exv10w26





Exhibit
10.26


Whereas, MKS Instruments, Inc. (the “Company”) and John A. Smith (“Employee”) have entered into an
employment agreement dated July 30, 2004, Appendix A of which includes deferred compensation
benefits, and



Whereas, such deferred compensation benefits are subject to the provisions of Internal Revenue Code
Section 409A, and



Whereas Appendix A has been administered in accordance with the provisions of Section 409A as of
January 1, 2005, and



Whereas, Appendix A must be formally amended in writing on or before December 31, 2008, to
incorporate applicable provisions of Section 409A in order to avoid potentially adverse tax
consequences to Employee,



Now, therefore, in accordance with Section 16 of Appendix A, the Company and Employee hereby agree
that Appendix A of the Agreement is amended in its entirety to read as follows, effective as of
November 10, 2008:



APPENDIX A

Supplemental Retirement Benefits




1. Purpose. (a) General. The purpose of this Appendix A is to provide Employee
with supplemental retirement benefits to encourage his continued employment with the Corporation.
Benefits will be payable only if Employee fully complies with all of the requirements of this
Appendix A.



(b) For Benefit of Employee Only. Benefits under this Appendix A are provided for the
benefit of Employee only. No other employee shall accrue any rights of any kind as a result of the
existence of the arrangement described in this Appendix A. Supplemental retirement benefits may be
provided to an employee only as specifically authorized by the Board of Directors of the
Corporation. 



(c) Internal Revenue Code Section 409A. The provisions of this Appendix A shall be
interpreted in a manner consistent with the requirements of Section 409A of the Internal Revenue
Code.



2. Definitions. Whenever used herein the following terms shall have the meanings
hereinafter set forth:



 








 






	2.1	 	“Account” or “Deferred Compensation Account” means the account established in
Employee’s name pursuant to Section 5.1 of this Appendix A which reflects Employee’s entire
interest in this Appendix A, and which includes Employee’s Company Contribution Subaccount,
Retirement Subaccount, and In-Service Distribution Subaccount(s).
	 
	2.2	 	“Base Salary” means base salary as defined in the Employment Agreement, before any
pre-tax salary reductions for participation in any benefit plan of the Corporation. Solely
for purposes of Section 4.1 of this Agreement, if Employee becomes disabled, then during such
period of disability “base salary” means base salary as defined in the Employment Agreement
for the calendar year in which such disability commenced, or the immediately preceding
calendar year, whichever is greater. “Disability” for purposes of this Section 2.2 means
Employee is receiving benefits under any short term or long term disability plan maintained by
the Corporation.
	 
	2.3	 	“Beneficiary” means one or more persons, trusts, estates or other entities,
designated by Employee to receive death benefits under this Appendix A upon Employee’s death.
If Employee fails to designate a Beneficiary or if all designated Beneficiaries predecease
Employee then death benefits under this Appendix A shall be payable to Employee’s surviving
spouse, if any, and if not 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




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	 	 	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 payable under the Corporation’s Management Incentive Plan.
	 
	2.5	 	“Change in Control” means the first to occur of any of the following events:






(a) Any “person” (as that term is used in Section 13 and 14(d)(2) of the Securities
Exchange Act of 1934 (“Exchange Act”)) becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or indirectly, of fifty percent (50%) or more
of the Company’s capital stock entitled to vote in the election of directors;




(b) The shareholders of the Company approve any consolidation or merger of the Company,
other than a consolidation or merger of the Company in which the holders of the common stock
of the Company immediately prior to the consolidation or merger hold more than fifty percent
(50%) of the common stock of the surviving corporation immediately after the consolidation
or merger;




(c) The shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or




(d) The shareholders of the Company approve the sale or transfer of all or substantially all
of the assets of the Company to parties that are not within a “controlled group of
corporations” (as defined in Code Section 1563) in which the Company is a member.




	2.6	 	“Company Contribution Subaccount” means the portion of Employee’s Account established
in accordance with Section 4.3 of this Appendix A which is credited with the Corporation’s
hypothetical contributions, and any earnings thereon.




