sctoviza
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO
Amendment
No. 3
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
MKS Instruments, Inc.
(Name of Subject Company (Issuer) and Filing Person (Issuer))
Options to Purchase Common Stock, no par value
(Title of Class of Securities)
55306N104
(CUSIP Number of Common Stock Underlying Class of Securities)
Leo Berlinghieri
President and Chief Executive Officer
MKS Instruments, Inc.
2 Tech Drive, Suite 201, Andover, Massachusetts 01810
(978) 645-5500
(Name, Address and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
Copy to:
Mark G. Borden, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street, Boston, Massachusetts 02109
(617) 526-6000
CALCULATION OF FILING FEE
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Transaction Valuation* |
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Amount of Filing Fee** |
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$4,197,423
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$234.22** |
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Calculated solely for purposes of determining the filing fee. This amount assumes that
options to purchase 1,454,947 shares of common stock of MKS Instruments, Inc. having an
aggregate value of $4,197,423 as of July 31, 2009 will be exchanged or cancelled pursuant to
this exchange offer. The actual transaction value will be based upon the number of options
tendered, if any. The aggregate value of such securities was calculated based on the
Black-Scholes option pricing model. |
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The amount of the filing fee, calculated in accordance with the Securities Exchange Act of
1934, as amended, equals $55.80 for each $1,000,000 of the value of this transaction. The
Transaction Value set forth above was calculated for the sole purpose of determining the
Amount of Filing Fee and should not be used for any other purpose. |
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Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify
the filing with which the offsetting fee was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid:
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$234.22 |
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Filing Party:
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MKS Instruments, Inc. |
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Form or Registration No.:
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005-58011 |
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Date Filed:
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August 3, 2009 |
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Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
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Check the appropriate boxes below to designate any transactions to which the statement relates: |
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third party tender offer subject to Rule 14d-1. |
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issuer tender offer subject to Rule 13e-4. |
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going-private transaction subject to Rule 13e-3. |
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amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer: o
*If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
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Rule 13e-4(i) (Cross-Border Issuer Tender Offer) |
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Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) |
TABLE OF CONTENTS
EXPLANATORY NOTE
This
Amendment No. 3 amends and supplements the Tender Offer Statement on Schedule TO
originally filed with the Securities and Exchange Commission (the
SEC) on August 3, 2009, as previously
amended (the Schedule TO), by MKS Instruments, Inc. (the Company), wherein the Company offered
to exchange certain outstanding eligible option grants for restricted stock units, on the terms and
subject to the conditions described in the Offer to Exchange Certain Stock Options for Restricted
Stock Units dated August 3, 2009.
This
Amendment No. 3 is made to amend and restate Item 12 (Exhibits) in its
entirety, to amend and restate Exhibit (a)(1)(A) to the
Schedule TO and to add exhibits (a)(1)(Q) and (a)(1)(R) thereto. The information
in the Schedule TO, including all schedules and annexes to the
Schedule TO, that were previously
filed with the Schedule TO on August 3, 2009,
August 12, 2009, and August 17, 2009, is incorporated herein by
reference to answer the items required in this Schedule TO, except that such information is hereby
amended, restated and supplemented to the extent specifically
provided in this Amendment No. 3. Except as
specifically set forth herein, this Amendment No. 3 does not modify any of the information previously
reported on the Schedule TO.
Item 12. Exhibits.
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Exhibit |
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Description |
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(a)(1)(A)
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Offer to Exchange Certain Outstanding Options for Restricted Stock Units, dated
August 3, 2009. |
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(a)(1)(B)*
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Form of E-Mail to Eligible Employees Regarding the Exchange Offer. |
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(a)(1)(C)*
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Form of Election Form. |
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(a)(1)(D)*
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Form of Withdrawal Form. |
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(a)(1)(E)*
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Form of Confirmation E-Mail/Memo to Employees who Elect to Participate in or Withdraw
from the Exchange Program by Fax or E-Mail. |
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(a)(1)(F)*
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Form of Reminder E-Mail to Eligible Employees. |
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(a)(1)(G)*
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Screen Shots of the Exchange Offer Website. |
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(a)(1)(H)*
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Screen Shots of Illustrative Calculator to Calculate Number of Restricted Stock Units. |
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(a)(1)(I)*
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Form of E-Mail Regarding Actual Exchange Ratios. |
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(a)(1)(J)*
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Form of E-Mail Regarding Conference Call on Day the Exchange Offer Expires. |
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(a)(1)(K)**
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Script For Phone Representatives. |
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(a)(1)(L)
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Annual Report on Form 10-K for the year ended December 31, 2008, filed on February
27, 2009, is incorporated herein by reference. |
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(a)(1)(M)
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Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, filed on May 7,
2009, is incorporated herein by reference. |
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(a)(1)(N)
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Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 7,
2009, is incorporated herein by reference. |
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Exhibit |
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Description |
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(a)(1)(O)
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Definitive Proxy Statement on Schedule 14A, filed on March 23, 2009, is incorporated
herein by reference. |
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(a)(1)(P)
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Amendment No. 1 to Definitive Proxy Statement on Schedule 14A, filed on April 27,
2009, is incorporated herein by reference. |
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(a)(1)(Q)
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Slides for Employee Information
Sessions. |
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(a)(1)(R)
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Form of E-Mail to Eligible
Employees Regarding Information Sessions. |
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(b)
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Not applicable. |
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(d)(1)
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2004 Stock Incentive Plan, as amended, is incorporated herein by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed on May 6, 2009. |
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(d)(2)
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Second Restated 1995 Stock Incentive Plan is incorporated herein by reference to
Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed November 13, 2002. |
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(d)(3)
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Nonstatutory Stock Option Agreement Granted Under the Second Restated 1995 Stock
Incentive Plan is incorporated herein by reference to Exhibit 10.5 to the Companys
Quarterly Report on Form 10-Q filed on August 9, 2004. |
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(d)(4)*
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Form of Restricted Stock Unit Agreement for Offer to Exchange. |
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(g)
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Not applicable. |
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(h)
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Not applicable. |
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* |
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Previously filed as Exhibits to the Companys Schedule TO filed on August 3, 2009. |
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Previously filed as an Exhibit to the Companys Amendment No. 1 to Schedule TO filed on August
12, 2009. |
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
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MKS INSTRUMENTS, INC.
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/s/ RONALD C. WEIGNER
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Ronald C. Weigner |
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Vice President, Chief Financial Officer and Treasurer |
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Date:
August 20, 2009
Index to Exhibits
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Exhibit |
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Description |
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(a)(1)(A)
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Offer to Exchange Certain Outstanding Options for Restricted Stock Units, dated
August 3, 2009. |
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(a)(1)(B)*
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Form of E-Mail to Eligible Employees Regarding the Exchange Offer. |
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(a)(1)(C)*
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Form of Election Form. |
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(a)(1)(D)*
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Form of Withdrawal Form. |
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(a)(1)(E)*
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Form of Confirmation E-Mail/Memo to Employees who Elect to Participate in or Withdraw
from the Exchange Program by Fax or E-Mail. |
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(a)(1)(F)*
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Form of Reminder E-Mail to Eligible Employees. |
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(a)(1)(G)*
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Screen Shots of the Exchange Offer Website. |
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(a)(1)(H)*
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Screen Shots of Illustrative Calculator to Calculate Number of Restricted Stock Units. |
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(a)(1)(I)*
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Form of E-Mail Regarding Actual Exchange Ratios. |
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(a)(1)(J)*
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Form of E-Mail Regarding Conference Call on Day the Exchange Offer Expires. |
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(a)(1)(K)**
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Script For Phone Representatives. |
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(a)(1)(L)
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Annual Report on Form 10-K for the year ended December 31, 2008, filed on February
27, 2009, is incorporated herein by reference. |
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(a)(1)(M)
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Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, filed on May 7,
2009, is incorporated herein by reference. |
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(a)(1)(N)
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Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 7,
2009, is incorporated herein by reference. |
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(a)(1)(O)
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Definitive Proxy Statement on Schedule 14A, filed on March 23, 2009, is incorporated
herein by reference. |
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(a)(1)(P)
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Amendment No. 1 to Definitive Proxy Statement on Schedule 14A, filed on April 27,
2009, is incorporated herein by reference. |
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(a)(1)(Q)
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Slides for Employee Information
Sessions. |
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(a)(1)(R)
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Form of E-Mail to Eligible
Employees Regarding Information Sessions. |
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(b)
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Not applicable. |
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(d)(1)
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2004 Stock Incentive Plan, as amended, is incorporated herein by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed on May 6, 2009. |
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(d)(2)
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Second Restated 1995 Stock Incentive Plan is incorporated herein by reference to
Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed November 13, 2002. |
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(d)(3)
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Nonstatutory Stock Option Agreement Granted Under the Second Restated 1995 Stock
Incentive Plan is incorporated herein by reference to Exhibit 10.5 to the Companys
Quarterly Report on Form 10-Q filed on August 9, 2004. |
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Exhibit |
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Description |
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(d)(4)*
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Form of Restricted Stock Unit Agreement for Offer to Exchange. |
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(g)
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Not applicable. |
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(h)
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Not applicable. |
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* |
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Previously filed as Exhibits to the Companys Schedule TO filed on August 3, 2009. |
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Previously filed as an Exhibit to the Companys Amendment No. 1 to Schedule TO filed on August
12, 2009. |
exv99wxayx1yxay
Exhibit (a)(1)(A)
MKS INSTRUMENTS, INC.
Offer to Exchange Certain Stock Options for Restricted Stock Units
This exchange offer and withdrawal rights will expire at 11:59 p.m., Eastern Time,
on August 28, 2009, unless extended.
MKS Instruments, Inc., which we refer to herein as MKS, we, our or us, by this Offer
to Exchange Certain Stock Options for Restricted Stock Units, or the exchange offer, is offering to
our eligible employees the opportunity to voluntarily exchange eligible options for restricted
stock units, or RSUs, granted under our 2004 Stock Incentive Plan, as amended. The expiration
time of the exchange offer is 11:59 p.m., Eastern Time, on August 28, 2009, unless extended.
You are an eligible employee if you are:
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an employee of MKS or one of our subsidiaries located in the United States, Germany,
Japan or the United Kingdom (employees located in countries other than the United
States, Germany, Japan and the United Kingdom are not eligible to participate in the
exchange offer); |
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employed on the date the exchange offer commences and remain employed through the
date the RSUs are granted; |
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eligible to participate in the 2004 Stock Incentive Plan, as amended; and |
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not an executive officer or a member of our board of directors. |
Eligible options are stock options held by eligible employees that were granted under our
Second Restated 1995 Stock Incentive Plan and have a per share exercise price greater than $23.35,
which is the highest closing price of our common stock on the NASDAQ Global Select Market, or
Nasdaq, in the 52-week period preceding the commencement date of the exchange offer.
For purposes of the exchange offer, the term option generally refers to an option to
purchase one share of our common stock, and the term option grant refers to each grant of one or
more options. You will be permitted to exchange your eligible stock options for RSUs on a
grant-by-grant basis. No partial exchanges of a stock option grant will be permitted. If you elect
to exchange an eligible option grant, you must exchange the entire outstanding (i.e., unexercised)
portion of that eligible option grant. Eligible options properly tendered in this exchange offer
and accepted by us for exchange will be cancelled and the RSUs granted immediately upon the
expiration time.
If you are an eligible employee and choose to participate in the exchange offer and surrender
eligible options for exchange, and if we accept your surrendered eligible options, you will receive
RSUs with the following terms:
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you will receive RSUs for a lesser number of shares of common stock than the
cancelled eligible options that you tender. The number of RSUs will be determined
using an exchange ratio that is intended to ensure that the fair value, for accounting
purposes, of the RSUs are approximately equal to the fair value of the eligible option
tendered for exchange at the time the RSUs are granted. The number of RSUs to be
granted in exchange for each eligible option will be that number of RSUs (rounded down
to the nearest whole) that would be derived by dividing the fair value of such eligible
option grant (determined using the Black- |
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Scholes option valuation model) by the closing sale price of our common stock on the day
the exchange offer expires. The Black-Scholes option valuation model used to value
eligible option grants will take into account (i) the closing price of our common stock
on Nasdaq on the day the exchange offer expires, (ii) the exercise price of the option
grant, (iii) the expected volatility of our common stock over the projected life of the
option grant, (iv) the estimated expected life of the option grant, (v) the risk-free
interest rate over the projected life of the option grant and (vi) the expected
dividends on our common stock. Because the Black-Scholes valuation model takes into
account certain assumptions on the day the exchange offer expires, including the closing
price of our common stock, the Black-Scholes value of the tendered eligible options, the
exact exchange ratios and number of RSUs to be granted will not be known until shortly
after 4:00 p.m., Eastern Time, on the day the exchange offer expires. Set forth below
is a table identifying hypothetical exchange ratios that would be used in the exchange
offer assuming various closing prices of our common stock on the day the exchange offer
expires. After 4:00 p.m., Eastern Time, on the day the exchange offer expires, we will
distribute by e-mail (or other method) to all eligible employees the exact ratios to be
used in the exchange offer. The exchange ratios separately apply to each eligible
option grant based upon the exercise price and grant date of such option grants. This
means that if you hold various eligible options grants, each may be subject to different
exchange ratios; |
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the RSUs will be granted under our 2004 Stock Incentive Plan, as amended; and |
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the RSUs will have a vesting period of one year. (See Section 9, Source and Amount
of Consideration; Terms of Restricted Stock Units.) Vesting of the RSUs will be
conditioned upon your continued service with us, subject to limited exceptions for
retirement, death or disability. This means that you will generally be required to
remain employed with MKS for one year after the RSU grant date in order to be vested in
the RSUs. |
We will grant the RSUs immediately upon the expiration time, which we expect to be 11:59 p.m.,
Eastern Time, on August 28, 2009. If the expiration time is extended, the RSU grant date will be
similarly extended.
Due to the Black-Scholes valuation model we are using, some eligible options will have
exchange ratios that are so high that the number of RSUs that would be granted for any outstanding
option grant would be zero. We strongly encourage you to:
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use the calculator on the exchange offer website, described below, to determine
the number of RSUs that would be granted to you in exchange for each of your
eligible option grants based upon the hypothetical exchange ratios; and |
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when we provide you with the final exchange ratios, review and reconsider the
number of RSUs that would be granted to you based up any election that you
previously submitted. |
We will not accept tendered eligible options that would result in zero RSUs being granted.
- ii -
Table of Hypothetical Exchange Ratios Based on Various Assumed Closing Prices of Our
Common
Stock on August 28, 2009
In the following table, we have assumed that the closing price of our common stock on Nasdaq
on the day the exchange offer expires will be $17.00, which is equal to the trailing average
closing price of our common stock for the 10-trading day period prior to July 24, 2009, rounded to
the nearest dollar. We have also included additional closing prices that represent both 10%
($18.70), 20% ($20.40) and 30% ($22.10) increases and 10% ($15.30), 20% ($13.60) and 30% ($11.90)
decreases to such assumed closing price. The valuation model underlying the table below assumes a
volatility spread of up to 52%.
