presentation of Claim. Employee, or the surviving spouse of Employee after
Employee's death, or Employee's Beneficiary (such Employee, surviving spouse, or
Beneficiary being referred to below as a "Claimant") may deliver to the
Corporation a written claim for a determination with respect to the amounts
distributable to such Claimant under this Appendix A. If such a claim relates to
the contents of a notice received by the Claimant, the claim must be made within
sixty (60) days after such notice was received by the Claimant. All other claims
must be made within 180 days of the date on which the event that caused the
claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.
13.2. Notification of Decision. The Corporation shall consider a Claimant's
claim within a reasonable time, but no later than ninety (90) days after
receiving the claim. If the Corporation determines that special circumstances
require an extension of time for processing the claim, written notice of the
extension shall be furnished to the Claimant prior to the termination of the
initial ninety (90) day period. In no event shall such extension exceed a period
of ninety (90) days from the end of the initial period. The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Corporation expects to render the benefit determination. The
Corporation shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Corporation has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice must set
forth in a manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part
of it;
(ii) specific reference(s) to pertinent provisions of this Appendix
A upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation
of why such material or information is necessary;
11
(iv) an explanation of the claim review procedure set forth in
Section 13.3 below; and
(v) a statement of the Claimant's right to bring a civil action
under ERISA Section 502(a) following an adverse benefit
determination on review.
13.3. Review of a Denied Claim. On or before sixty (60) days after receiving a
notice from the Corporation that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file with the
Corporation a written request for a review of the denial of the claim. The
Claimant (or the Claimant's duly authorized representative):
(a) may, upon request and free of charge, have reasonable access to, and
copies of, all documents, records and other information relevant to the
claim for benefits;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Corporation, in its sole discretion,
may grant.
13.4. Decision on Review. The Corporation shall render its decision on review
promptly, and no later than sixty (60) days after the Corporation receives the
Claimant's written request for a review of the denial of the claim. If the
Corporation determines that special circumstances require an extension of time
for processing the claim, written notice of the extension shall be furnished to
the Claimant prior to the termination of the initial sixty (60) day period. In
no event shall such extension exceed a period of sixty (60) days from the end of
the initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the
Corporation expects to render the benefit determination. In rendering its
decision, the Corporation shall take into account all comments, documents,
records and other information submitted by the Claimant relating to the claim,
without regard to whether such information was submitted or considered in the
initial benefit determination. The decision must be written in a manner
calculated to be understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent provisions of this Appendix A
upon which the decision was based;
(c) a statement that the Claimant is entitled to receive, upon request and
free of charge, reasonable access to and copies of, all documents, records
and other information relevant (as defined in applicable ERISA
regulations) to the Claimant's claim for benefits; and
(d) a statement of the Claimant's right to bring a civil action under
ERISA Section 502(a).
12
13.5. LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
this Article 13 is a mandatory prerequisite to a Claimant's right to commence
any legal action with respect to any claim for benefits under this Appendix A.
14. TAX WITHHOLDING AND REPORTING; SECTION 280G EXCISE TAXES.
(a) General. The Corporation shall have the right to deduct any required
withholding taxes from any payment made under this Appendix A. Except as
provided in Section 14(b), the Corporation shall not be obligated to pay or
reimburse Employee, or his surviving spouse or Beneficiary, for any income or
other taxes or penalties that may be imposed on such person by the Internal
Revenue Service or any state or other taxing authority as a result of benefits
paid under this Appendix A.
(b) Excise Tax Payment. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")), to Employee or for his benefit paid or payable or distributed or
distributable pursuant to the terms of this Employment Agreement (including this
Appendix A) or otherwise in connection with, or arising out of, his employment
with the Corporation or a Change in Control of the Corporation (a "Payment" or
"Payments"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Employee with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then Employee
will be entitled to immediately receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Employee of all taxes
(including any interest or penalties, other than interest and penalties imposed
by reason of Employee's failure to file timely a tax return or pay taxes shown
due on his return, imposed with respect to such taxes and the Excise Tax),
including any Excise Tax imposed upon the Gross-Up Payment, Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
15. SUCCESSORS. The provisions of this Appendix A shall bind and inure to the
benefit of the Corporation and its successors and assigns and Employee and
Employee's surviving spouse and designated beneficiaries.
16. AMENDMENT. This Appendix A may be amended only by written agreement between
Employee and the Corporation.
17. LEGEND
The securities represented by this supplemental retirement benefit have
not been registered under the Securities Act of 1933, as amended, and may
not be sold, transferred or otherwise disposed of in the absence of an
effective registration statement under such Act or an opinion of counsel
satisfactory to the corporation to the effect that such registration is
not required.
13