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	2.7	 	“Compensation” means, for any calendar year, the sum of Employee’s Base Salary for
such calendar year plus any Bonus payable in such calendar year.
	 
	2.8	 	“Corporation” means MKS Instruments, Inc. (the “Company”) and any corporation, trust,
association or enterprise which is required to be considered, together with the Corporation,
as one employer pursuant to the provisions of Sections 414(b), 414(c), 414(m) or 414(o) of the
Code. For purposes of applying Code sections 1563(a)(1), (2), and (3) and regulation section
1.414(c)-2 to the determination of companies under common control for purposes of this
Appendix A, 80% shall be used instead of “at least 80%” each place it appears in such
sections.
	 
	2.9	 	“Deferred Compensation Agreement” means a written compensation deferral agreement
entered into between Employee and the Corporation pursuant Section 3 of this Appendix A.
	 
	2.10	 	“Employment Agreement” means the Employment Agreement between Employee and the
Corporation that contains this Appendix A.
	 
	2.11	 	“In-Service Distribution Subaccount” means the portion of Employee’s Account
established in accordance with Section 3.4(c) of the Plan which is credited with Employee’s
hypothetical deferrals, and earnings thereon, deferred to an in-service distribution date.
	 
	2.12	 	“Permanent and Total Disability” means (a) Employee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (b) Employee is, by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health
plan covering employees of the Corporation. Employee shall be conclusively presumed to be




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	 	 	Permanently and Totally Disabled upon determination that he is disabled by the Social
Security Administration.






	2.13	 	“Retirement” or “Retired” or “Retires” means the earlier of:






(a) Employee’s Separation from Service with the Corporation upon or after attaining age 61,
or




(b) Employee’s deemed Retirement: Employee shall be deemed to have Retired on the
earliest of (i) the date he becomes Permanently and Totally Disabled, (ii) the date of
Employee’s Separation from Service as a result of the Corporation’s termination of
Employee’s employment with the Corporation for any reason other than Termination for Cause
as defined in Section 2.19 of this Appendix A, (iii) the date of Employee’s death while
employed by the Corporation, or (iv) the date of Employee’s qualifying Separation from
Service following a Change in Control in accordance with the provisions of Section 8 of this
Appendix A.




	2.14.	 	“Retirement Subaccount” means the portion of Employee’s Account established in
accordance with Section 3.4(b) of the Plan which is credited with Employee’s hypothetical
contributions, and earnings thereon, deferred to Retirement.
	 
	2.15.	 	“Section 409A” means Section 409A of the Internal Revenue Code, as the same may be
amended from time to time, and any successor statute thereto. References in this Appendix A
to Section 409A shall be deemed to mean and include any published guidance, regulations,
notices, rulings and similar announcements issued by the Internal Revenue Service or by the
Secretary of the Treasury under or interpreting Section 409A, decisions by any court of
competent jurisdiction involving a Participant or a beneficiary and any closing agreement made
under section 7121 of the Code that is approved by the Internal Revenue Service and involves a
Participant, all as determined by the Corporation in good faith, which determination may (but
shall not be required to) be made in reliance on the advice of such tax counsel or other tax
professional(s) with whom the Corporation from time to time may elect to consult with respect
to any such matter.




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	2.16.	 	“Separates from Service” or “Separation from Service” means Employee’s
separation from service with the Corporation as a result of death, retirement, or any other
reason, except that for purposes of this Section 2.16 the employment relationship is treated
as continuing intact while Employee is on military leave, sick leave, or other bona fide leave
of absence if the period of such leave does not exceed six months, or if longer, so long as
Employee retains a right to reemployment with the Corporation under an applicable statute or
by contract. For purposes of this Section 2.16 a leave of absence constitutes a bona fide
leave of absence only if there is a reasonable expectation that Employee will return to
perform services for the Corporation. If the period of leave exceeds six months and Employee
does not retain a right to reemployment under an applicable statute or by contract, the
employment relationship is deemed to terminate on the first date immediately following such
six-month period. Notwithstanding the foregoing, where a leave of absence is due to any
medically determinable physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than six months, where such
impairment causes Employee to be unable to perform the duties of his position of employment or
any substantially similar position of employment, a 29-month period of absence shall be
substituted for such six-month period. Whether an Employee has a Separation from Service shall
be determined in accordance with the provisions of Section 409A, any regulations thereunder,
and any other applicable guidance.
	 