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Exchange Ratio(1) |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
Grant |
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Exercise |
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Closing |
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Closing |
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Closing |
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Closing |
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Closing |
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Closing |
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Closing |
Date of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
Options |
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Options |
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$11.90 |
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$13.60 |
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$15.30 |
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$17.00 |
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$18.70 |
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$20.40 |
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$22.10 |
1/4/2000
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$ |
32.00 |
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*
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*
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*
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6136.4 to 1
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1554.7 to 1
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511.6 to 1
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206.6 to 1 |
4/24/2000
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$ |
41.88 |
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*
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*
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*
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*
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*
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901.4 to 1
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429.2 to 1 |
5/1/2000
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$ |
50.81 |
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*
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*
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*
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*
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*
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*
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2489.9 to 1 |
5/5/2000
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$ |
48.62 |
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*
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*
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*
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*
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*
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3323.1 to 1
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1458.7 to 1 |
5/30/2000
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$ |
41.50 |
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*
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*
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*
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2588.4 to 1
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1038 to 1
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481.7 to 1
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251.1 to 1 |
6/30/2000
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$ |
39.13 |
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*
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*
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*
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900 to 1
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409.5 to 1
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211.5 to 1
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120.8 to 1 |
7/21/2000
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$ |
32.25 |
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2847.9 to 1
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877.3 to 1
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344.6 to 1
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161.9 to 1
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87.1 to 1
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52.1 to 1
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33.9 to 1 |
9/6/2000
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$ |
29.50 |
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702.6 to 1
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266.5 to 1
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123.7 to 1
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66.7 to 1
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40.2 to 1
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26.4 to 1
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18.6 to 1 |
9/25/2000
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$ |
29.25 |
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538.3 to 1
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214.2 to 1
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103.3 to 1
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57.3 to 1
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35.4 to 1
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23.8 to 1
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17 to 1 |
4/27/2001
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$ |
24.62 |
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54.2 to 1
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31.3 to 1
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20.2 to 1
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14.2 to 1
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10.6 to 1
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8.4 to 1
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6.8 to 1 |
5/30/2001
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$ |
25.86 |
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59.4 to 1
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34.3 to 1
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22.2 to 1
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15.6 to 1
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11.6 to 1
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9.1 to 1
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7.4 to 1 |
7/30/2001
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$ |
26.50 |
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53.2 to 1
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31.7 to 1
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21 to 1
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15 to 1
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11.3 to 1
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9 to 1
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7.4 to 1 |
8/13/2001
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|
$ |
26.77 |
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52.9 to 1
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31.7 to 1
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21 to 1
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|
15.1 to 1
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|
11.4 to 1
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|
9.1 to 1
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|
7.4 to 1 |
11/14/2001
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|
$ |
24.50 |
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29.4 to 1
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19.1 to 1
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|
13.5 to 1
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|
10.2 to 1
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8.1 to 1
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|
6.6 to 1
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|
5.6 to 1 |
1/30/2002
|
|
$ |
23.50 |
|
|
21.8 to 1
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|
14.8 to 1
|
|
10.8 to 1
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8.4 to 1
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6.8 to 1
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|
5.7 to 1
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4.9 to 1 |
1/31/2002
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$ |
24.03 |
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23.3 to 1
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15.7 to 1
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11.4 to 1
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8.9 to 1
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7.2 to 1
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6 to 1
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|
5.1 to 1 |
2/1/2002
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$ |
23.85 |
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22.7 to 1
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15.4 to 1
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11.2 to 1
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8.7 to 1
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7 to 1
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|
5.9 to 1
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|
5.1 to 1 |
2/11/2002
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|
$ |
25.90 |
|
|
28.9 to 1
|
|
19.1 to 1
|
|
13.7 to 1
|
|
10.5 to 1
|
|
8.3 to 1
|
|
6.9 to 1
|
|
5.9 to 1 |
3/5/2002
|
|
$ |
30.02 |
|
|
45.1 to 1
|
|
28.8 to 1
|
|
20 to 1
|
|
14.9 to 1
|
|
11.6 to 1
|
|
9.4 to 1
|
|
7.8 to 1 |
3/25/2002
|
|
$ |
32.00 |
|
|
53.7 to 1
|
|
33.9 to 1
|
|
23.4 to 1
|
|
17.2 to 1
|
|
13.3 to 1
|
|
10.7 to 1
|
|
8.8 to 1 |
6/3/2002
|
|
$ |
27.87 |
|
|
28.8 to 1
|
|
19.4 to 1
|
|
14.1 to 1
|
|
10.9 to 1
|
|
8.8 to 1
|
|
7.3 to 1
|
|
6.2 to 1 |
11/11/2003
|
|
$ |
27.11 |
|
|
12.6 to 1
|
|
9.7 to 1
|
|
7.8 to 1
|
|
6.5 to 1
|
|
5.6 to 1
|
|
4.9 to 1
|
|
4.4 to 1 |
12/3/2003
|
|
$ |
26.86 |
|
|
12.1 to 1
|
|
9.3 to 1
|
|
7.5 to 1
|
|
6.3 to 1
|
|
5.4 to 1
|
|
4.8 to 1
|
|
4.3 to 1 |
1/5/2004
|
|
$ |
29.93 |
|
|
14.7 to 1
|
|
11.2 to 1
|
|
8.9 to 1
|
|
7.4 to 1
|
|
6.3 to 1
|
|
5.5 to 1
|
|
4.9 to 1 |
3/1/2004
|
|
$ |
24.35 |
|
|
9.2 to 1
|
|
7.3 to 1
|
|
6 to 1
|
|
5.1 to 1
|
|
4.5 to 1
|
|
4 to 1
|
|
3.6 to 1 |
|
|
|
(1) |
|
Ratio of number of eligible options surrendered to the number of RSUs to be issued in exchange
therefor. |
|
* |
|
Due to the Black-Scholes valuation model we are using, at the
assumed closing price shown above, eligible options granted at this exercise
price will have an exchange ratio that is so high that the number of
RSUs that would be granted in exchange for any outstanding option grant would be zero. We will not
accept tendered eligible options that would result in zero RSUs being
granted. Based upon the Black-Scholes option valuation methodology,
and using the hypothetical exchange ratios in the forgoing table and
an assumed closing price of $17.91 (the closing price of our common
stock as of August 19, 2009), a total of 75,326 eligible options, or
5.2% of the total number of eligible options, held by 40 eligible
option holders would round to zero RSUs if such holders were to
tender those eligible options. |
- iii -
The following are illustrative examples based upon the foregoing table, assuming no
other changes in the Black-Scholes assumptions underlying the table above:
|
|
|
assuming that the
closing price of our common stock on the day the exchange offer
expires is $17.00, an eligible option to purchase 1,000 shares with a per share exercise price of
$29.25 will have an exchange ratio of 57.3:1. Therefore, this eligible option will
be exchangeable for 17 RSUs, which is equal to the number of shares underlying the
eligible option, or 1,000, divided by 57.3, rounded down to the nearest whole
share. |
|
|
|
|
assuming that the
closing price of our common stock on the day the exchange offer
expires is $20.40, an eligible option to purchase 5,000 shares with a per share exercise price of
$48.62 will have an exchange ratio of 3323.1:1. Therefore, this eligible option
would be exchangeable for one RSU, which is equal to the number of shares
underlying the eligible option, or 5,000, divided by 3323.1, rounded down to the
nearest whole share. |
|
|
|
|
assuming that the
closing price of our common stock on the day the exchange offer
expires is $20.40, an eligible option to purchase 1,000 shares with a per share exercise price of
$48.62 will have an exchange ratio of 3323.1:1. Therefore, this eligible option
would be exchangeable for zero RSUs, which is equal to the number of shares
underlying the eligible option, or 1,000, divided by 3323.1, rounded down to the
nearest whole share. Because the number of RSUs that would be granted is zero, we
will not accept this option for exchange. |
The exchange ratios shown in the table above illustrate the difference between the relatively
lower estimated fair values of eligible options with higher exercise prices compared to the
correspondingly higher estimated fair values of eligible options with lower exercise prices. The
exchange ratios are derived from the eligible options fair value using the Black-Scholes valuation
model that weighs, among other things, exercise price and remaining term to expiration. The higher
the eligible options exercise price and the lower the closing price of our common stock on the day
the exchange offer expires, the higher the exchange ratio will be, resulting in fewer RSUs.
Similarly, options with longer terms to expiration result in lower exchange ratios and more RSUs.
The commencement date of this exchange offer is August 3, 2009. We are making this exchange
offer upon the terms and subject to the conditions described in this exchange offer document and in
the related Election Form distributed with this exchange offer document and available on the
exchange offer website described below. You are not required to accept this exchange offer. You
will be permitted to exchange your eligible stock options for RSUs on a grant-by-grant basis. No
partial exchanges of a stock option grant will be permitted. If you elect to exchange an eligible
option grant, you must exchange the entire outstanding (i.e., unexercised) portion of that eligible
option grant. Eligible options properly tendered in this exchange offer and accepted by us for
exchange will be cancelled and the RSUs granted immediately upon the expiration time.
Our common stock is traded on Nasdaq under the symbol MKSI. On July 31, 2009, the closing
price of our common stock was $19.37 per share. You should evaluate the risks related to our
business, our common stock, and this exchange offer, and review current market quotes for our
common stock, among other factors, before deciding to participate in the exchange offer.
See Risks of Participating in the Exchange Offer for a discussion of risks that you should
consider before participating in this exchange offer.
- iv -
IMPORTANT
If you would like to participate in the exchange offer, you must properly complete and submit
your election to MKS through the secure exchange offer website at https://mks.optionelection.com,
which we refer to as the exchange offer website. We will make computer and Internet access
available at our office locations to any eligible employee who does not have Internet access. We
encourage you to submit your election electronically via the exchange offer website. If you are
unable to do so for any reason, including technical failures of the exchange offer website such as
the exchange offer website being unavailable or the exchange offer website not accepting your
election, you must complete a paper election form and return it via fax at (978) 557-5124 or e-mail
to Marlene Maffe, the MKS stock plan administrator, at marlene_maffe@mksinst.com (via PDF or
similar imaged document file). To obtain a paper election form, please e-mail Marlene Maffe at
marlene_maffe@mksinst.com or call (978) 645-5654. You can also view and print the paper election
form at https://mks.optionelection.com.
Only responses that are complete and actually received by MKS, whether via the exchange offer
website or via fax or e-mail, before 11:59 p.m., Eastern Time, on August 28, 2009 (unless we extend
the exchange offer) will be accepted. Responses submitted by any other means, including hand
delivery, interoffice, U.S. mail (or other post) and Federal Express (or similar delivery service)
are not permitted. The delivery of all documents, including election forms and withdrawal forms, is
at your risk. If you make an election or withdrawal via the exchange offer website, you will
receive a website confirmation. If you make an election or withdrawal via fax or e-mail, MKS will
confirm the receipt of your election or withdrawal within two business days. If you have not
received a confirmation, it is your responsibility to send an e-mail to Marlene Maffe at
marlene_maffe@mksinst.com or call (978) 645-5654.
For purposes of the exchange offer, a business day means any day other than a Saturday,
Sunday or a U.S. federal holiday and consists of the time period from 12:00 a.m. through 11:59
p.m., Eastern Time.
Neither the U.S. Securities and Exchange Commission, or the SEC, nor any state securities
commission has approved or disapproved of these securities or passed judgment upon the accuracy or
adequacy of this exchange offer. Any representation to the contrary is a criminal offense.
If you need additional copies of the exchange offer materials, including the election or
withdrawal forms, you should send an e-mail to Marlene Maffe, the MKS stock plan administrator, at
marlene_maffe@mksinst.com or call (978) 645-5654. Copies will be furnished promptly at our expense.
You can also view and print materials from the exchange offer website at
https://mks.optionelection.com. You should direct questions about the exchange offer to Marlene
Maffe at marlene_maffe@mksinst.com.
You should rely only on the information contained in this exchange offer document and the
materials to which we have referred you. We have not authorized anyone to provide you with
different information. You should not assume that the information provided in this document is
accurate as of any date other than the date indicated, or if no date is indicated otherwise, the
date of this exchange offer. This exchange offer summarizes various documents and other
information. These summaries are qualified in their entirety by reference to the documents and
information to which they relate.
- v -
TABLE OF CONTENTS
|
|
|
|
|
SUMMARY TERM SHEET AND QUESTIONS AND ANSWERS |
|
|
1 |
|
RISKS OF PARTICIPATING IN THE EXCHANGE OFFER |
|
|
11 |
|
THE EXCHANGE OFFER |
|
|
13 |
|
Section 1. Eligibility |
|
|
13 |
|
Section 2. Number of Restricted Stock Units; Expiration Time |
|
|
14 |
|
Section 3. Purposes of the Exchange Offer |
|
|
18 |
|
Section 4. Procedures for Electing to Exchange Options |
|
|
20 |
|
Section 5. Withdrawal Rights and Change of Election |
|
|
22 |
|
Section 6. Acceptance of Options for Exchange and Granting of Restricted Stock Units |
|
|
23 |
|
Section 7. Conditions of the Exchange Offer |
|
|
23 |
|
Section 8. Price Range of Shares Underlying the Options and Restricted Stock Units |
|
|
25 |
|
Section 9. Source and Amount of Consideration; Terms of Restricted Stock Units |
|
|
26 |
|
Section 10. Information Concerning MKS; Financial Information |
|
|
30 |
|
Section 11. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities |
|
|
31 |
|
Section 12. Status of Options Acquired by Us in the Exchange Offer; Accounting Consequences of the Exchange Offer |
|
|
31 |
|
Section 13. Legal Matters; Regulatory Approvals |
|
|
32 |
|
Section 14. Material Income Tax Consequences |
|
|
32 |
|
Section 15. Extension of the Exchange Offer; Termination; Amendment |
|
|
34 |
|
Section 16. Fees and Expenses |
|
|
35 |
|
Section 17. Additional Information |
|
|
35 |
|
Section 18. Miscellaneous |
|
|
35 |
|
SCHEDULE A INFORMATION CONCERNING THE EXECUTIVE OFFICERS AND DIRECTORS OF MKS |
|
|
A-1 |
|
SCHEDULE B SUMMARY FINANCIAL INFORMATION OF MKS INSTRUMENTS, INC. |
|
|
B-1 |
|
SCHEDULE C GUIDE TO TAX ISSUES IN GERMANY |
|
|
C-1 |
|
SCHEDULE D GUIDE TO TAX ISSUES IN JAPAN |
|
|
D-1 |
|
SCHEDULE E GUIDE TO TAX ISSUES IN THE UNITED KINGDOM |
|
|
E-1 |
|
SUMMARY TERM SHEET AND QUESTIONS AND ANSWERS
The following are answers to some of the questions that you may have about the exchange
offer by MKS Instruments, Inc., which we refer to herein as MKS, we, our or us. By this
Offer to Exchange Certain Stock Options for Restricted Stock Units, or the exchange offer, we are
offering to our eligible employees (as described below) the opportunity to voluntarily exchange
eligible options (as described below) for restricted stock units, or RSUs, granted under our
2004 Stock Incentive Plan, as amended. You should read carefully the entire exchange offer, the
attached exhibits and the election and withdrawal forms, together with their associated
instructions. This exchange offer is made subject to the terms and conditions of these materials as
they may be amended from time to time hereafter. The information in this summary is not complete.
Additional important information is contained in the remainder of this exchange offer and the other
exchange offer materials. We have included in this summary references to other sections in the
exchange offer to help you find more complete information with respect to these topics.
Q1. |
|
What is the exchange offer? |
|
A1. |
|
The exchange offer is an opportunity for eligible employees to
voluntarily exchange eligible options for a lesser number of RSUs.
Eligible options are stock options held by eligible employees that
were granted under our Second Restated 1995 Stock Incentive Plan and
have a per share exercise price greater than $23.35, which is the
highest closing price of our common stock on the NASDAQ Global Select
Market, or Nasdaq, in the 52-week period preceding the commencement
date of the exchange offer. |
|
|
|
The expiration time of the exchange offer is 11:59 p.m., Eastern Time, on August 28, 2009,
unless extended. |
|
|
|
You may tender for exchange any one or more of your eligible option grants or none at all.
However, you must exchange all options received pursuant to each eligible option grant. If
you have exercised a portion of an eligible option grant, your election will apply to the
portion that remains outstanding and unexercised. For a complete listing of your options,
including any eligible options you may have, please refer to your account at
http://www.netbenefits.com (employees outside the U.S. should click on the login to
NetBenefits Worldwide link). Your account also lists the grant date of your options, the
exercise price of your options and the number of shares subject to your option grants.
Please note that not all of your options may be eligible for exchange. |
|
|
|
This is a one-time exchange offer, and we will strictly enforce the expiration time. We
reserve the right to reject any eligible options tendered for exchange that we determine are
not in appropriate form or are unlawful to accept. We will not accept tendered eligible
options that would result in zero RSUs being granted. Subject to the terms and conditions
of the exchange offer, we will accept all properly tendered options promptly after the
expiration time. (See Section 4, Procedures for Electing to Exchange Options.) |
|
|
|
We may extend the exchange offer. If we extend the exchange offer, we will issue an e-mail
or other communication disclosing the extension no later than 6:00 a.m., Eastern Time, on
the business day immediately following the previously scheduled date of expiration. For
purposes of the exchange offer, a business day means any day other than a Saturday, Sunday
or a U.S. federal holiday and consists of the time period from 12:00 a.m. through 11:59
p.m., Eastern Time. |
|
|
Only responses that are complete and actually received by MKS, whether via the exchange
offer website or via fax or e-mail, before 11:59 p.m., Eastern Time, on August 28, 2009
(unless we extend the exchange offer) will be accepted. Responses submitted by any other
means, including hand delivery, interoffice, U.S. mail (or other post) and Federal Express
(or similar delivery service) are not permitted. The delivery of all documents, including
election forms and withdrawal forms, is at your risk. If you make an election or withdrawal
via the exchange offer website, you will receive a website confirmation. If you make an
election or withdrawal via fax or e-mail, MKS will confirm the receipt of your election or
withdrawal within two business days. If you have not received a confirmation, it is your
responsibility to send an e-mail to Marlene Maffe at marlene_maffe@mksinst.com or call (978)
645-5654. |
|
Q2. |
|
Who may participate in the exchange offer? |
|
A2. |
|
You may participate in the exchange offer if you are an eligible
employee of MKS, which means you are: |
|
|
|
an employee of MKS or one of our subsidiaries located in the United States,
Germany, Japan or the United Kingdom; |
|
|
|
|
employed on the date the exchange offer commences and remain employed
through the date the RSUs are granted; |
|
|
|
|
eligible to participate in the 2004 Stock Incentive Plan, as amended; and |
|
|
|
|
not an executive officer or a member of our board of directors. (See Section
1, Eligibility.) |
|
|
Employees located in countries other than the United States, Germany, Japan and the United
Kingdom are not eligible to participate in the exchange offer.
We have excluded employees located in other jurisdictions where we
believe extending the exchange offer would be inconsistent with the
compensatory purposes of the exchange offer. |
|
Q3. |
|
How many RSUs will I receive for the options that I exchange? |
|
A3. |
|
You will receive RSUs for a lesser number of shares of common stock
than the cancelled eligible options that you tender. The number of
RSUs to be granted in exchange for each eligible option will be
determined using an exchange ratio that is intended to ensure that the
fair value, for accounting purposes, of the RSUs are approximately
equal to the fair value of the eligible option tendered for exchange
at the time the RSUs are granted. The number of RSUs to be granted in
exchange for each eligible option will be the number of RSUs (rounded
down to the nearest whole RSU) that would be derived by dividing the
fair value of such eligible option (determined using the Black-Scholes
option valuation model) by the closing sale price of our common stock
on the day the exchange offer expires. |
|
|
|
The Black-Scholes option valuation model we are using to value eligible option grants will
take into account (i) the closing price of our common stock on Nasdaq on the day the
exchange offer expires, (ii) the exercise price of the eligible option, (iii) the expected
volatility of our common stock over the projected life of the eligible option, (iv) the
estimated expected life of the eligible option, (v) the risk-free interest rate over the
projected life of the eligible option and (vi) the expected dividends on our common stock.