	2.17	 	“Specified Employee” means, at any time when stock of the Corporation is publicly
traded on an established securities market or otherwise (as determined in accordance with
Section 409A), an employee who is a “specified employee” within the meaning of Section 409A.
The Corporation shall have the discretion to use any alternative permitted under Section 409A
to determine whether Employee is a Specified Employee, and to take any action necessary to
make such alternative binding.
	 
	2.18	 	“Termination of Employment” means, for purposes of Section 4.4 of this Appendix A,
Employee’s Termination for Cause, or Employee’s voluntary




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	 	 	severance from employment with the Corporation (within the meaning of the Corporation’s
normal policies and procedures) for any reason other than Retirement.






	2.19	 	“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.
	 
	2.20	 	“Trust” means a Trust established pursuant to Section 11 of this Appendix A.
	 
	2.21	 	Gender and Number. Words in the masculine gender shall include the feminine and the
singular shall include the plural, and vice versa, unless qualified by the context. Any
headings used herein are included for ease of reference only, and are not to be construed so
as to alter the terms hereof.





3. Deferral Elections.




	3.1	 	Deferred Compensation Agreement. Employee may elect to defer a portion of his
Compensation by entering into a Deferred Compensation Agreement with the Corporation pursuant
to the rules set forth in this Section 3. The Deferred Compensation Agreement shall be made
on a form supplied by the Corporation and shall become effective only if the Corporation
accepts and approves the Agreement.
	 
	3.2	 	Timing of Deferred Compensation Agreement.






(a) Deferrals of Base Salary. (i) Employee may enter into a Deferred Compensation
Agreement with respect to his Base Salary prior to January 1 of each calendar year. The
Deferred Compensation Agreement shall apply to Base Salary earned in the immediately
following calendar year, and shall be irrevocable for such calendar year, except as provided
in Section 3.3(c) of this



7









 







Appendix A.




(ii) The foregoing notwithstanding, Employee may enter into a Deferred Compensation
Agreement within 30 days of the date Employee first becomes eligible to participate in the
deferred compensation arrangement set forth in this Appendix A. Such Deferred Compensation
Agreement shall apply to Base Salary earned after the date such Deferred Compensation
Agreement is executed, and shall be irrevocable for the balance of the calendar year, except
as provided in Section 3.3(c). This subparagraph (ii) shall not apply (that is, no mid-year
deferral election shall be permitted) in the event Employee, on the date Employee first
becomes eligible to participate in this arrangement, is covered under any other
account-based nonqualified deferred compensation plan required to be aggregated with this
arrangement under the definition of “plan” contained in Section 409A.




(b) Deferrals of Bonus. Employee may enter into a Deferred Compensation Agreement
with respect to a Bonus no later than September 30 of the calendar year prior to the
calendar year in which such Bonus is earned. Such deferral elections shall be irrevocable,
except as provided in Section 3.3(c). Subsequent deferrals of Bonus shall be made only
pursuant to a new Deferred Compensation Agreement.




The foregoing notwithstanding, if a Bonus constitutes “performance based compensation” as
defined in Section 409A, Employee may enter into a Deferred Compensation Agreement with
respect to such Bonus at any time up until June 30 of the year prior to the year in which
the applicable performance period ends.




(c) Cancellation of Deferral. The foregoing notwithstanding, in the event Employee
receives a hardship distribution (as defined in Treasury Regulation 1.401(k)-1(d)(3)) from a
section 401(k) plan maintained by the Corporation, Employee’s existing Deferred Compensation
Agreements shall be terminated prospectively (that is, upon receipt of such hardship
distribution, no further deferrals of Base Salary or Bonus shall be made under an existing
Deferred Compensation Agreement). Employee may, however, enter into a new Deferred



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Compensation Agreement that satisfies the requirements of Sections 3.1 through 3.3 of this
Appendix A.