The exchange ratios separately apply to each eligible option grant. This means that if you
hold various eligible options, each may be subject to a different exchange ratio. |
- 2 -
|
|
We have provided a table in Section 2 (Number of Restricted Stock Units; Expiration Time)
setting forth hypothetical exchange ratios that would be used in the exchange offer assuming
various closing prices on the day the exchange offer expires. However, to ensure that you
will have the information you need to make an informed decision based on the number of RSUs
that will be granted for exchanged eligible options, after Nasdaq closes on the day the
exchange offer expires, we will deliver to you (by e-mail or other method) a notification of
the final exchange ratios for the eligible options. At 5:30 p.m., Eastern Time, on the day the
exchange offer expires, we will host a conference call for all eligible employees both as a
further means of disclosing the final exchange ratios and to answer any remaining questions
that you may have. We will have designated employees available by telephone from the time at
which the final exchange ratios are delivered to you until 11:59, p.m., Eastern Time, on the
day the exchange offer expires to respond to any questions that you may have with respect to
the exchange offer or the final exchange ratios. You will have until 11:59 p.m., Eastern
Time, on the day the exchange offer expires (currently expected to be August 28, 2009) to make
an election by completing and submitting an election form or change any previous election you
have made by completing and submitting a withdrawal through the exchange offer website at
https://mks.optionelection.com or, if necessary completing a paper withdrawal form, by faxing
it to Marlene Maffe, the MKS stock plan administrator, at (978) 557-5124, or e-mail to Marlene
Maffe at marlene_maffe@mksinst.com (via PDF or similar imaged document file). |
|
|
|
Due to the Black-Scholes valuation model, some eligible options will have exchange ratios
that are so high that the number of RSUs that would be granted for any outstanding option
grant would be zero. We strongly encourage you to: |
|
|
|
use the calculator on the exchange offer website to determine the number of
RSUs that would be granted to you in exchange for each of your eligible option
grants based upon the hypothetical exchange ratios; and |
|
|
|
|
when we provide you with the final exchange ratios, review and reconsider the
number of RSUs that would be granted to you based up any election that you
previously submitted. |
|
|
We will not accept tendered eligible options that would result in zero RSUs being granted. |
|
Q4. |
|
Why is MKS making the exchange offer? |
|
A4. |
|
We are making the exchange offer to restore the retention and incentive benefits of our equity awards. We believe that the
exchange offer will help us to retain our valuable employees and better align the interests of our employees and
shareholders to maximize shareholder value. We issued the currently existing options to attract and retain the best
available personnel and to provide additional incentives to our employees. However, our stock price, like that of many
other companies in our industry, has declined significantly in the past year. As a result, most of our employees hold
options with exercise prices significantly higher than the current market price of our common stock. These options are
commonly referred to as being underwater. By making the exchange offer, we intend to provide eligible employees with the
opportunity to receive RSUs that have greater retention value because, unlike underwater options, such RSUs provide value
to employees even if our stock price remains depressed. (See Section 3, Purposes of the Exchange Offer.) |
|
Q5. |
|
How do I elect to participate? |
- 3 -
A5. |
|
If you wish to participate in the exchange offer, you must: |
|
|
|
submit your election to tender eligible options through our secure exchange offer
website or, if necessary, by the paper-based method, as described below; |
|
|
|
|
properly complete your election in the manner described in the prior bullet, during
the period beginning on August 3, 2009 and ending at 11:59 p.m., Eastern Time, on
August 28, 2009, or a later date if the exchange offer period is extended; and |
|
|
|
|
qualify as an eligible employee (as described in Question 2), which generally
means you are employed by us continuously throughout the period described in the prior
bullet. |
|
|
To participate, you may log onto the exchange offer website at
https://mks.optionelection.com and indicate your election to participate on a grant-by-grant
basis. If you are unable to do so for any reason, including technical failures of the
exchange offer website such as the exchange offer website being unavailable or the exchange
offer website not accepting your election, you must complete a paper election form and
return it via fax at (978) 557-5124 or e-mail to Marlene Maffe, the MKS stock plan
administrator, at marlene_maffe@mksinst.com (via PDF or similar imaged document file). To
obtain a paper election form, please e-mail Marlene Maffe at marlene_maffe@mksinst.com or
call (978) 645-5654. Please follow the directions set forth in Section 4 (Procedures for
Electing to Exchange Options) in connection with completing your election form. |
|
|
|
We must receive your election before 11:59 p.m., Eastern Time, on August 28, 2009 (or, if we
extend the exchange offer period, a later date). Elections not made via the exchange offer
website nor received by MKS before 11:59 p.m., Eastern Time, on August 28, 2009, even if
sent prior to the expiration time, will be disregarded. Accordingly, please allow time for
delivery when sending your paper election form(s). If we do not receive your election by the
expiration time, you will be deemed to have rejected the exchange offer. |
|
|
|
YOU SHOULD REVIEW THIS DOCUMENT AND ALL OF THE RELATED ATTACHMENTS BEFORE MAKING YOUR
ELECTION. |
|
Q6. |
|
Are there circumstances under which I would not be granted RSUs? |
|
A6. |
|
Yes. If, for any reason, you are no longer our employee when the RSUs
are granted, which will be immediately upon the expiration time, you
will not receive any RSUs. Instead, you will keep your current
eligible options and the eligible options will vest and expire in
accordance with their original terms. Except as provided by applicable
law and/or any employment agreement between you and us, your
employment with us will remain at-will regardless of your
participation in the exchange offer and can be terminated by you or
your employer at any time with or without cause or notice. (See
Section 1, Eligibility.) |
|
|
|
We will not accept tendered eligible options that would result in zero RSUs being granted.
Moreover, even if we accept your eligible options, we will not grant RSUs to you if we are
prohibited from doing so by applicable laws. We do not anticipate any such prohibitions at
this time. In such event, your eligible options will remain in effect, in accordance with
their existing terms and conditions. (See Section 13, Legal Matters; Regulatory
Approvals.) |
|
|
|
In addition, if you hold an option that expires after the commencement of, but before the
cancellation of options under, the exchange offer, that particular option is not eligible
for |
- 4 -
|
|
exchange. Therefore, if you hold options that expire any time before the expiration time
(whether or not extended), which we expect will be 11:59 p.m. on August 28, 2009, they will
not be eligible for exchange and such options will continue to be governed by their original
terms. (See Section 15, Extension of the Exchange Offer; Termination; Amendment.) |
|
|
|
In addition, due to the Black-Scholes valuation model we are using, some eligible options
will have exchange ratios that are so high that the number of RSUs that would be granted for
such outstanding option grant would be zero. We will not accept tendered eligible options
that would result in zero RSUs being granted. |
|
|
|
We also reserve the right, in our reasonable judgment, before the expiration time to
terminate or amend the exchange offer and to postpone our acceptance and cancellation of any
options elected to be exchanged if any of the events listed in Section 7 (Conditions of the
Exchange Offer) occurs, by giving oral or written notice of the termination or postponement
to you or by making a public announcement of the termination. (See Section 15, Extension of
the Exchange Offer; Termination; Amendment.) |
|
|
|
Only employees located in the United States, Germany, Japan and the United Kingdom are
eligible to participate in the exchange offer. We have excluded employees located in other jurisdictions where we
believe extending the exchange offer would be inconsistent with the
compensatory purposes of the exchange offer. |
|
Q7. |
|
Am I required to participate in this option exchange? |
|
A7. |
|
No. Participation in the exchange offer is completely voluntary. |
|
Q8. |
|
When will my RSUs vest? |
|
A8. |
|
Each RSU represents the right to receive one share of our common stock which will become vested 12 months from the RSU
grant date. Vesting of the RSUs will be conditioned upon your continued service with us, subject to limited exceptions
for retirement, death or disability. This means that you will generally be required to remain employed with MKS for one
year after the RSU grant date in order to be vested in the RSUs. However, if your employment with us terminates by reason
of retirement, death or disability, the vesting of the RSUs will accelerate such that your RSUs will be fully vested.
Additionally, if, prior to any vesting of an RSU, and within two years after the effectiveness of a Change in Control (as
defined in the RSU agreement), the participant is (i) terminated by MKS without Cause (as defined in the RSU agreement) or
(ii) terminates his or her employment for Good Reason (as defined in the RSU agreement), then, 100% of the participants
RSUs shall become immediately and fully vested. (See Section 9, Source and Amount of Consideration, Terms of
Restricted Stock Units.) |
|
Q9. |
|
If I participate in the exchange offer, do I have to exchange all of my eligible options? |
|
A9. |
|
No. You may pick and choose which of your outstanding eligible options you wish to exchange. However, if you decide to
exchange any eligible options received pursuant to a particular option grant, you must exchange all of the eligible
options received pursuant to such grant (i.e., you must make your election to participate on a grant-by-grant basis),
except that (a) you may partially tender an option grant covered by a domestic relations order (or comparable legal
document as the result of the end of a marriage) (see Question 10), and (b) you may elect to exchange all of the options
received pursuant to such eligible option grant that remain
unexercised at the expiration time. (See Section 2, Number of
Restricted Stock Units; Expiration Time.) |
- 5 -
Q10. |
|
What happens if I have an eligible option that is subject to a domestic relations order or comparable legal document as
the result of the end of a marriage? |
|
A10. |
|
If you have an eligible option that is subject to a domestic relations order (or comparable legal document as the result
of the end of a marriage) and a person who is not an eligible employee of MKS beneficially owns a portion of that eligible
option, you may tender only the portion beneficially owned by you. Any portion beneficially owned by a person who is not
our employee may not be exchanged in the exchange offer (even if legal title to that portion of the option is held by you
and you are an eligible employee). (See Section 2, Number of Restricted Stock Units; Expiration Time.) |
|
Q11. |
|
When will I receive the RSUs? |
|
A11. |
|
We will grant the RSUs immediately upon the expiration time, which we expect to be 11:59 p.m., Eastern Time, on August 28,
2009. If the expiration time is extended, the RSU grant date will be similarly extended. You will receive your RSU
agreement as soon as practicable after the expiration time. (See Section 6, Acceptance of Options for Exchange and
Granting of Restricted Stock Units.) |
|
Q12. |
|
When will my tendered eligible options be cancelled? |
|
A12. |
|
Your eligible options, properly tendered and not validly withdrawn, will be cancelled immediately upon the expiration
time, which will be 11:59 p.m., Eastern Time, on August 28, 2009, unless we extend the exchange offer. Once we have
accepted your eligible options and they have been cancelled, you will no longer have any rights under those options. (See
Section 6, Acceptance of Options for Exchange and Granting of Restricted Stock Units.) |
|
Q13. |
|
Once I surrender my eligible options, is there anything I must do to receive the RSUs? |
|
A13. |
|
No. Once your eligible options have been surrendered, there is nothing that you must do to receive your RSUs. Your RSUs
will be granted to you on the same day that the properly tendered and not validly withdrawn eligible options are
cancelled, provided that you are still an employee on such date (see Question 6). In order to vest in the shares covered
by RSUs, you will need to remain in continued service with us through the vesting date, as described in Question 8. (See
Section 1, Eligibility.) |
|
Q14. |
|
Can I exchange MKS common stock that I acquired upon a prior exercise of MKS options? |
|
A14. |
|
No. The exchange offer relates only to certain options to purchase shares of MKS common stock. You may not exchange shares
of MKS common stock in the exchange offer. (See Section 2, Number of Restricted Stock Units; Expiration Time.) |
|
Q15. |
|
Will the terms and conditions of my RSUs be the same as the terms and conditions of my eligible options? |
|
A15. |
|
No. Your RSUs will be unvested as of the RSU grant date and will have a different vesting schedule from the vesting
schedule of your eligible options. |
|
|
|
In addition, your RSUs will be granted under the terms of a RSU agreement under our 2004
Stock Incentive Plan, as amended. The applicable form of RSU agreement is filed as an
exhibit to the Schedule TO with which the exchange offer has been filed and is available on
the U.S. Securities |
- 6 -
|
|
and Exchange Commission, or SEC, website at http://www.sec.gov. (See Section 9, Source and
Amount of Consideration; Terms of Restricted Stock Units.) You may also contact Marlene
Maffe, the MKS stock plan administrator, to receive a copy of the 2004 Stock Incentive Plan,
as amended, and the form of RSU agreement. We will promptly furnish to you copies of these
documents upon request at our expense. |
|
|
|
Until your RSUs vest and you are issued shares for such RSUs, you will not have any of the
rights or privileges of a shareholder of MKS related to such shares. Once your RSUs vest
and you have been issued the underlying shares of common stock, you will have all of the
rights and privileges of a shareholder with respect to those shares, including the right to
vote and to receive dividends. |
|
Q16. |
|
What happens to my eligible options if I choose not to participate or if my options are not accepted for exchange? |
|
A16. |
|
If you choose not to participate or your eligible options are not accepted for exchange, your existing eligible options
will remain outstanding until they expire by their terms and will retain their current exercise price, current vesting
schedule and all of the other terms and conditions as set forth in the relevant agreement related to such eligible
options. (See Section 6, Acceptance of Options for Exchange and Granting of Restricted Stock Units.) |
|
Q17. |
|
How does MKS determine whether an eligible option has been properly tendered? |
|
A17. |
|
We will determine, in our discretion, all questions about the validity, form, eligibility (including time of receipt) and
acceptance of any eligible options. Our determination of these matters will be final and binding on all persons. We
reserve the right to reject any election form or any eligible options tendered for exchange that we determine are not in
an appropriate form or are unlawful to accept. We will accept all properly tendered eligible options that are not validly
withdrawn, subject to the terms of the exchange offer; provided, however, that we will not accept tendered eligible
options that would result in zero RSUs being granted. No tender of eligible options will be deemed to have been made
properly until all defects or irregularities have been cured or waived by us. Neither we nor any other person is
obligated to give you notice of any defects or irregularities in any electronic election or paper election form, nor will
anyone incur any liability for failure to give any notice. (See Section 4, Procedures for Electing to Exchange Options.) |
|
Q18. |
|
Will I have to pay taxes if I participate in the exchange offer? |
|
A18. |
|
If you participate in the exchange offer and are a U.S. taxpayer, you generally will not be required under current U.S.
law to recognize income for U.S. federal income tax purposes at the time of the exchange. However, you will have taxable
income when your RSUs vest in an amount equal to the fair market value of the MKS shares on the vesting date. MKS has a
withholding obligation with respect to this compensation income. In order for you to be issued shares of common stock when
your RSUs vest, you must make satisfactory arrangements with respect to the payment of income, employment and other taxes
that MKS determines must be withheld with respect to such shares. The RSU agreement provides that MKS will automatically
deduct and retain from the shares of common stock that would otherwise be issued in settlement of RSUs the appropriate
number of whole shares, valued at their then fair market value, to satisfy our tax withholding obligations at the
applicable minimum statutory withholding rate. You will have taxable capital gain (or loss) when you sell the shares
underlying the RSUs in the amount by which the sale price for the shares exceeds (or is less than) the fair market value
of the shares on the vesting date. Note that the tax treatment of RSUs is significantly different from the tax |
- 7 -
|
|
treatment of your eligible options, and participating in the exchange offer could result in
your tax liability being higher than if you had kept your eligible options or you having
income in a year that you had not expected. (See Risks of Participating in the Exchange
Offer.) Please see Section 14 (Material Income Tax Consequences) for a description of
the general tax consequences associated with options and RSUs. |
|
|
|
If you participate in the exchange offer and are subject to tax or social insurance
contributions in Germany, Japan or the United Kingdom, please refer to Schedules C, D and E
of this exchange offer for a description of the tax and social insurance consequences that
may apply to you. |
|
|
|
You should consult with your tax advisor to determine the personal tax consequences to you
of participating in the exchange offer. If you are a resident of or subject to the tax laws
in more than one country, you should be aware that there may be additional or different tax
and social insurance consequences that may apply to you. |
|
Q19. |
|
Are there any conditions to the exchange offer? |
|
A19. |
|
Yes. The completion of the exchange offer is subject to a number of customary conditions that are described in Section 7
(Conditions of the Exchange Offer). If any of these conditions are not satisfied, we will not be obligated to accept
and exchange properly tendered eligible options, though we may do so at our discretion. |
|
Q20. |
|
If you extend the exchange offer, how will you notify me? |
|
A20. |
|
If we extend the exchange offer, we will issue an e-mail or other form of communication disclosing the extension no later
than 6:00 a.m., Eastern Time, on the next business day following the previously scheduled expiration date. (See Sections
2, Number of Restricted Stock Units; Expiration Time and 15, Extension of the Exchange Offer; Termination; Amendment.) |
|
Q21. |
|
How will you notify me if the exchange offer is changed? |
|
A21. |
|
If we change the exchange offer, we will issue an e-mail or other form of communication disclosing the change no later
than 6:00 a.m., Eastern Time, on the next business day following the date on which we change the exchange offer. (See
Sections 2, Number of Restricted Stock Units; Expiration Time, and 15, Extension of the Exchange Offer; Termination;
Amendment.) |
|
Q22. |
|
Can I change my mind and withdraw from the exchange offer? |
|
A22. |
|
Yes. You may change your mind after you have submitted an election and withdraw some or all of your eligible options from
the exchange offer at any time before the expiration time (expected to be August 28, 2009). Please note, however, that
withdrawals must be made on a grant-by-grant basis. This means you cannot withdraw one option received pursuant to a
particular option grant without also withdrawing all other options received pursuant to such option grant. If we extend
the expiration time, you may withdraw your election at any time until the extended offer expires. You may change your mind
as many times as you wish, but you will be bound by the last properly submitted election and/or withdrawal we receive
before the expiration time. Although we do not expect this to occur, under SEC rules governing the exchange offer, if we
have not accepted your properly tendered eligible options by 11:59 p.m., Eastern Time, on September 28, 2009, you may
withdraw your eligible options at any time thereafter. (See Section 5, Withdrawal Rights and Change of Election.) |
- 8 -
Q23. |
|
Can I change my mind about which eligible options I want to exchange? |
|
A23. |
|
Yes. You may change your mind after you have submitted an election and change the eligible options you tender for exchange
at any time before the expiration time. If we extend the expiration time, you may change your election at any time until
the extended offer expires. You may elect to exchange additional eligible options, fewer eligible options, all of your
eligible options or none of your eligible options. You may change your mind as many times as you wish, but you will be
bound by the last properly submitted election we receive before the expiration time. (See Section 4, Procedures for
Electing to Exchange Options and Section 5, Withdrawal Rights and Change of Election.) |
|
Q24. |
|
How do I change my election? |
|
A24. |
|
To change your election, you must do the following before the expiration time: |
|
|
|
access the exchange offer website at https://mks.optionelection.com and
complete a new electronic election form; or |
|
|
|
|
although we encourage you to submit your election electronically via the
exchange offer website, if you are unable to do so for any reason, including
technical failures of the exchange offer website such as the exchange offer
website being unavailable or the exchange offer website not accepting your
election, you must complete a paper election form and return it via fax at
(978) 557-5124 or e-mail to Marlene Maffe, the MKS stock plan administrator, at
marlene_maffe@mksinst.com (via PDF or similar imaged document file). To obtain
a paper election form please e-mail Marlene Maffe at marlene_maffe@mksinst.com
or call (978) 645-5654. You can also view and print the election form at
https://mks.optionelection.com. |
|
|
Only responses that are complete and actually received by MKS, whether via the exchange
offer website or via fax or e-mail, before 11:59 p.m., Eastern Time, on August 28, 2009
(unless we extend the exchange offer) will be accepted. Responses submitted by any other
means, including hand delivery, interoffice, U.S. mail (or other post) and Federal Express
(or similar delivery service) are not permitted. The delivery of all documents, including
election forms and withdrawal forms, is at your risk. If you make an election or withdrawal
via the exchange offer website, you will receive a website confirmation. If you make an
election or withdrawal via fax or e-mail, MKS will confirm the receipt of your election or
withdrawal within two business days. If you have not received a confirmation, it is your
responsibility to send an e-mail to Marlene Maffe at marlene_maffe@mksinst.com or call (978)
645-5654. (See Section 5, Withdrawal Rights and Change of Election.) |
|
Q25. |
|
What if I withdraw my election and then decide again that I want to
participate in the exchange offer? |
|
A25. |
|
If you have withdrawn your election to participate and then decide
again that you would like to participate in the exchange offer, you
may re-elect to participate by submitting a new, properly completed
electronic election form (or faxed or e-mailed form) accepting the
exchange offer before the expiration time, in accordance with the
procedures described in Question 5 and Section 5 (Withdrawal Rights
and Change of Election). |
|
Q26. |
|
Are you making any recommendation as to whether I should exchange my
eligible options? |
- 9 -
A26. |
|
No. We are not making any recommendation as to whether you should
accept the exchange offer. We understand that the decision whether or
not to exchange your eligible options in the exchange offer will be a
challenging one for many employees. The program does carry risk, and
there are no guarantees that you ultimately would receive greater
value from the RSUs you will receive in exchange than you would if
you had retained your corresponding options. (See Risks of
Participating in the Exchange Offer for information regarding some
of these risks.) As a result, you must make your own decision as to
whether or not to participate in the exchange offer. For questions
regarding personal tax implications or other investment- or
tax-related questions, you should talk to your legal counsel,
accountant, and/or financial advisor. |
|
Q27. |
|
Whom can I contact if I have questions about the exchange offer, or
if I need additional copies of the exchange offer materials? |
|
A27. |
|
You should direct questions about the exchange offer and requests for
additional copies of exchange offer materials to Marlene Maffe, the
MKS stock plan administrator, at marlene_maffe@mksinst.com or (978)
645-5654. (See Section 10, Information Concerning MKS; Financial
Information.) |
|
Q28. |
|
What will be the sequence of events should I decide to participate in
this exchange offer? |
|
|
|
|
|
Exchange Election Period
|
|
You may elect to
participate in this
exchange offer
during this time.
|
|
From August 3, 2009
until August 28,
2009 at 11:59 p.m.,
Eastern Time, unless
the exchange offer
is extended or
terminated. |
|
|
|
|
|
Determination of Final
Exchange Ratios and
Number of RSUs
|
|
We will determine
the exchange ratios
based on the closing
price of our common
stock on August 28,
2009 unless we
extend the exchange
offer. We will
notify you of the
exact exchange
ratios and the
number of RSUs you
will receive after
4:00 p.m., Eastern
Time, on the day the
exchange offer
expires.
|
|
After 4:00 p.m.,
Eastern Time, on
August 28, 2009,
unless the exchange
offer is extended or
terminated. |
|
|
|
|
|
Conference Call
|
|
We will host a
conference call for
all eligible
employees both as a
further means of
disclosing the final
exchange ratios and
to answer any
remaining questions
that you may have.
|
|
5:30 p.m., Eastern
Time, on August 28,
2009, unless the
exchange offer is
extended or
terminated. |
|
|
|
|
|
Cancellation Date and
RSU Grant Date
|
|
All elections and
withdrawals will be
final as of 11:59
p.m., Eastern Time,
on the day the
exchange offer
expires, and this is
when exchanged
options will be
cancelled and RSUs
will be granted.
|
|
August 28, 2009,
unless the exchange
offer is extended or
terminated. |
- 10 -
RISKS OF PARTICIPATING IN THE EXCHANGE OFFER
Participating in the exchange offer involves a number of risks, including those described below.
This list and the risk factors in our Annual Report on Form 10-K for the year ended December 31,
2008, and in our Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2009 and June 30, 2009, filed with the
SEC highlight the material risks relating to MKS. You should carefully consider these risks and are
encouraged to speak with an investment and/or tax advisor, as necessary, before deciding whether or
not to participate in the exchange offer. In addition, we strongly urge you to read the sections in
this exchange offer discussing the U.S. federal tax consequences of participating in the exchange
offer, as well as the rest of this exchange offer, for a more in-depth discussion of the risks that
may apply to you before deciding to participate in the exchange offer.
Economic Risks
If the price of our common stock increases after the date on which your eligible options are
cancelled, your cancelled eligible options might have been worth more than the RSUs that you
receive in exchange for them.
For example, using the hypothetical exchange ratios in the table in Section 2, if you exchange
an eligible option grant covering 1,000 shares with an exercise price of $29.25 per share, you
would receive 17 RSUs (i.e., 1,000 divided by the exchange ratio of 57.3 applicable to the eligible
option grant rounded down to the nearest whole share). Assume, for illustrative purposes only that,
one year after the RSU grant date, the fair market value of our common stock had increased to
$39.25 per share. Under this example, if you had kept your exchanged eligible option, exercised it,
and sold the underlying shares at $39.25 per share, you would have realized a pre-tax income of
$10,000, but if you exchanged your eligible option and sold the RSUs for $39.25 per share, you
would only realize a pre-tax income of $667.25.
Once you have tendered your eligible option and we have accepted it for exchange, there will
be no way to return your surrendered eligible option to you even if the fair market value of our
common stock on the RSU grant date exceeds the exercise price of your surrendered eligible option.
Any RSU you receive in the exchange offer will be completely unvested at the time it is granted,
regardless of the extent to which the corresponding eligible option was vested upon surrender. This
means that you will be vested in fewer shares under your RSU and that if your employment with us
terminates during that new vesting period (other than as a result of retirement, death or
disability), or if the RSU otherwise terminates under certain circumstances during the vesting
period, you might have been better off if you had continued holding the eligible option rather than
exchanging it for a RSU.
The RSUs will have a vesting period of one year. (See Section 9, Source and Amount of
Consideration; Terms of Restricted Stock Units.) Vesting of the RSUs will be conditioned upon
your continued service with us, subject to limited exceptions for retirement, death or disability.
This means that you will generally be required to remain employed with MKS for one year after the
RSU grant date in order to be vested in the RSUs.
If your employment with us terminates for any reason (other than as a result of retirement,
death or disability) during the vesting period of your RSU, you will forfeit your RSUs at that
time.
You should carefully consider the relative benefit to you of the extent to which your eligible
options have already vested, compared to the benefit of a RSU with a vesting period of one year. If
our stock price increases in the future to a value above the exercise price of an eligible option
you surrendered in the exchange offer, you may have been better off retaining the eligible option
with its higher price and current vesting schedule rather than having tendered it for the RSU with
a new vesting schedule.
- 11 -
The exchange offer is not a promise of continued employment for any length of time. The exchange
offer does not change the at-will nature of your employment. Your employment may be terminated by
us or by you at any time, including prior to the expiration time, the RSU grant date or the date
your RSU becomes vested, for any reason, with or without cause.
If we are acquired by or merge with another company, your cancelled eligible options might
have been worth more than the RSU that you receive in exchange for them.
A transaction involving us, such as a merger or other acquisition, could have a substantial
effect on our stock price, including significantly increasing the price of our common stock.
Depending on the structure and terms of this type of transaction, eligible employees who elect to
exchange their eligible options in the exchange offer might be deprived of the benefit of the
appreciation in the price of our common stock resulting from the merger or acquisition. This could
result in a greater financial benefit for those eligible employees who did not participate in the
exchange offer and retained their eligible options.
Tax-Related Risks
We believe that the exchange of eligible options for RSUs pursuant to the exchange offer
should be treated as a non-taxable exchange and neither we nor any of our employees should
recognize any income for U.S. federal income tax purposes upon the surrender of eligible options
and the grant of RSUs.
If you participate in this exchange offer, you should not recognize any income or be subject
to income tax withholding upon the cancellation of your eligible options and receipt of your RSUs.
However, in connection with the issuance of shares on the date that your RSUs vest, you will
recognize income equal to the fair market value of the shares received, and we will generally have
a corresponding deduction at the time you recognize income. When shares are delivered to you under
your RSUs, you must make adequate provision for any sums required to satisfy applicable federal,
state, local and foreign tax withholding obligations. The RSU agreement provides that MKS will
automatically deduct and retain from the shares of common stock that would otherwise be issued in
settlement of RSUs the appropriate number of whole shares, valued at their then fair market value,
to satisfy our tax withholding obligations at the applicable minimum statutory withholding rate.
Unless the foregoing tax withholding obligations are satisfied, we have no obligation to deliver
any shares to you under your RSUs. You will have taxable income when you sell the shares delivered
to you under your RSUs.
Business-Related Risks
In addition to the risks discussed above, you should carefully review the risk factors
contained in our Annual Report on Form 10-K for the year ended December 31, 2008, and our Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2009 and
June 30, 2009, as well as the information provided in
this exchange offer and the other materials that we have filed with the SEC, before making a
decision on whether or not to tender your eligible options. These filings and our other SEC
filings may be examined, and copies may be obtained, at the SECs public reference room at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. Our SEC filings also are available to the
public on the SECs Internet site at http://www.sec.gov. Each person to whom a copy of this
exchange offer is delivered may obtain a copy of any or all of the documents to which we have
referred you, other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents, at no cost, by writing to us at MKS Instruments,
Inc., 2 Tech Drive, Suite 201, Andover, MA 01810, Attention: Marlene Maffe.
- 12 -
THE EXCHANGE OFFER
MKS Instruments, Inc., which we refer to herein as MKS, we, our or us, by this Offer
to Exchange Certain Stock Options for Restricted Stock Units, or the exchange offer, is offering to
our eligible employees the opportunity to voluntarily exchange eligible options for restricted
stock units, or RSUs, granted under our 2004 Stock Incentive Plan, as amended. This exchange offer
and withdrawal rights will expire at the expiration time, which is 11:59 p.m., Eastern Time, on
August 28, 2009 unless we extend the exchange offer.
Section 1. Eligibility.
You are an eligible employee if you are:
|
|
|
an employee of MKS or one of our subsidiaries located in the United States, Germany,
Japan or the United Kingdom; |
|
|
|
|
employed on the date the exchange offer commences and remain employed through the
date the RSUs are granted, hereinafter referred to as the RSU grant date; |
|
|
|
|
eligible to participate in the 2004 Stock Incentive Plan, as amended; and |
|
|
|
|
not an executive officer or a member of our board of directors. |
Employees located in countries other than the United States, Germany, Japan and the United
Kingdom are not eligible to participate in the exchange offer. We have excluded employees located in other jurisdictions where we believe extending the exchange
offer would be inconsistent with the compensatory purposes of the
exchange offer.
Eligible options are stock options held by eligible employees that were granted under our
Second Restated 1995 Stock Incentive Plan and have a per share exercise price greater than $23.35,
which is the highest closing price of our common stock on Nasdaq in the 52-week period preceding
the commencement date of the exchange offer.
For purposes of the exchange offer, the term option generally refers to an option to
purchase one share of our common stock, and the term option grant refers to each grant of one or
more options. You will be permitted to exchange your eligible stock options for RSUs on a
grant-by-grant basis. No partial exchanges of a stock option grant will be permitted. If you elect
to exchange an eligible option grant, you must exchange the entire outstanding (i.e., unexercised)
portion of that eligible option grant. Eligible options properly tendered in this exchange offer
and accepted by us for exchange will be cancelled and the RSUs granted immediately upon the
expiration time.
If you do not remain employed by MKS through the RSU grant date, you will keep your current
eligible options, and they will vest and expire in accordance with their terms. If we do not extend
the exchange offer, the RSU grant date will be August 28, 2009. Except as provided by applicable
law and/or any employment agreement between you and MKS, your employment with MKS will remain
at-will and can be terminated by you or MKS at any time, with or without cause or notice. In
order to vest in your RSUs, you must remain in continued service with MKS through the vesting date.
If your employment with us terminates for any reason (other than as a result of retirement, death
or disability) during the vesting period of your RSU, you will forfeit your RSUs at that time. See
Section 9 (Source and Amount of Consideration; Terms of Restricted Stock Units).
Nothing in this exchange offer should be construed to confer upon you the right to remain an
employee of MKS or one of our subsidiaries. The terms of your employment with us remain
- 13 -
unchanged. We cannot guarantee or provide you with any assurance that you will not be subject
to involuntary termination or that you will otherwise remain in our employ until the RSU grant date
or thereafter.
Section 2. Number of Restricted Stock Units; Expiration Time.
Subject to the terms and conditions of the exchange offer, we will accept for exchange options
granted with a per share exercise price greater than $23.35, which is the highest closing price of
our common stock on Nasdaq in the 52-week period preceding the commencement date of the exchange
offer, that (i) are held by eligible employees, (ii) are outstanding and unexercised as of the
expiration time and (iii) are properly tendered and not validly withdrawn before the expiration
time; provided, however, we will not accept tendered eligible options that would result in zero
RSUs being granted. In order to be eligible, options must be outstanding as of the expiration
time. For example, if an option expires during the offer period, that particular option is not
eligible for exchange.
For a complete listing of your options, including any eligible options you may have, please
refer to your account at http://www.netbenefits.com (employees outside the U.S. should click on the
login to NetBenefits Worldwide link). Your account also lists the grant date of your options,
the exercise price of your options and the number of shares subject to your option grants. Please
note that not all of your options may be eligible for exchange.
As noted above, for purposes of the exchange offer, the term option refers to an option to
purchase one share of our common stock, and the term option grant refers to each grant of one or
more options. You will be permitted to exchange your eligible stock options for RSUs on a
grant-by-grant basis. No partial exchanges of a stock option grant will be permitted. If you elect
to exchange an eligible option grant, you must exchange the entire outstanding (i.e., unexercised)
portion of that eligible option grant. For example, assume that you have received options pursuant
to three separate option grants. In the first grant, you received 1,000 options, 700 of which have
been exercised and 300 of which remain outstanding. In the second grant, you received 1,000
options, none of which have been exercised, and in the third grant, you received 3,000 options,
none of which have been exercised. Under this scenario, you may choose to exchange all of the
eligible options received pursuant to the three grants, all of the eligible options received
pursuant to any two of the three grants, all of the eligible options received pursuant to any one
of the three grants, or none of the eligible options. However, you may not choose to exchange less
than all of the eligible options received pursuant to any one or more of such grants (such as an
election to exchange only 150 of the remaining 300 options received pursuant to the first grant).
However, the rule above will not apply to any options subject to a domestic relations order
(or comparable legal document resulting in the end of marriage) to the extent that such options are
beneficially owned by a person who is not an employee of MKS. Any such options may not be exchanged
pursuant to the exchange offer, even if title to such options is held by an eligible employee. The
options beneficially owned by the eligible employee may be tendered in the exchange offer if
eligible, but only if all such options received pursuant to the same grant are tendered at the same
time. For instance, if the 3,000 options received pursuant to the third grant above are subject to
a domestic relations order such that your former spouse is the beneficial owner of 1,000 of such
options and you are beneficial owner of 2,000 of such options, then you may elect to participate in
the exchange offer and exchange all 2,000 options that you beneficially own and that were received
as part of the same option grant.
Exchange Ratios.
- 14 -
If you are an eligible employee and choose to participate in the exchange offer and surrender
eligible options for exchange, and if we accept your surrendered eligible options, you will receive
RSUs with the following terms:
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you will receive RSUs for a lesser number of shares of common stock than the
cancelled eligible options that you tender. The number of RSUs will be determined
using an exchange ratio that is intended to ensure that the fair value, for accounting
purposes, of the RSUs is approximately equal to the fair value of the eligible option
tendered for exchange at the time the RSUs are granted. The number of RSUs to be
granted in exchange for each eligible option will be that number of RSUs (rounded down
to the nearest whole) that would be derived by dividing the fair value of such eligible
option grant (determined using the Black-Scholes option valuation model) by the closing
sale price of our common stock on the day the exchange offer expires. The
Black-Scholes option valuation model used to value eligible option grants will take
into account (i) the closing price of our common stock on Nasdaq on the day the
exchange offer expires, (ii) the exercise price of the option grant, (iii) the expected
volatility of our common stock over the projected life of the option grant, (iv) the
estimated expected life of the option grant, (v) the risk-free interest rate over the
projected life of the option grant and (vi) the expected dividends on our common stock.
Because the Black-Scholes valuation model takes into account certain assumptions on
the day the exchange offer expires, including the closing price of our common stock,
the Black-Scholes value of the tendered eligible options, the exact exchange ratios and
number of RSUs to be granted will not be known until shortly after 4:00 p.m., Eastern
Time, on the day the exchange offer expires. Set forth below is a table identifying
hypothetical exchange ratios that would be used in the exchange offer assuming various
closing prices of our common stock on the day the exchange offer expires. After 4:00
p.m., Eastern Time, on the day the exchange offer expires, we will distribute by e-mail
(or other method) to all eligible employees the exact ratios to be used in the exchange
offer. The exchange ratios separately apply to each eligible option grant based upon
the exercise price and grant date of such option grants. This means that if you hold
various eligible options grants, each may be subject to different exchange ratios; |
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the RSUs will be granted under our 2004 Stock Incentive Plan, as amended; and |
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the RSUs will have a vesting period of one year. (See Section 9, Source and Amount
of Consideration; Terms of Restricted Stock Units.) Vesting of the RSUs will be
conditioned upon your continued service with us, subject to limited exceptions for
retirement, death or disability. This means that you will generally be required to
remain employed with MKS for one year after the RSU grant date in order to be vested in
the RSUs. |
We will grant the RSUs immediately upon the expiration time, which we expect to be 11:59 p.m.,
Eastern Time, on August 28, 2009. If the expiration time is extended, the RSU grant date will be
similarly extended.
Due to the Black-Scholes valuation model, some eligible options will have exchange ratios that
are so high that the number of RSUs that would be granted for any outstanding option grant would be
zero. We strongly encourage you to:
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use the calculator on the exchange offer website to determine the number of
RSUs that would be granted to you in exchange for each of your eligible option
grants based upon the hypothetical exchange ratios; and |
- 15 -
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when we provide you with the final exchange ratios, review and reconsider the
number of RSUs that would be granted to you based up any election that you
previously submitted. |
We will not accept tendered eligible options that would result in zero RSUs being granted.
Table of Hypothetical Exchange Ratios
Based on Various Assumed Closing Prices of Our
Common Stock on August 28, 2009
In the following table, we have assumed that the closing price of our common stock on Nasdaq
on the day the exchange offer expires will be $17.00, which is equal to the trailing average
closing price of our common stock for the 10-trading day period prior to July 24, 2009, rounded to
the nearest dollar. We have also included additional closing prices that represent both 10%
($18.70), 20% ($20.40) and 30% ($22.10) increases and 10% ($15.30), 20% ($13.60) and 30% ($11.90)
decreases to such assumed closing price. The valuation model underlying the table below assumes a
volatility spread of up to 52%.