	3.3	 	Amount of Deferrals.






(a) From Base Salary. Employee may elect to defer up to 25% of his or her
Base Salary, in increments of 1%.




(b) From Bonus. Employee may elect to defer up to 100% of his Bonus, in
increments of 5%.




The 25% and 100% maximum deferral limits described above may be reduced by the Corporation
in any year if the Corporation determines, in its sole discretion, that such action is
necessary to meet Federal or State tax withholding obligations.




	3.4	 	Deferral Period.






(a) General. At the time Employee defers Compensation pursuant to a Deferred
Compensation Agreement for a calendar year, he may specify an In-Service Distribution Date
applicable to all or a portion of the deferrals for such calendar year, and earnings
thereon. Any deferrals of Compensation not deferred to an In-Service Distribution Date shall
be deemed deferred to Retirement.




(b) Retirement Subaccount. The Corporation shall establish a Retirement Subaccount
on Employee’s behalf representing Compensation Employee has deferred to Retirement, and
earnings thereon. Payments from Employee’s Retirement Subaccount shall be made at such time
and in such manner as provided in Section 6.3.




(c) Deferrals to an In-Service Distribution Date. Deferrals to an In-Service
Distribution Date shall be subject to the following requirements:




(i) In-Service Distribution Date. The In-Service Distribution Date must be
a date at least three full calendar years after the date of such Deferred



9









 







Compensation Agreement.




(ii) In-Service Distribution Subaccount. The Corporation shall
establish an In-Service Distribution Subaccount on Employee’s behalf to which
Employee’s deferrals relating to a particular In-Service Distribution Date, and
earnings thereon, shall be credited.




(iii) Limits. There are no limits on the number of In-Service Distribution
Subaccounts Employee may establish.




(iv) Payments. Payments from In-Service Distribution Subaccounts shall be
made at such time and in such manner as provided in Section 6.2.




(d) Postponing In-Service Distributions. Employee may elect to postpone payment of
an In-Service Distribution Subaccount, and instead have such amount paid out on an allowable
alternative In-Service Distribution Date, by submitting a new In-Service Distribution
Election Form to the Corporation, subject to the following:




(i) Such Election Form must be submitted to and accepted by the Corporation in its
sole discretion no later than the end of the 13th month prior to the month
containing Employee’s previously elected In-Service Distribution Date; and




(ii) The new In-Service Distribution Date selected by Employee must
be the first day of any calendar year that is at least five full
calendar years after the end of the calendar year in which the previously elected
In- Service Distribution would otherwise have been paid to Employee, and




(iii) Such election shall not take effect until 12 months has
elapsed from the date such election is made.




	3.5	 	Vesting of Retirement and In-Service Distribution Subaccounts. Subject to
Section 11.2, Employee’s Retirement Subaccount and In-Service Distribution 




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	 	 	Subaccount(s) shall be fully vested and nonforfeitable.





4. Company Contributions.




	4.1	 	Required Company Contribution. The Corporation shall make an annual hypothetical
contribution on Employee’s behalf equal to 15% of Employee’s Compensation. Such hypothetical
contribution shall commence with the calendar year the Employment Agreement is executed by the
Corporation and Employee, and shall continue each calendar year up to and including the year
in which Employee Retires. Except as provided in Section 2.2, and solely for purposes of this
Section 4.1, “Compensation” in the calendar year Employee Retires shall mean only Base Salary
and Bonus actually paid to Employee in such calendar year.
	 
	4.2	 	Discretionary Company Contribution. The Corporation may, in its absolute discretion,
make an additional hypothetical contribution on Employee’s behalf with respect to any calendar
year. The fact that the Corporation makes a discretionary contribution with respect to a
particular calendar year shall not obligate the Corporation to make a discretionary
contribution with respect to any other calendar year.
	 
	4.3	 	Company Contribution Subaccount. The Corporation shall establish a Company
Contribution Subaccount on behalf of Employee to which hypothetical required company
contributions and discretionary company contributions, and earnings thereon, shall be
allocated.
	 