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Exchange Ratio(1) |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Assumed |
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Grant |
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Exercise |
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Closing |
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Closing |
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Closing |
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Closing |
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Closing |
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Closing |
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Closing |
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Date of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Price of |
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Options |
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Options |
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$11.90 |
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$13.60 |
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$15.30 |
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$17.00 |
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$18.70 |
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$20.40 |
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$22.10 |
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1/4/2000 |
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$ |
32.00 |
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* |
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* |
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* |
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6136.4 to 1 |
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1554.7 to 1 |
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511.6 to 1 |
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206.6 to 1 |
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4/24/2000 |
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$ |
41.88 |
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* |
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* |
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* |
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* |
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* |
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901.4 to 1 |
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429.2 to 1 |
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5/1/2000 |
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$ |
50.81 |
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* |
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* |
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* |
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* |
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* |
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* |
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2489.9 to 1 |
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5/5/2000 |
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$ |
48.62 |
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* |
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* |
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* |
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* |
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* |
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3323.1 to 1 |
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1458.7 to 1 |
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5/30/2000 |
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$ |
41.50 |
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* |
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* |
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* |
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2588.4 to 1 |
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1038 to 1 |
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481.7 to 1 |
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251.1 to 1 |
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6/30/2000 |
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$ |
39.13 |
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* |
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* |
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* |
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900 to 1 |
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409.5 to 1 |
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211.5 to 1 |
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120.8 to 1 |
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7/21/2000 |
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$ |
32.25 |
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2847.9 to 1 |
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877.3 to 1 |
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344.6 to 1 |
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161.9 to 1 |
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87.1 to 1 |
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52.1 to 1 |
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33.9 to 1 |
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9/6/2000 |
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$ |
29.50 |
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702.6 to 1 |
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266.5 to 1 |
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123.7 to 1 |
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66.7 to 1 |
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40.2 to 1 |
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26.4 to 1 |
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18.6 to 1 |
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9/25/2000 |
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$ |
29.25 |
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538.3 to 1 |
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214.2 to 1 |
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103.3 to 1 |
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57.3 to 1 |
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35.4 to 1 |
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23.8 to 1 |
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17 to 1 |
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4/27/2001 |
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$ |
24.62 |
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54.2 to 1 |
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31.3 to 1 |
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20.2 to 1 |
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14.2 to 1 |
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10.6 to 1 |
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8.4 to 1 |
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6.8 to 1 |
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5/30/2001 |
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$ |
25.86 |
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59.4 to 1 |
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34.3 to 1 |
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22.2 to 1 |
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15.6 to 1 |
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11.6 to 1 |
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9.1 to 1 |
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7.4 to 1 |
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7/30/2001 |
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$ |
26.50 |
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53.2 to 1 |
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31.7 to 1 |
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21 to 1 |
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15 to 1 |
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11.3 to 1 |
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9 to 1 |
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7.4 to 1 |
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8/13/2001 |
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$ |
26.77 |
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52.9 to 1 |
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31.7 to 1 |
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21 to 1 |
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15.1 to 1 |
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11.4 to 1 |
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9.1 to 1 |
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7.4 to 1 |
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11/14/2001 |
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$ |
24.50 |
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29.4 to 1 |
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19.1 to 1 |
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13.5 to 1 |
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10.2 to 1 |
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8.1 to 1 |
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6.6 to 1 |
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5.6 to 1 |
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1/30/2002 |
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$ |
23.50 |
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21.8 to 1 |
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14.8 to 1 |
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10.8 to 1 |
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8.4 to 1 |
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6.8 to 1 |
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5.7 to 1 |
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4.9 to 1 |
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1/31/2002 |
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$ |
24.03 |
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23.3 to 1 |
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15.7 to 1 |
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11.4 to 1 |
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8.9 to 1 |
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7.2 to 1 |
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6 to 1 |
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5.1 to 1 |
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2/1/2002 |
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$ |
23.85 |
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22.7 to 1 |
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15.4 to 1 |
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11.2 to 1 |
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8.7 to 1 |
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7 to 1 |
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5.9 to 1 |
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5.1 to 1 |
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2/11/2002 |
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$ |
25.90 |
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28.9 to 1 |
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19.1 to 1 |
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13.7 to 1 |
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10.5 to 1 |
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8.3 to 1 |
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6.9 to 1 |
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5.9 to 1 |
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3/5/2002 |
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$ |
30.02 |
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45.1 to 1 |
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28.8 to 1 |
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20 to 1 |
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14.9 to 1 |
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11.6 to 1 |
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9.4 to 1 |
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7.8 to 1 |
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3/25/2002 |
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$ |
32.00 |
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53.7 to 1 |
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33.9 to 1 |
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23.4 to 1 |
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17.2 to 1 |
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13.3 to 1 |
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10.7 to 1 |
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8.8 to 1 |
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6/3/2002 |
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$ |
27.87 |
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28.8 to 1 |
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19.4 to 1 |
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14.1 to 1 |
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10.9 to 1 |
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8.8 to 1 |
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7.3 to 1 |
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6.2 to 1 |
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11/11/2003 |
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$ |
27.11 |
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12.6 to 1 |
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9.7 to 1 |
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7.8 to 1 |
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6.5 to 1 |
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5.6 to 1 |
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4.9 to 1 |
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4.4 to 1 |
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12/3/2003 |
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$ |
26.86 |
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12.1 to 1 |
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9.3 to 1 |
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7.5 to 1 |
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6.3 to 1 |
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5.4 to 1 |
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4.8 to 1 |
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4.3 to 1 |
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1/5/2004 |
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$ |
29.93 |
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14.7 to 1 |
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11.2 to 1 |
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8.9 to 1 |
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7.4 to 1 |
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6.3 to 1 |
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5.5 to 1 |
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4.9 to 1 |
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3/1/2004 |
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$ |
24.35 |
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9.2 to 1 |
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7.3 to 1 |
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6 to 1 |
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5.1 to 1 |
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4.5 to 1 |
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4 to 1 |
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3.6 to 1 |
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(1) |
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Ratio of number of eligible options surrendered to the number of RSUs to be issued in exchange
therefor. |
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Due to the Black-Scholes valuation model we are using, at the
assumed closing price shown above, eligible options granted at this exercise
price will have an exchange ratio that is so high that the number of
RSUs that |
- 16 -
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would be granted in exchange for any outstanding option grant would be zero. We will not accept
tendered eligible options that would result in zero RSUs being
granted. Based upon the Black-Scholes option valuation methodology,
and using the hypothetical exchange ratios in the forgoing table and
an assumed closing price of $17.91 (the closing price of our common
stock as of August 19, 2009), a total of 75,326 eligible options, or
5.2% of the total number of eligible options, held by 40 eligible
option holders would round to zero RSUs if such holders were to
tender those eligible options. |
The following are illustrative examples based upon the foregoing table, assuming no
other changes in the Black-Scholes assumptions underlying the table above:
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assuming that the
closing price of our common stock on the day the exchange offer
expires is $17.00, an eligible option to purchase 1,000 shares with a per share exercise price of
$29.25 will have an exchange ratio of 57.3:1. Therefore, this eligible option will
be exchangeable for 17 RSUs, which is equal to the number of shares underlying the
eligible option, or 1,000, divided by 57.3, rounded down to the nearest whole
share. |
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assuming that the
closing price of our common stock on the day the exchange offer
expires is $20.40, an eligible option to purchase 5,000 shares with a per share exercise price of
$48.62 will have an exchange ratio of 3323.1:1. Therefore, this eligible option
would be exchangeable for one RSU, which is equal to the number of shares
underlying the eligible option, or 5,000, divided by 3323.1, rounded down to the
nearest whole share. |
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assuming that the
closing price of our common stock on the day the exchange offer
expires is $20.40, an eligible option to purchase 1,000 shares with a per share exercise price of
$48.62 will have an exchange ratio of 3323.1:1. Therefore, this eligible option
would be exchangeable for zero RSUs, which is equal to the number of shares
underlying the eligible option, or 1,000, divided by 3323.1, rounded to the nearest
whole share. Because the number of RSUs that would be granted is zero, we will not
accept this option for exchange. |
The exchange ratios shown in the table above illustrate the difference between the relatively
lower estimated fair values of eligible options with higher exercise prices compared to the
correspondingly higher estimated fair values of eligible options with lower exercise prices. The
exchange ratios are derived from the eligible options fair value using the Black-Scholes valuation
model that weighs, among other things, exercise price and remaining term to expiration. The higher
the eligible options exercise price and the lower the closing price of our common stock on the day
the exchange offer expires, the higher the exchange ratio will be, resulting in fewer RSUs.
Similarly, options with longer terms to expiration result in lower exchange ratios and more RSUs.
The commencement date of this exchange offer is August 3, 2009. We are making this exchange
offer upon the terms and subject to the conditions described in this exchange offer document and in
the related Election Form distributed with this exchange offer document and available on the
exchange offer website. You are not required to accept this exchange offer. You will be permitted
to exchange your eligible stock options for RSUs on a grant-by-grant basis. No partial exchanges
of a stock option grant will be permitted. If you elect to exchange an eligible option grant, you
must exchange the entire outstanding (i.e., unexercised) portion of that eligible option grant.
Eligible options properly tendered in this exchange offer and accepted by us for exchange will be
cancelled and the RSUs granted as of the day the exchange offer expires of this exchange offer.
Our common stock is traded on Nasdaq under the symbol MKSI. On July 31, 2009, the closing
price of our common stock was $19.37 per share. You should evaluate the risks related to our
business, our common stock, and this exchange offer, and review current market quotes for our
common stock, among other factors, before deciding to participate in the exchange offer. All RSUs
will be subject to the terms of a RSU agreement between you and MKS under our 2004 Stock Incentive
Plan, as amended. See Section 9 (Source and Amount of Consideration; Terms of Restricted Stock
Units).
- 17 -
The expiration time of the exchange offer will be 11:59 p.m., Eastern Time, on August 28,
2009, unless we extend the exchange offer. We may, in our discretion, extend the exchange offer, in
which event the expiration time will refer to the latest time and date at which the extended offer
expires. See Section 15 (Extension of the Exchange Offer; Termination; Amendment) for a
description of our rights to extend, terminate and amend the exchange offer.
Section 3. Purposes of the Exchange Offer.
Many of our employees now hold stock options with exercise prices significantly higher than
the current market price of our common stock. For example, on July 31, 2009, the closing price of
our common stock on Nasdaq was $19.37 per share. On that date,
holders of eligible options held an aggregate of 2,060,133 options,
over 70% of which were underwater, meaning that the exercise price of the outstanding
stock option was higher than the market price for our common stock. On July 31, 2009, the weighted
average exercise price of our eligible options was $26.79. Although we continue to believe that
equity awards are an important component of our employees total compensation, many of our
employees view their existing options as having little or no value due to the difference between
the exercise prices and the current market price of our common stock. As a result, for many
employees, these options are ineffective at providing the incentive and retentive values that our
board of directors believes are necessary to motivate our employees and to increase long-term
shareholder value. We believe that the exchange offer provides the following benefits:
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the exchange offer will provide renewed incentives and motivation for the eligible
employees to contribute to achieving future stock price growth. By realigning the value
of previously granted stock options with the current value of our common stock, based
on the exchange ratios described in Section 2 (Number of Restricted Stock Units;
Expiration Time), we believe that the RSUs will become an important tool to help
motivate the eligible employees to continue to create shareholder value; |
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the exchange offer is designed to benefit our shareholders by providing renewed
retention value due to the extended vesting terms of the RSUs. All of the eligible
options will be fully vested at the expiration time. The RSUs will have a new 12-month
vesting period, thus providing an incentive for eligible employees to continue their
employment; |
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the exchange offer will also enable us to recapture value from compensation costs
that we already are incurring with respect to outstanding equity awards that currently
have very little motivational impact. By replacing options that have little or no
retentive or incentive value with a lesser number of RSUs, we will increase the
retentive and incentive value of equity awards for which we have already incurred
costs. In addition, replacing these options will not create additional compensation
expense; and |
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outstanding underwater options expose our shareholders to potential dilution and may
place downward pressure on our stock price even if they are underwater and not likely
to be exercised. This potential dilution and downward pressure caused by outstanding
stock options is referred to as overhang. We estimate a reduction in our overhang of
outstanding stock options of approximately 1,288,027 shares as a result of granting a lesser
number of RSUs in exchange for the eligible options, assuming (a) full participation in
the exchange offer, (b) an assumed closing price of our common
stock of $17.00 per share and (c) exchange ratios that have been
calculated in accordance with the Black-Scholes option valuation model
described in Section 2. The actual reduction in our
total overhang that could result from the |
- 18 -
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exchange offer could vary significantly and is dependent upon a number of factors,
including the actual level of participation in the exchange offer. |
MKS continually evaluates and explores strategic opportunities as they arise, including
business combination transactions, strategic partnerships, capital infusions and the purchase of
sale of assets. At any given time, we may be engaged in discussions or negotiations with respect
to various corporate transactions. We also grant stock options and other stock awards, including
restricted stock units and restricted stock grants, in the ordinary course of business to our
current and new employees, including our executive officers. Our employees, including our
executive officers, from time to time acquire or dispose of our securities. Additionally, in the
ordinary course of business, MKS makes changes in the composition and structure of its board of
directors and/or management. Subject to the foregoing, and except as otherwise disclosed in the
exchange offer materials or in our filings with the SEC, we presently have no plans or proposals
that relate to or would result in:
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any extraordinary transaction, such as a material merger, reorganization or
liquidation, involving MKS or any of its subsidiaries; |
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any purchase, sale or transfer of a material amount of our assets or the assets of
any of our subsidiaries; |
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any material change in our present dividend rate or policy, or our indebtedness or
capitalization; |
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any change in our present board of directors or management, including, but not
limited to, any plans or proposals to change the number or term of directors or to fill
any existing board vacancies or to change any material term of the employment contract
of any executive officer; |
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any other material change in our corporate structure or business; |
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our common stock being delisted from Nasdaq or not being authorized for quotation in
an automated quotation system operated by a national securities association; |
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our common stock becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or the Exchange
Act; |
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the suspension of our obligation to file reports pursuant to Section 15(d) of the
Exchange Act; |
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the acquisition by any person of additional of our securities or the disposition of
our securities; or |
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any changes in our certificate of incorporation or bylaws, or any actions that may
impede the acquisition of control of us by any person. |
Neither we nor our board of directors makes any recommendation as to whether you should accept
the exchange offer, nor have we authorized any person to make any such recommendation. You should
evaluate carefully all of the information in this exchange offer and consult your investment and
tax advisors. You must make your own decision about whether to participate in the exchange offer.
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Section 4. Procedures for Electing to Exchange Options.
Proper Election to Exchange Options.
Participation in the exchange offer is voluntary. If you are an eligible employee and you
wish to surrender any of your eligible options for exchange in the exchange offer, you must notify
MKS of your election before the exchange offer expires at 11:59 p.m., Eastern Time, on August 28,
2009 (or such later date as may apply if the exchange offer is extended). If we extend the exchange
offer beyond that time, you may surrender your eligible options for exchange at any time until the
extended expiration time.
You will be permitted to exchange your eligible stock options for RSUs on a grant-by-grant
basis. No partial exchanges of a stock option grant will be permitted. If you elect to exchange an
eligible option grant, you must exchange the entire outstanding (i.e., unexercised) portion of that
eligible option grant. If you elect to surrender one eligible option grant in the exchange offer,
you do not need to surrender any other eligible option grants you may hold. If you attempt to
exchange a portion but not all of an outstanding eligible option grant, your election form will be
rejected.
You must notify MKS of your election to exchange such eligible options before the exchange
offer expires. You may notify MKS of your election in one of the following two ways:
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by making an election online at the exchange offer website, which is available
at https://mks.optionelection.com. Your online election must be submitted before
the expiration deadline of 11:59 p.m., Eastern Time, on August 28, 2009 (or such
later date as may apply if the exchange offer is extended); or |
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by completing and returning the paper election form included in the materials
provided to you with this exchange offer document and delivering it to MKS
according to the instructions contained in the materials so that MKS receives it
before the expiration deadline of 11:59 p.m., Eastern Time, on August 28, 2009 (or
such later date as may apply if the exchange offer is extended). |
You must allow for delivery time based on the method of submission that you choose to ensure
that MKS receives your election form by the deadline.
We encourage you to submit your election electronically via the exchange offer website. Only
responses that are complete and actually received by MKS (whether via the exchange offer website or
via fax or e-mail) by the expiration time will be accepted. Responses submitted by any other means,
including hand delivery, interoffice, U.S. mail (or other post) and Federal Express (or similar
delivery service) are not permitted. The delivery of all documents, including election forms and
withdrawal forms, is at your risk. If you make an election or withdrawal via the exchange offer
website, you will receive a website confirmation. If you make an election or withdrawal via fax or
e-mail, MKS will confirm the receipt of your election or withdrawal within two business days. If
you have not received a confirmation, it is your responsibility to send an e-mail to Marlene Maffe
at marlene_maffe@mksinst.com or call (978) 645-5654.
You must complete the election process in the foregoing manner before 11:59 p.m., Eastern
Time, on August 28, 2009. If we extend the exchange offer beyond that date, you must complete the
process before the extended expiration time.
You may change your mind about which of your eligible options you wish to have exchanged. If
you wish to add additional eligible options to your election, you must complete and submit a new
election
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form before the expiration time by following the procedures described above. This new election
form must be properly completed and dated after your prior election form and must list all eligible
options you wish to exchange. Any prior election form will be disregarded. If, instead, you wish to
withdraw some or all of the eligible options you selected for exchange, you may do so at any time
before the expiration time by following the procedures described in Section 5 (Withdrawal Rights
and Change of Election).
Your election to participate becomes irrevocable after 11:59 p.m., Eastern Time, on August 28,
2009, unless we extend the exchange offer, in which case your election will become irrevocable
after 11:59 p.m., Eastern Time, on the new expiration date. The exception to this rule is that if
we have not accepted your properly tendered options by 11:59 p.m., Eastern Time, on September 28,
2009, you may withdraw your options at any time thereafter. You may change your mind after you have
submitted an election form and withdraw from the exchange offer at any time before the expiration
time, as described in Section 5 (Withdrawal Rights and Change of Election). You may change your
mind as many times as you wish, but you will be bound by the last properly submitted election form
we receive before the expiration time.
This is a one-time offer, and we are required to and will strictly enforce the expiration
time. Elections after the expiration time will not be honored under any circumstances. We reserve
the right to reject any eligible options tendered for exchange that we determine are not in
appropriate form or are unlawful to accept. We will not accept tendered eligible options that
would result in zero RSUs being granted. Subject to the terms and conditions of the exchange
offer, we will accept all properly tendered options promptly after the expiration time.
We may extend the exchange offer. If we extend the exchange offer, we will issue an e-mail or
other communication disclosing the extension no later than 6:00 a.m., Eastern Time, on the business
day immediately following the previously scheduled expiration time.
Our receipt of your Election Form is not by itself an acceptance of your options for exchange.
For purposes of the exchange offer, we will be deemed to have accepted eligible options for
exchange that are properly tendered and not validly withdrawn as of the time when we give oral or
written notice of our acceptance of options for exchange. We may issue this notice of acceptance by
e-mail or other form of communication. Eligible options accepted for exchange will be cancelled
immediately upon expiration time which we presently expect will be 11:59 p.m., Eastern Time, on
August 28, 2009.
Determination of Validity; Rejection of Options Tendered For Exchange; Waiver of Defects; No
Obligation To Give Notice Of Defects.
We will determine, in our discretion, all questions about the validity, form, eligibility
(including time of receipt) and acceptance of any eligible options. Our determination of these
matters will be final and binding on all persons. We reserve the right to reject any election form
or any options tendered for exchange that we determine are not in appropriate form or are unlawful
to accept. We will not accept tendered eligible options that would result in zero RSUs being
granted. We will accept all properly tendered options that are not validly withdrawn. We also
reserve the right to waive any of the conditions of the exchange offer or any defect or
irregularity in any tender of any particular options or for any particular option holder, provided
that if we grant any such waiver, it will be granted with respect to all option holders and
tendered options. No tender of options will be deemed to have been properly made until all defects
or irregularities have been cured by the tendering option holder or waived by us. Neither we nor
any other person is obligated to give you notice of any defects or irregularities in any electronic
election or paper election form, nor will anyone incur any liability for failure to give any
notice.
- 21 -
Your election to exchange options through the procedures described above constitutes your
acceptance of the terms and conditions of the exchange offer. Our acceptance of your eligible
options for exchange will constitute a binding agreement between MKS and you upon the terms and
subject to the conditions of the exchange offer.
Section 5. Withdrawal Rights and Change of Election.
You may change your election with respect to your eligible options only in accordance with the
provisions of this section at any time before the expiration time, which is expected to be 11:59
p.m., Eastern Time, on August 28, 2009. If we extend the exchange offer, you may withdraw your
tendered options at any time until the extended expiration time.
You will be permitted to withdraw your election to exchange your eligible stock options for
RSUs on a grant-by-grant basis. No partial exchanges of a stock option grant will be permitted. If
you withdraw an eligible option grant, you must withdraw the entire outstanding (i.e., unexercised)
portion of that eligible option grant.
In addition, although we intend to accept all properly tendered options promptly upon the
expiration time, if we have not accepted your options by 11:59 p.m., Eastern Time, on September 28,
2009, you may withdraw your tendered options at any time thereafter.
We encourage you to submit your withdrawals or election changes electronically via the
exchange offer website. If you are unable to do so for any reason, including technical failures of
the exchange offer website such as the exchange offer website being unavailable or the exchange
offer website not accepting your election, you must complete a paper election form and return it
via fax at (978) 557-5124 or e-mail to Marlene Maffe, the MKS stock plan administrator, at
marlene_maffe@mksinst.com (via PDF or similar imaged document file), before 11:59 p.m., Eastern
Time, on August 28, 2009, unless we extend the exchange offer. To obtain a paper election form
please send an e-mail to Marlene Maffe at marlene_maffe@mksinst.com or call (978) 645-5654. You can
also view and print the election form from the exchange offer website at
https://mks.optionelection.com.
If you submit an election form declining the exchange offer and you later decide that you
would like to exchange your eligible options for RSUs, you may elect to participate at any time by
submitting a new properly completed electronic election form (or paper election form) accepting the
exchange offer before the expiration time, by following the procedures described in Section 4
(Procedures for Electing to Exchange Options).
Neither we nor any other person is obligated to give you notice of any defects or
irregularities in any electronic election or paper election form, nor will anyone incur any
liability for failure to give any notice. We will determine, in our discretion, all questions
about the validity, form, eligibility (including time of receipt) and acceptance of any eligible
options. Our determination of these matters will be final and binding on all persons.
You may change your mind as many times as you wish, but you will be bound by the last properly
submitted election and/or withdrawal form we receive before the expiration time. Any eligible
option grants that you do not withdraw will be bound pursuant to your prior election form.
Only responses that are complete and actually received by MKS (whether via the exchange offer
website or via fax or e-mail) by the expiration time will be accepted. Responses submitted by any
other means, including hand delivery, interoffice, U.S. mail (or other post) and Federal Express
(or similar delivery service) are not permitted. The delivery of all documents, including election
- 22 -
forms and withdrawal forms, is at your risk. If you make a withdrawal via the exchange offer
website, you will receive a website confirmation. If you make a withdrawal via fax or e-mail, MKS
will confirm the receipt of your withdrawal within two business days. If you have not received a
confirmation, it is your responsibility to send an e-mail to Marlene Maffe at
marlene_maffe@mksinst.com or call (978) 645-5654.
Section 6. Acceptance of Options for Exchange and Granting of Restricted Stock Units.
Upon the terms and conditions of the exchange offer and promptly following the expiration
time, we will accept for exchange and cancel all eligible options properly tendered for exchange
and not validly withdrawn before the expiration time; provided, however, that we will not accept
tendered eligible options that would result in zero RSUs being granted. Once the eligible options
are cancelled, you no longer will have any rights with respect to such options. Subject to the
terms and conditions of the exchange offer, if your options are properly tendered by you for
exchange and accepted by us, such options will be cancelled as of expiration time, which we
anticipate to be 11:59 p.m., Eastern Time, on August 28, 2009. None of the shares subject to
cancelled options will be available for future awards under our equity incentive plans.
Subject to our rights to terminate the exchange offer, as discussed in Section 15 (Extension
of the Exchange Offer; Termination; Amendment), we will accept promptly upon the expiration time
all properly tendered options that are not validly withdrawn except options that would result in
zero RSUs being granted. We will give oral or written notice to the eligible employees generally of
our acceptance for exchange of the eligible options. This notice may be made by e-mail or other
method of communication.
We will grant the RSUs immediately upon the expiration time, which we expect to be 11:59 p.m.,
Eastern Time, on August 28, 2009. All RSUs will be granted under the 2004 Stock Incentive Plan, as
amended, and will be subject to a RSU agreement between you and MKS. The number of RSUs you will
receive will be determined using an exchange ratio that is intended to ensure that the fair value,
for accounting purposes, of the RSUs are approximately equal to the fair value of the eligible
option tendered for exchange at the time the RSUs are granted as described in Section 2 (Number of
Restricted Stock Units; Expiration Time). As soon as practicable after the expiration time, we
will send you your RSU agreement. You will be issued shares of common stock when and if your RSUs
vest in accordance with the vesting schedule described in Section 9 (Source and Amount of
Consideration; Terms of Restricted Stock Units).
Options that we do not accept for exchange will remain outstanding until they expire by their
terms and will retain their current exercise price and current vesting schedule.
Section 7. Conditions of the Exchange Offer.
Notwithstanding any other provision of the exchange offer, we will not be required to accept
any options tendered for exchange, and we may terminate the exchange offer, or postpone our
acceptance and cancellation of any options tendered for exchange, in each case, subject to Rule
13e-4(f)(5) under the Exchange Act, if at any time on or after the date the exchange offer
commences, and before the expiration time, any of the following events has occurred, or has been
determined by us, in our reasonable judgment, to have occurred:
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there has been threatened in writing or instituted or is pending any action,
proceeding or litigation seeking to enjoin, make illegal or delay
beyond November 4, 2009 (the date by which the exchange offer must be
completed in accordance with stockholder approval) the exchange offer; |
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any order, stay, judgment or decree has been issued by any court, government,
governmental authority or other regulatory or administrative authority and is in
effect, or any statute, rule, regulation, governmental order or injunction has been
proposed, enacted, enforced or deemed applicable to the exchange offer, any of which
might restrain, prohibit or delay completion of the exchange offer or impair the
contemplated benefits of the exchange offer to us (see Section 3, Purposes of the
Exchange Offer, for a description of the contemplated benefits of the exchange offer
to us); |
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there has occurred: |
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any general suspension of trading in, or limitation on prices for, our
securities on any national securities exchange or in an over-the-counter market in
the United States; |
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the declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States; |
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any limitation, whether or not mandatory, by any governmental, regulatory or
administrative agency or authority on, or any event that, in our reasonable
judgment, might affect the extension of credit to us by banks or other lending
institutions in the United States; |
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in our reasonable judgment, any extraordinary or material adverse change in U.S.
financial markets generally, including, a decline of at least 10% in the Dow Jones
Industrial Average, the Nasdaq Index or the Standard & Poors 500 Index from the
date of commencement of the exchange offer; |
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the commencement, continuation or escalation of a war or other national or
international calamity directly or indirectly involving the United States, which
reasonably could be expected to affect materially or adversely, or to delay
materially, the completion of the exchange offer; or |
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if any of the situations described above existed at the time of commencement of
the exchange offer and that situation, in our reasonable judgment, deteriorates
materially after commencement of the exchange offer; |
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a tender or exchange offer, other than this exchange offer by us, for some or all of
our shares of outstanding common stock, or a material merger, acquisition or other
business combination proposal involving us or our subsidiaries, has been proposed,
announced or made by another person or entity or has been disclosed publicly or we have
learned that: |
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any person, entity or group within the meaning of Section 13(d)(3) of the
Exchange Act has acquired more than 5% of our outstanding common stock, other than
a person, entity or group that had publicly disclosed such ownership with the SEC
prior to the date of commencement of the exchange offer; |
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any such person, entity or group that had publicly disclosed such ownership
prior to such date will acquire additional common stock constituting more than 1%
of our outstanding shares; or |
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any new group has been formed that beneficially owns more than 5% of our
outstanding common stock that in our judgment in any such case, and regardless of
the circumstances, |
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makes it inadvisable to proceed with the exchange offer or with such acceptance for
exchange of eligible options; |
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there has occurred any change, development, clarification or position taken in
generally accepted accounting principles that could or would require us to record for
financial reporting purposes compensation expense against our earnings in connection
with the exchange offer, other than as contemplated as of the commencement date of the
exchange offer (as described in Section 12, Status of Options Acquired by Us in the
Exchange Offer; Accounting Consequences of the Exchange Offer); |
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any event has occurred that has resulted or is reasonably likely to result, in our
reasonable judgment, in a material adverse change in our business or financial
condition; |
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any event has occurred that has resulted or may result, in our reasonable judgment,
in a material impairment of the contemplated benefits of the exchange offer to us (see
Section 3, Purposes of the Exchange Offer, for a description of the contemplated
benefits of the exchange offer to us); or |
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any rules or regulations by any governmental authority, Nasdaq or other regulatory
or administrative authority or any national securities exchange have been enacted,
enforced or deemed applicable to MKS. |
If any of the above events occur, we may:
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terminate the exchange offer and all tendered eligible options will continue to
remain outstanding; |
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complete and/or extend the exchange offer and, subject to your withdrawal rights,
retain all tendered eligible options until the extended offer expires; |
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amend the terms of the exchange offer; or |
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waive any unsatisfied condition and, subject to any requirement to extend the period
of time during which the exchange offer is open, complete the exchange offer. |
The conditions to the exchange offer are for our benefit. We may assert them in our discretion regardless of the circumstances giving rise to them before the expiration time. We may waive any condition, in whole or in part, at any time and from time to time before the expiration time, in our discretion, whether or not we waive any other condition to the exchange offer. If we become aware that a condition to the exchange offer is triggered, we will
promptly notify eligible employees in writing whether or not we have decided to waive such condition. Our failure at any time to exercise any of these rights will not be deemed a waiver of any such rights, but will be deemed a
waiver of our ability to assert the condition that was triggered with respect to the particular circumstances under which we failed to exercise such rights. Subject to any order or decision by a court or arbiter of competent jurisdiction, any determination we make concerning the events described in this Section will be final and binding upon all persons.
Section 8. Price Range of Shares Underlying the Options and Restricted Stock Units.
The MKS common stock underlying your eligible options and the RSUs is traded on Nasdaq under
the symbol MKSI. The following table shows, for the periods indicated, the high and low intraday
sales price per share of our common stock as reported by Nasdaq.
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High |
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Low |
Fiscal Year Ending December 31, 2009 |
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3rd Quarter (through July 31, 2009) |
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$ |
20.12 |
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$ |
12.75 |
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2nd Quarter |
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$ |
17.50 |
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$ |
12.75 |
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1st Quarter |
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$ |
16.29 |
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$ |
11.38 |
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Fiscal Year Ended December 31, 2008 |
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4th Quarter |
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$ |
19.79 |
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$ |
11.76 |
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3rd Quarter |
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$ |
25.00 |
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$ |
19.00 |
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2nd Quarter |
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$ |
25.88 |
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$ |
20.91 |
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1st Quarter |
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$ |
22.24 |
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$ |
15.90 |
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Fiscal Year Ended December 31, 2007 |
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4th Quarter |
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$ |
21.71 |
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$ |
16.94 |
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3rd Quarter |
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$ |
28.15 |
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$ |
18.91 |
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2nd Quarter |
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$ |
28.47 |
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$ |
25.46 |
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1st Quarter |
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$ |
26.00 |
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$ |
21.11 |
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On July 31, 2009, the last reported sale price of our common stock, as reported by Nasdaq, was
$19.37 per share.
You should evaluate current market quotes for our common stock, among other factors, before
deciding whether or not to accept the exchange offer.
Section 9. Source and Amount of Consideration; Terms of Restricted Stock Units.
Consideration.
We will grant RSUs in exchange for eligible options properly tendered by you and accepted by
us for such exchange. RSUs are equity awards under which MKS promises to issue common stock in the
future, providing the vesting criteria have been satisfied.
Subject to the terms and conditions of the exchange offer, upon our acceptance of your
properly tendered eligible options, you will be entitled to receive RSUs determined using an
exchange ratio that is intended to ensure that the fair value, for accounting purposes, of the RSUs
are approximately equal to the fair value of the eligible option tendered for exchange at the time
the RSUs are granted as described in Section 2 (Number of Restricted Stock Units; Expiration
Time). Fractional RSUs will be rounded down to the nearest whole RSU on a grant-by-grant basis.
If we receive and accept tendered options from eligible employees of all options eligible to
be tendered (a total of options to purchase 1,454,947 shares subject to the terms and conditions of the
exchange offer), based upon the Black-Scholes option pricing model
described in Section 2 and assuming a closing price
of our common stock of $17.00, we will grant RSUs covering a total of
approximately 166,920 shares of our common stock, or approximately
0.34% of the total shares of our common stock
outstanding as of July 31, 2009.
General terms of RSUs.
RSUs will be granted under our 2004 Stock Incentive Plan, as amended, and subject to a RSU
agreement between you and MKS. The following description summarizes the material terms of the RSUs
and our 2004 Stock Incentive Plan, as amended, under which the RSUs will be granted. Our
statements in this exchange offer concerning the 2004 Stock Incentive Plan, as amended, and the
RSUs are merely
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summaries and do not purport to be complete. The statements are subject to, and are qualified
in their entirety by reference to, the 2004 Stock Incentive Plan, as amended, and the form of RSU
agreement, which are incorporated herein by reference. The 2004 Stock Incentive Plan, as amended,
and the applicable form of RSU agreement are incorporated by reference or filed as exhibits to the
Schedule TO with which this exchange offer has been filed and are available on the or filed SEC
website at http://www.sec.gov. You may also contact Marlene Maffe, the MKS stock plan
administrator, to receive a copy of the 2004 Stock Incentive Plan, as amended, and the form of RSU
agreement. We will promptly furnish to you copies of these documents upon request at our expense.
Each recipient of an award under the 2004 Stock Incentive Plan, as amended, is referred to as
a participant.
Purchase Price. The purchase price, if any, of a RSU granted under the 2004 Stock Incentive
Plan, as amended, is generally determined by the administrator of such plan. There will be no
purchase price for the RSUs granted in the exchange offer. As a result, you do not have to make
any cash payment to MKS to receive your RSUs or the common stock to be issued upon vesting, but you
will be required to satisfy your tax obligation associated with the vesting of the shares.
Vesting. Each RSU will have a vesting period of one year. Vesting of the RSUs will be
conditioned upon your continued service with us, subject to limited exceptions for retirement,
death or disability. This means that you will generally be required to remain employed with MKS
for one year after the RSU grant date in order to be vested in the RSUs. However, if your
employment with us terminates by reason of retirement, death or disability, the vesting of the RSUs
will accelerate such that your RSUs will be fully vested. Under the RSU agreement, retirement
means a voluntary termination of employment by the participant after he or she is at least age
sixty (60) and has a combination of years of age plus Years of Service with MKS equal to seventy
(70) or more, and Years of Service means full years of employment since the participants
original hire date with MKS (or parent or subsidiary of MKS).
Additionally, if, prior to any vesting of a RSU, and within two years after the effectiveness
of a Change in Control (as defined in the RSU agreement), the participant is (i) terminated by MKS
without Cause (as defined in the RSU agreement) or (ii) terminates his or her employment for Good
Reason (as defined in the RSU agreement), then 100% of the participants RSUs shall become
immediately and fully vested.
Transferability of RSUs. RSUs granted in the exchange offer may not be transferred, except to
or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any
other relatives approved by the board of directors or to a trust established solely for the benefit
of the participant and/or such relatives. In the event of your death, any person who acquires the
RSUs by bequest or inheritance may be issued the shares subject to the RSUs.
Registration and Sale of Shares Underlying RSUs. All of the shares of MKS common stock
issuable upon the vesting of the RSUs have been registered under the Securities Act of 1933, as
amended (the Securities Act) on registration statements on Form S-8 filed with the SEC. Unless
you are an employee who is considered an affiliate of MKS for purposes of the Securities Act, you
will be able to sell the shares issuable upon the vesting of your RSUs free of any transfer
restrictions under applicable U.S. securities laws.
Federal income tax consequences. You should refer to Section 14 (Material Income Tax
Consequences Material U.S. Federal Income Tax Consequences) for a discussion of the U.S.
federal income tax consequences of the RSUs and eligible options, as well as the consequences of
accepting or
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rejecting the exchange offer. If you are a taxpayer of the United States, but also are
subject to the tax laws of another non-U.S. jurisdiction, you should be aware that there might be
other tax and social insurance consequences that may apply to you. If you are a taxpayer in
Germany, Japan or the United Kingdom, the tax consequences of the exchange offer to you are
described in Schedules C, D and E, respectively. We strongly recommend that you consult with your
advisors to discuss the consequences to you of this transaction.
2004 Stock Incentive Plan, as amended.
The 2004 Stock Incentive Plan, as amended, provides for the grant of incentive stock options,
nonstatutory stock options, stock appreciation rights, awards of restricted stock and unrestricted
stock, and other stock-based awards, including RSUs and performance shares. As of January 1, 2009,
an aggregate of 13,442,295 shares of common stock was authorized for issuance under the 2004 Stock
Incentive Plan, as amended (subject to adjustment for certain changes in our capitalization).
Incentive Stock Options and Nonstatutory Options. Optionees receive the right to purchase a
specified number of shares of common stock at some time in the future at an option price and
subject to such terms and conditions as are specified at the time of the grant. Incentive stock
options and options that the board of directors or Compensation Committee intends to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue Code may not be granted
at an exercise price less than the fair market value of the common stock on the date of grant (or
less than 110% of the fair market value in the case of incentive stock options granted to optionees
holding 10% or more of the total combined voting stock of MKS or any of its subsidiaries).
Non-qualified options may be granted with an exercise price that may be less than, equal to or
greater than the fair market value of the common stock on the date of grant. The 2004 Stock
Incentive Plan, as amended, permits the following forms of payment of the exercise price of
options: (i) payment by cash, check or in connection with a cashless exercise through a broker,
(ii) delivery to MKS of a promissory note, (iii) any other lawful means or (iv) any combination of
these forms of payment.
Restricted Stock. Restricted stock awards entitle recipients to acquire shares of common
stock, subject to the right of MKS to repurchase all or part of such shares at their issue price
from the recipient in the event that the conditions specified in the applicable stock award are not
satisfied prior to the end of the applicable restriction period established for such award, or
portion of such award, in the case of restrictions that lapse ratably.