	4.4	 	Vesting of Company Contribution Subaccount. Subject to Sections 4.5, 4.6, 4.7, and
Section 11.2 of this Appendix A, Employee’s Company Contribution Subaccount shall vest upon
the earlier of (a) or (b), where (a) is the following vesting schedule:





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	Attained Age While Employed	 	 
	By the Corporation	 	Vested Percentage
	65
	 	 	100	%
	64
	 	 	90	%
	63
	 	 	80	%







and (b) is the date of Employee’s deemed Retirement under Section 2.13(b).
Employee’s Company Contribution Subaccount shall be forfeited upon Employee’s Termination of
Employment. The Company may, in its sole and absolute discretion, waive the vesting schedule
and fully vest Employee at any time.




	4.5.	 	Compliance with Noncompete, Nondisclosure, and Nonsoliciation Agreements. Employee’s
Company Contribution Subaccount shall be forfeited, and no amount attributable to such
Subaccount shall be payable under this Appendix A, in the event the Corporation determines
that Employee has failed to comply with the terms of any noncompetition, nondisclosure, or
nonsolicitation provision contained in the Employment Agreement, or in any other agreement
between Employee and the Corporation.
	 
	4.6.	 	Notice of Intent to Retire. Benefits payable under Section 6.1 of this Appendix A
attributable to Employee’s Company Contribution Subaccount are specifically conditioned upon
Employee providing to the Corporation written notice of Employee’s intent to Retire at least
six months prior to Employee’s Retirement date. In the event Employee fails to satisfy the
notice requirements of this Section 4.6, Employee’s Company Contribution Subaccount shall be
forfeited, and no amount attributable to such Subaccount shall be payable under this Appendix
A. The foregoing notwithstanding, this section 4.6 shall not apply to benefits payable under
Section 6.1 as a result of Employee’s deemed Retirement under Section 2.13(b) of this Appendix
A. The Corporation, in its sole and absolute discretion, may elect to waive the notice
requirement of this Section 4.6.
	 
	4.7.	 	Release. Benefits payable under Section 6.1 of this Appendix A attributable to
Employee’s Company Contribution Subaccount 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




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	 	 	of Employee’s employment and/or termination of employment with the Corporation. In the event
Employee terminates employment with the Corporation for any reason other than death
(including Retirement) without satisfying the requirements of this Section 4.7 Employee’s
Company Contribution Subaccount shall be forfeited, and no amount attributable to such
Subaccount shall be payable under this Appendix A.






	4.8	 	Payment of Company Contribution Subaccount. Employee’s vested Company Contribution
Subaccount shall be paid at such time and in such manner as provided in Section 6.




5. Employee’s Deferred Compensation Account.





	5.1	 	Establishment of Deferred Compensation Accounts and Subaccounts. The Corporation
shall establish and maintain a hypothetical account for Employee called the Deferred
Compensation Account. Such Account shall be segregated from the other accounts on the books
and records of the Corporation as an unfunded and unsecured liability of the Corporation to
Employee. Subaccounts (including Employee’s Company Contribution Subaccount, In-Service
Distribution Subaccount(s), and Retirement Subaccount) shall be maintained as determined
necessary by the Corporation. Accounts and subaccounts are maintained solely as a device for
the measurement and determination of the amounts to be paid to Employee or his Beneficiary
pursuant to this Appendix A. Any reference to “contributions to” or “payments from”
Employee’s Accounts or subaccounts, or similar phrases, are for convenience only.
	 
	5.2	 	Timing of Contributions to and Distributions From Employee’s Deferred Compensation
Account. The Corporation shall credit to Employee’s Deferred Compensation Account an
amount equal to the percentage of Employee’s Base Salary and Bonus which he has elected to
defer in accordance with Section 3.3, as of the last day of the calendar month in which
Employee would have received such amount if not for Employee’s deferral election.
	 
	 	 	The Corporation shall credit to Employee’s Deferred Compensation Account an 




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	 	 	amount equal to
the Company Contribution(s) to which he is entitled under Sections 4.1 and 4.2 as soon as
administratively practicable after the end of each calendar year.






	 	 	Any distribution with respect to Employee’s Deferred Compensation Account shall be charged
to such Account as of the date the distribution is made by the Corporation or from the Trust
established in accordance with this Appendix A.
	 
	5.3	 	Selection of Investment Vehicle. Employee shall specify, in the manner prescribed by
the Corporation, the allocation of his Account among investment indices available under this
Appendix A. An individual’s selection of an investment index will have no bearing on the
actual investment or segregation of Corporation assets, but will be used as the basis for
making adjustments to such individual’s Account as described in Section Article 5.4 below.
Employee can change his or her investment index or indices at such time, and in such manner,
as determined by the Corporation. The Corporation may change the investment indices available
under this Appendix A at any time in its absolute discretion.
	 
	5.4	 	Adjustment of Deferred Compensation Account. As of the last day of each calendar
month, or more frequently as determined in the sole discretion of the Corporation, Employee’s
Deferred Compensation Account shall be credited with hypothetical net income, gain and loss,
including hypothetical net unrealized gain and loss, based on the hypothetical investment
directions made by the Participant in accordance with Section 5.3 of this Appendix A.




6. Benefit Payments.





	6.1	 	Payment of Company Contribution Subaccount.
	 
	 	 	The vested portion of Employee’s Company Contribution Subaccount shall be paid in a lump sum
on Employee’s Retirement date, and the nonvested portion shall be forfeited.
	 
	6.2	 	Payment of In-Service Distribution Subaccount. Employee’s In-Service




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	 	 	Distribution Subaccount(s) shall be paid in a single lump sum on the earlier of (a) the Participant’s
In-Service Distribution Date, or (b) the date Employee Separates from Service for any reason.






	6.3	 	Payment of Retirement Subaccount. Employee’s Retirement Subaccount(s) shall be paid
in a single lump sum on the date Employee Separates from Service for any reason.
	 
	6.4	 	Delay of Payment to Specified Employee. Sections 6.1 through 6.3 of this Appendix A
notwithstanding, in the event Employee is a Specified Employee on the date Employee Separates
from Service then any amount payable under this Appendix A as a result of such Separation from
Service, other than amounts payable as a result of Employee’s Permanent and Total Disability,
shall not be made earlier than (a) the date that is six months after the date of Employee’s
Separation from Service or, if earlier, (b) the date of the Employee’s death.
	 
	6.5	 	Payment upon Death. The vested portion of Employee’s Deferred Compensation Account
shall be paid to Employee’s Beneficiary upon Employee’s death.
	 
	6.6	 	Time and amount of Payment. Where the provisions of this Appendix A require that a
payment be made on a designated date, (for example, under Sections 6.1, 6.2, 6.3, 6.4, 6.5, or
8) such payment shall be deemed to have been made on such date if it is made as soon as
administratively practicable following such date. In no event, however, shall payment be made
later than the end of the calendar year containing such designated date or, if later, the 15th
day of the third calendar month following such designated date. The amount payable, if any, to
Employee (or Employee’s beneficiary) under Sections 6.1 through 6.5 shall be determined as of
the valuation date (pursuant to Section 5.4) immediately preceding Employee’s (or Employee’s
beneficiary’s) distribution date. In no event shall Employee be permitted to designate,
directly or indirectly, the taxable year in which payment will be made.
	 
	6.7	 	Distribution of Taxable Amounts. Anything in this Appendix A to the contrary
notwithstanding, in the event Employee is determined to be subject to federal 




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	 	 	income tax on
any amount credited to Employee’s Deferred Compensation Account due to the failure of this
arrangement to meet the requirements of Section 409A, Corporation shall distribute to
Employee, as soon as administratively practicable, an amount equal to the amount Employee is
required to include in income as a result of such failure.






	6.8	 	Domestic Relations Orders. The payment of all or part of Employee’s Retirement
benefit may, in the sole discretion of the Corporation, be accelerated and paid to a person
other than Employee if Corporation determines that such payment is necessary to fulfill a
valid domestic relations order as defined in Section 414(p)(1)(B) of the Internal Revenue
Code.




7. Limitations On Liability. Notwithstanding any of the preceding provisions of this
Appendix A, neither the Corporation, nor any individual acting as employee or agent of the
Corporation, shall be liable to Employee or other person for any claim, loss, liability or expense
incurred in connection with this Appendix A.