RSUs. RSUs awards entitle recipients to acquire shares of common stock to be delivered at the
time the RSU vests. RSU awards to executive officers typically vest in equal annual installments
over three years, with half of the award subject to achievement of the performance goal. RSU awards
to non-executive officers (other than those granted in the exchange offer) typically vest on the
third anniversary of the date of grant.
Stock Appreciation Rights and Performance Shares. A stock appreciation right is based on the
value of common stock and entitles the holder to receive consideration to the extent that the fair
market value on the date of exercise of the shares of common stock underlying the right exceeds the
fair market value of the underlying shares on the date the right was granted. A performance share
award entitles the recipient to acquire shares of common stock upon the attainment of specified
performance goals.
Administration. The 2004 Stock Incentive Plan, as amended, is administered by the board of
directors and the Compensation Committee. The board of directors has the authority to grant awards
under the 2004 Stock Incentive Plan, as amended, and to accelerate, waive or amend certain
provisions of outstanding awards. The board of directors has authorized the Compensation Committee
to administer
- 28 -
certain aspects of the 2004 Stock Incentive Plan, as amended. The board of directors has
authorized the Chief Executive Officer of MKS to make awards to non-executive officer employees,
subject to the limitations that (i) option awards may not be for more than 35,000 shares, and
restricted stock and RSU awards may not be for more than 15,000 shares, each subject to adjustment
as set forth in the plan, and (ii) in addition, such awards may not exceed a maximum fair market
value on the date of grant of $150,000. The maximum number of shares with respect to which awards
may be granted to any one participant in any calendar year is 900,000 shares.
Subject to any applicable limitations contained in the 2004 Stock Incentive Plan, as amended,
the board of directors or any committee or individual to whom the board of directors delegates
authority, as the case may be, selects the recipients of awards and determines (i) the number of
shares of common stock covered by awards and the dates upon which such options become exercisable,
(ii) the exercise price of options, (iii) the duration of options (which may not exceed 10 years)
and (iv) the number of shares of common stock subject to any restricted stock, RSU or other
stock-based awards and the terms and conditions of such awards, including conditions for repurchase
or vesting, and any issue price or repurchase price.
The board of directors is required to make appropriate adjustments in connection with the 2004
Stock Incentive Plan, as amended, and any outstanding awards to reflect stock splits, stock
dividends, recapitalizations, spin-offs and other similar changes in capitalization. The 2004
Stock Incentive Plan, as amended, also contains provisions addressing the consequences of any
Reorganization Event, which is defined as (a) any merger or consolidation of the company with or
into another entity as a result of which all of the common stock of the company is converted into
or exchanged for the right to receive cash, securities or other property, (b) any exchange of all
of the common stock of the company for cash, securities or other property pursuant to a share
exchange transaction or (c) the liquidation or dissolution of the company. Upon the occurrence of
a Reorganization Event, the board of directors will take one or more of the following actions as to
all or any outstanding awards on such terms as the board determines: (i) provide that awards are
assumed or be substituted by the acquiring or succeeding corporation, (ii) upon written notice to a
participant, provide that the participants unexercised options or other unexercised awards become
exercisable in full and will terminate immediately prior to the consummation of the Reorganization
Event unless exercised by the participant within a specified period following the date of such
notice, (iii) provide that outstanding awards become realizable or deliverable, or restrictions
applicable to an award lapse, in whole or in part prior to or upon such Reorganization Event, (iv)
make or provide for a cash payment to a participant, (v) provide that, in connection with a
liquidation or dissolution of the company, awards convert into the right to receive liquidation
proceeds and (vi) any combination of the foregoing. Upon the occurrence of a Reorganization Event,
the repurchase and other rights of the company under each outstanding restricted stock award will
inure to the benefit of the acquiring or succeeding corporation. The board of directors will
specify the effect of a Reorganization Event on any other award at the time the award is granted.
If any award expires or is terminated, surrendered, canceled or forfeited, the unused shares
of common stock covered by such award will again be available for grant under the 2004 Stock
Incentive Plan, as amended, subject, however, in the case of incentive stock options, to any
limitations under the Code. Notwithstanding the foregoing, none of the shares subject to options
cancelled in the exchange offer will be available for future awards under our equity incentive
plans.
Eligibility to Receive Awards. Employees, officers, directors, consultants and advisors of
MKS and its subsidiaries are eligible to be granted awards under the 2004 Stock Incentive Plan, as
amended. Under present law, however, incentive stock options may only be granted to employees of
MKS and its subsidiaries. The maximum number of shares with respect to which awards may be granted
to any
- 29 -
participant under the 2004 Stock Incentive Plan, as amended, may not exceed 900,000 shares per
calendar year.
Plan
Benefits. The granting of awards under the 2004 Stock Incentive Plan, as amended,
is discretionary, and we cannot determine the number or type of awards to be granted in the future
to any particular person or group. All of the employees, officers, directors, consultants and
advisors of MKS and its subsidiaries who are expected to contribute to MKS future growth and
success are eligible to participate in the 2004 Stock Incentive Plan, as amended.
Amendment or Termination. No award may be made under the 2004 Stock Incentive Plan, as
amended, after March 3, 2014, but awards previously granted may extend beyond that date. The board
of directors may at any time amend, suspend or terminate the 2004 Stock Incentive Plan, as amended,
except that no award designated as subject to Section 162(m) of the Code by the board of directors
after the date of such amendment shall become exercisable, realizable or vested (to the extent such
amendment was required to grant such award) unless and until such amendment shall have been
approved by our shareholders.
Section 10. Information Concerning MKS; Financial Information.
Information Concerning MKS.
Our principal executive offices are located at 2 Tech Drive, Suite 201, Andover, Massachusetts
01810, and our main telephone number is (978) 645-5500. Questions regarding the exchange offer
should be directed to:
Marlene Maffe
MKS Instruments, Inc.
2 Tech Drive, Suite 201
Andover, MA 01810
E-Mail: marlene_maffe@mksinst.com
Telephone: (978) 645-5654
Fax: (978) 557-5124
MKS Instruments, Inc. was founded in 1961 and is a leading worldwide provider of instruments,
subsystems and process control solutions that measure, control, power, monitor and analyze critical
parameters to improve process performance and productivity of advanced manufacturing processes.
MKS is managed as one operating segment which is organized around three product groups: Instruments
and Control Systems, Power and Reactive Gas Products and Vacuum Products. MKS products are derived
from its core competencies in pressure measurement and control, materials delivery, gas composition
analysis, electrostatic change management, control and information technology, power and reactive
gas generation and vacuum technology.
Financial Information
The financial information, including financial statements and the notes thereto, included under the
caption Item 8. Financial Statements and Supplementary Data in our Annual Report on Form 10-K for
the year ended December 31, 2008, filed with the SEC on February 27, 2009, and under the caption
Part I. Financial Information in our Quarterly Report on Form 10-Q for the quarter ended June 30,
2009, filed with the SEC on August 7, 2009 are incorporated herein by
reference. Attached as Schedule B to this Offer to Exchange is a summary
of certain financial information contained in the above-referenced reports, as
well as information on book value per share and ratio of earnings to fixed charges.
We recommend that you
review the materials that we have filed with the SEC before making a decision on whether
or not to surrender your eligible options for exchange. See Section
17 (Additional Information) for more information regarding reports we
file with the SEC and how to obtain copies of or otherwise review such reports.
- 30 -
Section 11. Interests of Directors and Executive Officers; Transactions and Arrangements
Concerning Our Securities.
A list of our directors and executive officers is attached to this exchange offer as Schedule
A. Our executive officers and the members of our board of directors may not participate in the
exchange offer. As of July 31, 2009, our executive officers and directors (14 persons) as a group
held options unexercised and outstanding under each of our stock incentive plans to purchase a
total of 1,256,916 our shares, which represented approximately 31% of the shares subject to all
options outstanding under each of our stock incentive plans as of that date. We also refer you to
our 2009 annual meeting proxy statement, filed with the SEC on March 23, 2009, for information
concerning agreements, arrangements and understandings between us and our officers and directors.
Neither we nor any of our executive officers or directors or any affiliates of ours were
engaged in transactions involving eligible options during the past 60 days. Our executive officers
and directors are not eligible employees and do not hold eligible options.
Except for outstanding options to purchase shares of our common stock and other stock awards,
such as restricted stock units, granted or to be granted from time to time to certain of our
employees (including executive officers) and non-employee directors pursuant to our equity
compensation plans, and the purchase rights that are outstanding from time to time under our
employee stock purchase plan, and except as set forth in this document, neither we nor any person
controlling us nor, to our knowledge, any of our directors or executive officers, is a party to any
contract, arrangement, understanding or relationship with any other person relating, directly or
indirectly, to the exchange offer with respect to any of our securities (including, but not limited
to, any contract, arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss or the giving or withholding of proxies, consents or
authorizations).
Section 12. Status of Options Acquired by Us in the Exchange Offer; Accounting Consequences of the
Exchange Offer.
Options that we acquire through the exchange offer will be cancelled. None of the shares
subject to cancelled options will be available for future awards under our equity incentive plans.
As of January 1, 2006, we adopted the provisions of Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123 (Revised), or SFAS 123(R), on accounting for
share-based payments. Under SFAS 123(R), we will recognize incremental compensation expense, if
any, resulting from the RSUs granted in the exchange program. The incremental compensation cost
will be measured as the excess, if any, of the fair value of each RSU granted to employees in
exchange for surrendered eligible options, measured as of the date the RSUs are granted, over the
fair value of the eligible options surrendered in the exchange for the RSUs, measured immediately
prior to the exchange.
- 31 -
The number of RSUs will be determined using an exchange ratio that is intended to ensure that
the fair value, for accounting purposes, of the RSUs are approximately equal to the fair value of
the eligible option tendered for exchange at the time the RSUs are granted. As a result, the
exchange offer may allow us to realize real incentive and retention benefits from the RSUs issued,
while recognizing only minimal incremental compensation expense due to the exchange. The actual
amount of compensation expense will depend on the exchange ratios, Black-Scholes values and vesting
schedules for options actually exchanged as part of the exchange offer, as well as the market price
of our common stock on the date of the exchange. In the event that any of the RSUs are forfeited
prior to their vesting due to termination of employment, the compensation expense for the forfeited
RSUs will not be recognized.
Section 13. Legal Matters; Regulatory Approvals.
We are not aware of any material pending legal proceedings relating to the exchange offer or
any margin requirements or anti-trust laws applicable to the exchange offer. We are not aware of
any regulatory requirements that must be complied with or approvals that must be obtained in
connection with the exchange offer. Should any additional approval or other action be required, we
presently contemplate that we will seek such approval or take such other action. We cannot assure
you that any such approval or other action, if needed, could be obtained or what the conditions
imposed in connection with such approvals would entail or whether the failure to obtain any such
approval or other action would result in adverse consequences to our business. Our obligation
under the exchange offer to accept tendered options for exchange and to grant RSUs for tendered
options is subject to the conditions described in Section 7 (Conditions of the Exchange Offer).
If we are prohibited by applicable laws or regulations from granting RSUs on the RSU grant
date, we will not grant any RSUs. However, we are not currently aware of any
circumstances in which we would be prohibited by applicable law from
granting RSUs, and we will
use reasonable efforts to effect the grant, but if the grant is prohibited on the RSU grant date,
we will not grant any RSUs and you will not receive any other benefit for the eligible options you
tendered and your eligible options will not be accepted for exchange.
Section 14. Material Income Tax Consequences.
Material U.S. Federal Income Tax Consequences.
The following is a summary of the material U.S. federal income tax consequences of the
exchange of eligible options for RSUs pursuant to the exchange offer for those eligible employees
subject to U.S. federal income tax. The summary includes a description of the tax consequences of
participating and of not participating in the offer. This discussion is based on the United States
Internal Revenue Code, its legislative history, treasury regulations promulgated thereunder and
administrative and judicial interpretations as of the date of this exchange offer, all of which are
subject to change, possibly on a retroactive basis. This summary does not discuss all of the tax
consequences that may be relevant to you in light of your particular circumstances, nor is it
intended to be applicable in all respects to all categories of option holders. We strongly
recommend that you consult with your own advisors to discuss the consequences to you of this
exchange offer.
Tax
Consequences of Participating in the Exchange Offer.
Eligible employees who exchange options for RSUs will not be required to recognize income for
U.S. federal income tax purposes at the time of the exchange. We believe that the exchange of
eligible options for RSUs will be treated as a non-taxable exchange. You will not recognize income
upon the receipt of the RSUs.
- 32 -
You will recognize ordinary compensation income when the RSUs vest in an amount equal the fair
market value of the shares on the vesting date. The compensation income is subject to income and
employment tax withholding. The RSU agreement provides that MKS will automatically deduct and
retain from the shares of common stock that would otherwise be issued in settlement of RSUs the
appropriate number of whole shares, valued at their then fair market value, to satisfy our tax
withholding obligations at the applicable minimum statutory withholding rate. Unless the foregoing
tax withholding obligations are satisfied, we have no obligation to deliver any shares to you under
your RSUs. When you sell the shares, you will recognize capital gain (or loss) equal to the amount
by which the sale price exceeds (or is less than) the fair market value of the stock on the vesting
date. This capital gain (or loss) will be long-term if you have held the shares for at least one
year at the time of sale and otherwise will be short-term. For this purpose, your holding period
will start the day after the vesting date.
We recommend that you consult your tax advisor with respect to the federal, state and local
tax consequences of participating in the exchange offer, as the tax consequences to you are
dependent on your individual tax situation.
In addition, if you are a resident of more than one country, you should be aware that there
might be tax and social insurance consequences for more than one country that may apply to you. We
strongly recommend that you consult with your own advisors to discuss the consequences to you of
this transaction.
Tax Consequences of Not Participating in the Exchange Offer.
If you participate in the exchange offer, your eligible options will be exchanged for RSUs.
If you do not participate in the exchange offer, you will continue to hold your outstanding stock
options, which are treated as nonstatutory stock options for U.S. federal income tax purposes. So
that you are able to compare the tax consequences of the RSUs to that of your eligible options, we
have included the following summary as a description of the tax consequences generally applicable
to nonstatutory stock options under U.S. federal tax law.
When you exercise a nonstatutory stock option, you recognize ordinary compensation income in
an amount equal to the excess of the fair market value of the shares on the date of exercise over
your exercise price. The compensation income is subject to income and employment tax withholding.
Upon disposition of the shares, you will recognize capital gain (or loss) equal to the amount
by which the sale price exceeds (or is less than) the fair market value of the stock on the date of
exercise. The capital gain or loss and will be long-term if the shares were held for more than one
year and otherwise will be long-term. The holding period for the shares generally will begin the
day after exercise.
Material Income Tax and Other Considerations for Employees Who Reside Outside the U.S.
Attached as Schedules C, D and E to this exchange offer are short summaries of the general tax
consequences of the exchange offer in countries other than the U.S. where residents are eligible to
participate in the exchange offer. If you are subject to the tax laws in any of these countries,
please see the relevant section(s) under Schedules C, D and E for information regarding the tax
consequences to you of participating in the exchange offer. You should review the information
carefully and consult your own tax advisor regarding your personal situation before deciding
whether or not to participate in the exchange offer.
We recommend that you consult your tax advisor with respect to the federal, state and local
tax consequences of participating in the exchange offer. In addition, if you are a resident of
more
- 33 -
than one country, you should be aware that there might be tax and social insurance
consequences for more than one country that may apply to you. We strongly recommend that you
consult with your advisors to discuss the consequences to you of this transaction.
Section 15. Extension of the Exchange Offer; Termination; Amendment.
We reserve the right, in our discretion, at any time and regardless of whether or not any
event listed in Section 7 (Conditions of the Exchange Offer) has occurred or is deemed by us to
have occurred, to extend the period of time during which the exchange offer is open and delay the
acceptance for exchange of any eligible options. If we elect to extend the period of time during
which the exchange offer is open, we will give you written notice of the extension and
delay, as described below. If we extend the expiration time, we also will extend your right to
withdraw tenders of eligible options until such extended expiration time. In the case of an
extension, we will issue an e-mail or other form of communication no later than 6:00 a.m., Eastern
Time, on the next business day after the previously scheduled expiration time.
We also reserve the right, in our reasonable judgment, before the expiration time to terminate
or amend the exchange offer and to postpone our acceptance and cancellation of any options elected
to be exchanged if any of the events listed in Section 7 (Conditions of the Exchange Offer)
occurs, by giving written notice of the termination or postponement to you or by making a
public announcement of the termination. Our reservation of the right to delay our acceptance and
cancellation of options elected to be exchanged is limited by Rule 13e-4(f)(5) under the Exchange
Act, which requires that we must pay the consideration offered or return the eligible options
promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, we further reserve the right, before the expiration
time, in our discretion and regardless of whether any event listed in Section 7 (Conditions of the
Exchange Offer) has occurred or is deemed by us to have occurred, to amend the exchange offer in
any respect. As a reminder, if a particular option expires after commencement, but before
cancellation under the exchange offer, that particular option is not eligible for exchange.
Therefore, if we extend the exchange offer for any reason and if a particular option that was
tendered before the originally scheduled expiration time expires after such originally scheduled
expiration time but before the actual cancellation date under the extended offer, that option would
not be eligible for exchange.
The minimum period during which the exchange offer will remain open following material changes
in the terms of the exchange offer or in the information concerning the exchange offer will depend
on the facts and circumstances of such change, including the relative materiality of the terms or
information changes. Because our shareholders approved the option exchange and the basis for
determining the number of eligible options being sought in the exchange offer and the method of
determining the consideration being offered by us for the eligible options in the exchange offer,
we cannot amend the offer to change the number of eligible options being sought in the exchange
offer or the consideration being offered by us. If any term of the exchange offer is amended in a
manner that we determine constitutes a material change adversely affecting any holder of eligible
options, we will promptly disclose the amendments in a manner reasonably calculated to inform
holders of eligible options of such amendment, and we will extend the exchange offers period so
that at least five business days, or such longer period as may be required by the tender offer
rules, remain after such change.
For purposes of the exchange offer, a business day means any day other than a Saturday,
Sunday or a U.S. federal holiday and consists of the time period from 12:00 a.m. through 11:59
p.m., Eastern Time.
- 34 -
Section 16. Fees and Expenses.
We will not pay any fees or commissions to any broker, dealer or other person for soliciting
options to be exchanged through the exchange offer.
Section 17. Additional Information.