The Corporation does not in any way guarantee Employee’s Deferred Compensation Account against loss
or depreciation, whether caused by poor investment performance, insolvency of a deemed investment
or by any other event or occurrence. In no event shall the employees, officers, directors, or
stockholders of the Corporation be liable to any individual or entity on account of any claim
arising by reason of the provisions of this Appendix A or any instrument or instruments
implementing its provisions, or for the failure of any Employee, Beneficiary or other individual or
entity to be entitled to any particular tax consequences with respect to this Appendix A, or any
credit or payment hereunder.



Nothing contained in this Appendix A shall constitute a guarantee by the Corporation or any other
person or entity that the assets of the Corporation will be sufficient to pay any benefits
hereunder.



Any payment made in good faith in accordance with provisions of this Appendix A
shall be a complete discharge of any liability for the making of such payment under the provisions
of this Appendix A.




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8. Effect of a Change In Control of the Corporation. Anything in this Appendix A to the
contrary notwithstanding, this Section 8 shall apply in the event of a Change in Control. If,
within three years after the date of a Change in Control Employee voluntarily Separates from
Service 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 benefit on the date
of such Separation from Service.



Solely for purposes of this Section 8, “Good Reason” shall mean Employee’s voluntary Separation
from Service within 90 days following (i) a material diminution in Employee’s positions, duties and
responsibilities from those described in this Employment Agreement (ii) if Employee is a member of
the Board of Directors, the removal of Employee from, or the failure to re-elect Employee as a
member of, the Board, (iii) 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) (iv) 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 executives), (v) a material breach of any provision of this Employment
Agreement by the Corporation, (vi) the Corporation’s requiring Employee to be based at a location
that creates a one-way commute for Employee 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.




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9. Effect Of Termination Of Employment And Rehire. Upon Employee’s Retirement or other
Separation from Service 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). This Appendix A shall not apply to any subsequent period of reemployment
of Employee by the Corporation.



10. Administration.





	10.1.	 	Powers of the Corporation. The Board of Directors of the Company (the “Board”)
shall have the sole authority to act on behalf of the Corporation under this Appendix A
(subject to Section 10.3), 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
	 
	10.2.	 	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.
	 
	10.3.	 	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.
	 
	10.4.	 	Reports and Records. The Board and those to whom the Board has delegated duties
under Section 10.3 shall keep records of all their proceedings and actions and shall maintain
books of account, records, and other data as shall be necessary for the proper administration
of this Appendix A and for compliance with applicable law.




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	10.5.	 	Costs. The costs of providing and administering the benefits under this Appendix A
shall be borne by the Corporation.





11. Unfunded Benefits; Establishment Of Trust.




	11.1.	 	Unfunded Status. This Appendix A shall be unfunded for tax purposes and for
purposes of Title 1 of ERISA.
	 
	11.2.	 	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.
	 
	11.3.	 	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.
	 
	11.4	 	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.




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12. Payment Of Benefit For Disabled Or Incapacitated Person. If the Corporation
determines, in its discretion, that Employee or Employee’s Beneficiary is under a legal
disability or is incapacitated in any way so as to be unable to manage his financial
affairs, the Corporation may make any payment otherwise due under the terms of
this Appendix A 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 12 shall be a
complete discharge of any liability for the making of such payment under this Appendix A. Nothing
contained in this Section 12 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.



13. Nonassignability. Neither Employee nor any other person shall have any right to
commute, 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.



14. Claim Procedure.





	14.1.	 	Presentation of Claim. Employee, or Employee’s Beneficiary after Employee’s death
(such Employee 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 




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	 	 	the determination desired by the Claimant.






	14.2.	 	Notification of Decision.






(a) Claim for benefits other than Disability Benefits. 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.




(b) Claim for disability benefits. If the claim relates to benefits in connection
with disability (as defined in Section 4.4), the Corporation shall consider a Claimant’s
claim within a reasonable time, but no later than forty-five (45) days after receiving the
claim. If the Corporation determines that, due to matters beyond the control of the Plan,
the Corporation will not be able to respond to the claim within such 45-day period, the
Corporation may extend the response period for one or two additional periods of up to 30
days each by providing the Claimant with notice describing the circumstances that
necessitate the extension and the date as of which the Corporation anticipates that it will
render its decision. Each such notice must be conveyed to the Claimant prior to the
commencement of an extension.




(c) Notification. The Corporation shall notify the Claimant in writing, within the
time periods specified in Section 14.2(a) or (b) as applicable:




(1) that the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or




(2) 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:



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(A) the specific reason(s) for the denial of the claim, or any part
of it;




(B) specific reference(s) to pertinent provisions of this Appendix
A upon which such denial was based;




(C) 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;




(D) an explanation of the claim review procedure set forth in
Section 14.3 below; and




(E) a statement of the Claimant’s right to bring a civil action
under ERISA Section 502(a) following an adverse benefit determination on review.




	14.3	 	Review of a Denied Claim.






(a) Claim for benefits other than disability benefits. 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):




(1) 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;




(2) may submit written comments or other documents; and/or




(3) may request a hearing, which the Corporation, in its sole discretion, may
grant.




	 	 	The Corporation shall render its decision on review promptly, and no later than




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	 	 	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:






(1) specific reasons for the decision;




(2) specific reference(s) to the pertinent provisions of this Appendix A upon which
the decision was based;




(3) 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




(4) a statement of the Claimant’s right to bring a civil action under ERISA Section
502(a).




(b) Claim for disability benefits. If the claim relates to benefits in connection
with disability (as defined in Section 4.4), the procedure described in Section 14.3(a)
above shall apply, modified as follows:




(1) All references to 60 days shall be changed to 45 days, except that a Claimant
shall have 180 days to file an appeal.



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(2) The Corporation shall designate an individual to conduct the review who is not
the individual who made the initial adverse determination, and is not a subordinate
of such individual.




(3) The notice of extension shall describe the circumstances that require the
extension; must include the date as of which the Corporation anticipates that it
will render its decision; and must be communicated to the Claimant prior to the
commencement of the extension.




(4) The review shall not afford deference to the initial adverse benefit
determination.




(5) When the appeal is based on a medical judgment, the Corporation shall consult
with a health care professional who has appropriate experience and training in the
field involved in determining the Claimant’s disability and shall identify all
medical and vocational experts whose advice was obtained in connection with the
appeal. A health care professional may not be consulted under this Section
7.10(b)(3)(ii)(E) if the health care professional (or a subordinate of such
individual) was consulted in connection with the initial claim for benefits.




(6) If the Corporation makes an adverse benefit determination on review, the
Corporation shall provide the Claimant with a statement that the Claimant is
entitled to receive or request reasonable access to, and copies of, all information
relevant to the claim for benefits, including internal rules, guidelines, and
protocols (to the extent relied upon) and a statement regarding voluntary
alternative dispute resolution options.




	14.4.	 	Disability Benefits. For purposes of this Article 14, “disability benefits” means a
benefit payable under this Appendix A that is conditioned upon the
Corporation’s determination that Employee is Permanently and Totally Disabled. If the
Corporation does not make such determination, but instead relies solely upon the
determination of the Social Security Administration’s determination that Employee is
disabled, then Sections 14.2(b) and 14.3(b) shall not apply, and 




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	 	 	any claims by Employee
shall instead be reviewed under the provisions of this Article 14 for benefits other than
Disability benefits.






	14.5.	 	Legal Action. A Claimant’s compliance with the foregoing provisions of this Article
14 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.




15. Tax Withholding And Reporting.





(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 15(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”) from the Corporation 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.



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16. 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.



17. Amendment. This Appendix A may be amended only by written agreement between Employee
and the Corporation.



Agreed to and executed this 10th day of November, 2008.




	 	 	 	 	 
	MKS Instruments, Inc.

 	 	 
	By:  	/s/ Leo Berlinghieri
 	 	 
	 	Leo Berlinghieri, CEO & President 	 	 
	 	 	 	 
	 	 	 
	/s/ John Smith
 	 	 
	John A. Smith 	 	 
	 	 	 
	 




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