This exchange offer is part of a Tender Offer Statement on Schedule TO that we have filed with
the SEC. This exchange offer does not contain all of the information contained in the Schedule TO
and the exhibits to the Schedule TO. We recommend that you review the Schedule TO, including its
exhibits, and the following materials that we have filed with the SEC before making a decision on
whether to elect to exchange your eligible options:
|
|
|
our annual report on Form 10-K for our fiscal year ended December 31, 2008, filed
with the SEC on February 27, 2009; |
|
|
|
|
our quarterly report on Form 10-Q for the quarter ended March
31, 2009, filed with the SEC on May 7, 2009; |
|
|
|
|
our quarterly report on Form 10-Q for the quarter ended
June 30, 2009, filed with
the SEC on August 7, 2009; |
|
|
|
|
our definitive proxy statement on Schedule 14A for our 2009 annual meeting of
shareholders, filed with the SEC on March 23, 2009 and amended on April 27, 2009; |
|
|
|
|
the information contained in our current reports on Form 8-K filed with the SEC; and |
|
|
|
|
the description of our common stock contained in our Registration Statement on Form
8-A filed with the SEC on March 2, 1999, including any amendments or reports filed for
purposes of updating such description. |
These filings, our other annual, quarterly and current reports, our proxy statements and our
other SEC filings may be examined, and copies may be obtained, at the SECs public reference room
at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. Our SEC filings also are available to
the public on the SECs Internet site at http://www.sec.gov.
Each person to whom a copy of this exchange offer is delivered may obtain a copy of any or all
of the documents to which we have referred you, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents, at no cost, by writing to
us at MKS Instruments, Inc., 2 Tech Drive, Suite 201, Andover, MA 01810, attention Marlene Maffe.
As you read the documents listed above, you may find some inconsistencies in information from
one document to another. If you find inconsistencies between the documents, or between a document
and this exchange offer, you should rely on the statements made in the most recent document.
The information contained in this exchange offer about us should be read together with the
information contained in the documents to which we have referred you, in making your decision as to
whether or not to participate in the exchange offer.
Section 18. Miscellaneous.
We have not authorized any person to make any recommendation on our behalf as to whether you
should elect to exchange your options through the exchange offer. You should rely
- 35 -
only on the information in this document or materials to which we have referred you. We have
not authorized anyone to give you any information or to make any representations in connection with
the exchange offer other than the information and representations contained in this document and in
the related exchange offer materials. If anyone makes any recommendation or representation to you
or gives you any information, you must not rely upon that recommendation, representation or
information as having been authorized by us.
MKS Instruments, Inc.
August 3, 2009
- 36 -
SCHEDULE A
INFORMATION CONCERNING THE EXECUTIVE OFFICERS AND DIRECTORS OF MKS
The directors and executive officers of MKS are set forth in the following table:
|
|
|
Name |
|
Position and Offices Held |
John R. Bertucci
|
|
Director, Chairman |
Christina H. Amon
|
|
Director |
Robert R. Anderson
|
|
Director |
Gregory R. Beecher
|
|
Director |
Leo Berlinghieri
|
|
Director, Chief Executive Officer and President |
Richard S. Chute
|
|
Director, Secretary |
Peter R. Hanley
|
|
Director |
Hans-Jochen Kahl
|
|
Director |
Louis P. Valente
|
|
Director |
Gerald G. Colella
|
|
Vice President, Chief Business Officer and Acting Group
Vice President, PRG Products |
John T.C. Lee
|
|
Group Vice President, CIT Products |
John A. Smith
|
|
Vice President and Chief Technology Officer |
William D. Stewart
|
|
Group Vice President, Vacuum Products and PFM&C Products |
Ronald C. Weigner
|
|
Vice President, Chief Financial Officer and Treasurer |
The address of each executive officer and director is c/o MKS Instruments, Inc., 2 Tech Drive,
Suite 201, Andover, Massachusetts 01810. Our executive officers and members of our board of
directors are not eligible to participate in the exchange offer.
A-1
SCHEDULE B
SUMMARY FINANCIAL INFORMATION OF MKS INSTRUMENTS, INC.
We have presented below a summary of our consolidated financial data. The following summary
consolidated financial data should be read in conjunction with the Managements Discussion and
Analysis of Financial Condition and Results of Operations and the consolidated financial
statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 and with Part I. Financial Information of our Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2009. The selected consolidated statements of operations
data for the fiscal years ended December 31, 2008 and 2007 and the selected consolidated balance
sheet data as of December 31, 2008 and 2007 are derived from our audited consolidated financial
statements that are included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2008. The selected consolidated statements of operations data for the fiscal quarter ended June
30, 2009 and the selected consolidated balance sheet data as of June 30, 2009 are derived from our
unaudited condensed consolidated financial statements included in our Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 2009. Our interim results are not necessarily indicative of
results for the full fiscal year, and our historical results are not necessarily indicative of the
results to be expected in any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Year Ended |
|
|
June 30, |
|
June 30, |
|
December |
|
December |
|
|
2009 |
|
2008 |
|
31, 2008 |
|
31, 2007 |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
Consolidated Statements of Operations Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
79,155 |
|
|
$ |
171,002 |
|
|
$ |
646,994 |
|
|
$ |
780,487 |
|
Gross profit |
|
$ |
25,528 |
|
|
$ |
70,488 |
|
|
$ |
259,943 |
|
|
$ |
331,487 |
|
Income (loss) from operations |
|
$ |
(222,242 |
) |
|
$ |
12,905 |
|
|
$ |
35,533 |
|
|
$ |
106,985 |
|
Net (loss) income |
|
$ |
(207,134 |
) |
|
|
9,234 |
|
|
$ |
30,117 |
|
|
$ |
86,360 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(4.20 |
) |
|
$ |
0.19 |
|
|
$ |
0.61 |
|
|
$ |
1.53 |
|
Diluted |
|
$ |
(4.20 |
) |
|
$ |
0.18 |
|
|
$ |
0.59 |
|
|
$ |
1.51 |
|
Shares used in computing earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
49,307 |
|
|
|
49,691 |
|
|
|
49,717 |
|
|
|
56,349 |
|
Diluted |
|
|
49,307 |
|
|
|
50,866 |
|
|
|
50,754 |
|
|
|
57,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
June 30, |
|
December |
|
December |
|
|
2009 |
|
31, 2008 |
|
31, 2007 |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
139,703 |
|
|
$ |
119,261 |
|
|
$ |
223,968 |
|
Short-term investments |
|
$ |
118,838 |
|
|
$ |
159,608 |
|
|
$ |
99,797 |
|
Working capital |
|
$ |
441,982 |
|
|
$ |
452,793 |
|
|
$ |
514,235 |
|
Total assets |
|
$ |
742,921 |
|
|
$ |
984,939 |
|
|
$ |
1,076,260 |
|
Short-term obligations |
|
$ |
9,403 |
|
|
$ |
18,678 |
|
|
$ |
20,203 |
|
Long-term obligations, less current portion |
|
$ |
177 |
|
|
$ |
396 |
|
|
$ |
5,871 |
|
Stockholders equity |
|
$ |
664,282 |
|
|
$ |
886,698 |
|
|
$ |
954,009 |
|
Book Value Per Share
Our book value per share as of June 30, 2009 was $13.43.
Ratio
of Earnings to Fixed Charges
The following table sets forth our ratio of earnings to fixed charges for the periods specified:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
Ended June |
|
Year ended
December |
|
Year ended
December 31, |
|
|
30,
2009 |
|
31, 2008 |
|
2007 |
Ratio of
Earnings to Fixed Charges |
|
|
(269.8 |
) |
|
|
17.0 |
|
|
|
49.8 |
|
The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For the
purposes of computing the ratio of earnings to fixed charges, earnings consist of income before provision for income taxes plus fixed charges. Fixed charges consist of interest expense
and the interest portion of rental expense (estimated to equal 20% of such expense, which is considered a reasonable approximation of the interest factor).
B-1
SCHEDULE C
GUIDE TO TAX ISSUES IN GERMANY
The following is a general summary of the material tax consequences of the voluntary
cancellation of eligible options in exchange for the grant of restricted stock units (RSUs) for
eligible employees subject to tax in Germany. This summary is based on the tax laws in effect in
Germany as of June 2009. This summary is general in nature and does not discuss all of the tax
consequences that may be relevant to you in light of your particular circumstances, nor is it
intended to be applicable in all respects to all categories of eligible employees. Also, please
note that tax laws change frequently and occasionally on a retroactive basis. As a result, the
information contained in this summary may be out-of-date at grant or vesting of the RSUs, or when
you sell shares acquired at vesting of the RSUs.
This summary may also include other country-specific requirements that may affect your
participation in the Stock Option Exchange Program.
If you are a citizen or resident of more than one country, or are considered a resident of
more than one country for local law purposes, the information contained in this summary may not be
applicable to you. Accordingly, you are strongly advised to seek appropriate professional advice
as to how the tax or other laws in your country apply to your specific situation.
Tax Information
Option Exchange/Grant of RSUs
You likely will not be subject to tax as a result of the exchange of eligible options for the
grant of RSUs. As a general rule, options and RSUs are taxed at the moment when the employee gains
economic ownership in the respective shares, i.e., at vesting. However, tax authorities may hold
that a portion of the value / built-in gain of an option or RSU will be realized at an earlier
stage when old options are traded against RSUs. However, it is rather unlikely that German tax
authorities will take this position, although neither court law nor clear guidance by the tax
authorities are currently available.
Vesting
You will be subject to income tax and social insurance contributions (to the extent you have
not reached already the applicable contribution ceiling) when the RSUs vest and shares are issued
to you. The taxable amount will be the fair market value of the shares issued to you at vesting.
Please note that a personal allowance of 360 per calendar year may be available pursuant to
Section 3 No. 39 of the German Income Tax Act (Einkommensteuergesetz) because the income results
from the acquisition of stock in your employers parent company. Please consult your personal tax
advisor to determine whether this deduction may apply at vesting of the RSUs.
Sale of Shares
When you subsequently sell any shares acquired at vesting of the RSUs, you will be subject to
capital gains tax at a flat rate of 25% (plus 5.5% solidarity surcharge thereon plus church tax, if
any) provided you do not own 1% or more of the stated capital of MKS (and have not owned 1% or more
at any time in the last five years) and the shares are not held as a business asset. Please note
that you may elect to be taxed at your marginal tax rate if the 25% flat rate exceeds your marginal
tax rate. The amount, whether at the flat rate or at your marginal tax rate, will be the
difference between the sale price and the fair market value of the shares issued at vesting.
C-1
Withholding and Reporting
Your German employer will withhold and report income tax and social security contributions (to the
extent applicable) when the RSUs vest. To qualify as a German employer, the employing company must
either have its place of management, a permanent establishment or a representative in Germany. As
a guideline you may check whether tax is withheld on your cash salary in which case tax would also
be withheld on the vested RSUs. However, you are responsible for reporting and paying any
additional taxes due if your tax liability exceeds the amount withheld and for reporting and paying
any tax resulting from the sale of shares.
C-2
SCHEDULE D
GUIDE TO TAX ISSUES IN JAPAN
The following is a general summary of the material tax consequences of the voluntary
cancellation of eligible options in exchange for the grant of restricted stock units (RSUs) for
eligible employees subject to tax in Japan. This summary is based on the tax laws in effect in
Japan as of June 2009. This summary is general in nature and does not discuss all of the tax
consequences that may be relevant to you in light of your particular circumstances, nor is it
intended to be applicable in all respects to all categories of eligible employees. Also, please
note that tax laws change frequently and occasionally on a retroactive basis. As a result, the
information contained in this summary may be out-of-date at grant or vesting of the RSUs, or when
you sell shares acquired at vesting of the RSUs.
This summary may also include other country-specific requirements that may affect your
participation in the Stock Option Exchange Program.
If you are a citizen or resident of more than one country, or are considered a resident of
more than one country for local law purposes, the information contained in this summary may not be
applicable to you. Accordingly, you are strongly advised to seek appropriate professional advice as
to how the tax or other laws in your country apply to your specific situation.
Tax Information
Option Exchange
You likely will not be subject to tax as a result of the exchange of eligible options for the
grant of RSUs. Please note, however, that the Japanese tax treatment of an exchange of stock
options for RSUs is uncertain because there are no specific tax provisions related to such an
exchange. Therefore, we recommend that you consult your personal tax advisor regarding the
potential tax consequences of the Stock Option Exchange Program.
Grant
Although the tax treatment of RSUs is uncertain in Japan, under the current practice of the
tax authorities, you likely will not be subject to tax when the RSUs are granted to you.
Vesting
You likely will be subject to income tax, but not social insurance contributions, when the
RSUs vest and shares are issued to you. The taxable amount will be the fair market value of the
shares issued to you at vesting. This income likely will be characterized as remuneration income.
Sale of Shares
When you subsequently sell any shares acquired at vesting of the RSUs, you will be subject to
capital gains tax on any gain you realize. The taxable gain will be the difference between the
sale price and the fair market value of the shares at vesting. Generally, you will be subject to
capital gains tax at a flat rate of 20%. However, you may be eligible for a reduced tax rate if
certain conditions are met. Please consult your personal tax advisor to determine whether you may
be eligible for a reduced capital gains rate.
D-1
Withholding and Reporting
Your employer will not withhold or report tax at the vesting of the RSUs. You are responsible
for reporting and paying any tax resulting from the vesting of the RSUs and the sale of shares.
Other Information
Exchange Control
If the value of shares you acquire in a single transaction exceeds ¥100 million, you must submit a
Securities Acquisition Report to the Minister of Finance through the Bank of Japan within 20 days
after such acquisition.
D-2
SCHEDULE E
GUIDE TO TAX ISSUES IN THE UNITED KINGDOM
The following is a general summary of the material tax consequences of the voluntary
cancellation of eligible options in exchange for the grant of restricted stock units (RSUs) for
eligible employees subject to tax in the United Kingdom (U.K.). This summary is based on the tax
laws in effect in the U.K. as of June 2009. This summary is general in nature and does not discuss
all of the tax consequences that may be relevant to you in light of your particular circumstances,
nor is it intended to be applicable in all respects to all categories of eligible employees. Also,
please note that tax laws change frequently and occasionally on a retroactive basis. As a result,
the information contained in this summary may be out-of-date at grant or vesting of the RSUs, or
when you sell shares acquired at vesting of the RSUs.
This summary may also include other country-specific requirements that may affect your
participation in the Stock Option Exchange Program.
If you are a citizen or resident of more than one country or are considered a resident of more
than one country for local law purposes, or if you are not treated as resident and ordinarily
resident in the U.K., the information contained in this summary may not be applicable to you.
Accordingly, you are strongly advised to seek appropriate professional advice as to how the tax or
other laws in your country apply to your specific situation.
Tax Information
Option Exchange
You likely will not be subject to tax as a result of the exchange of eligible options for the
grant of RSUs.
Grant
You will not be subject to tax when RSUs are granted to you.
Vesting
You will be subject to income tax and employee national insurance contributions (NICs) when
the RSUs vest and shares are issued to you. The taxable amount will be the fair market value of
the shares issued to you at vesting.
Sale of Shares
When you subsequently sell any shares acquired at vesting of the RSUs, you will be subject to
capital gains tax if your total capital gain exceeds the annual exemption amount (£10,100 for the
tax year April 6, 2009 to April 5, 2010), in which case you will be subject to tax at a flat rate
of 18% on the difference between the sale price and the fair market value of the shares at vesting.
Please note that, when you sell any shares acquired at vesting, you may need to take into
account the share-identification rules in calculating your capital gains tax liability,
particularly if you have acquired shares of MKS common stock from other sources. Please consult
your personal tax advisor to determine how share-identification rules apply in your particular
situation.
E-1
Withholding and Reporting
Your employer will calculate the income tax and employee and employer NICs due at the vesting
of RSUs and account for these amounts to Her Majestys Revenue & Customs (HMRC). Your employer
will account for and withhold any applicable income tax and employee and employer NICs under the
Pay As You Earn system or by any other means set forth in your RSU agreement.
If a sufficient amount is not accounted for, you must reimburse your employer for the income
tax due within 90 days of the vesting of the RSUs to avoid further tax consequences. If you fail
to pay this amount to the employer within that time limit, the income tax paid by your employer on
your behalf and not reimbursed within 90 days of vesting will constitute a loan owed by you to your
employer. The loan will be effective as of the date of vesting, will be immediately due and
repayable, will bear interest at the then-current official rate of HMRC and may be recovered by MKS
or your employer at any time by any of the means set forth in your RSU agreement.
Your employer also is required to report the grant and vesting of the RSUs, the acquisition of
shares and the tax withheld on its annual tax returns filed with HMRC.
In addition to your employers reporting obligations, you are responsible for reporting any
income resulting from the vesting of the RSUs and the sale of shares on your annual tax return.
You also are responsible for paying any tax resulting from the sale of shares.
E-2
exv99wxayx1yxqy
EXHIBIT
(a)(1)(Q)
Option Exchange
Presentation
August 24 and 25, 2009
|
This presentation is designed to help eligible
employees understand the Option Exchange.
However, this presentation is qualified by the
information contained in the Schedule TO,
including the Offer to Exchange, which MKS
filed with the Securities and Exchange
Commission. The Offer to Exchange was
distributed to all eligible employees and is also
available at the Option Exchange website at
www.mks.optionelection.com
MKS Option Exchange Presentation
|
Agenda
What is the Exchange Offer?
What is the difference between options and RSUs?
How many RSUs would I get for my options?
How will I know the actual exchange ratio for my
options?
How do I elect to exchange or withdraw my election?
Examples of exchanging options
Questions and Answers
|
What is the Exchange Offer?
Many MKS employees now hold MKS stock options
that have exercise prices that are much higher than
the current market price of our common stock.
MKS is giving eligible employees who hold stock
options with an exercise price of more than $23.35 a
choice: they can either (1) keep these options, with
the hope that the MKS stock price will increase above
the exercise price, or (2) trade in these option for a
lesser number of Restricted Stock Units (called
"RSUs").
|
Options vs. RSUs: Options
An option is the right to purchase stock at a specified
exercise price. If you have an option to purchase 100
shares, with an exercise price of $25, then you would
pay $2,500 in order to exercise the option and buy the
shares:
100 shares x $25 price per share = $2,500 cost
to exercise
To make a profit, you would need to sell the stock at
more than $25 per share.
|
Options vs. RSUs: RSUs
With an RSU, you do not pay an exercise price.
With an RSU, once the RSU vests, it becomes
common stock. You can sell the common stock at
any price and still make some profit. So, even if the
MKS stock price remains lower than your original
option's exercise price, the RSU would still have
value.
RSUs granted in the Exchange Offer will have a one-
year vesting period. If you remain employed with
MKS for one year from the date of grant, the RSU will
"vest" and become MKS common stock.
|
How many RSUs would I get?
Exchange ratios are calculated, for accounting
purposes, so that the "fair value" of each option at the
time of exchange is approximately equal to the "fair
value" of the RSUs being granted.
Exchange ratio calculations are affected by the
exercise price, the volatility of the MKS stock price, the
remaining life of the option, and interest rates.
The exchange ratios are also affected by the stock
price of the MKS common stock on the last day of the
Exchange Offer (August 28th).
We won't know the actual exchange ratios until the
close of the stock market on August 28th.
|
How will I know the actual
exchange ratio for my options?
ESTIMATES: You may use the exchange website
calculator at any time during the offer period to
calculate the estimated conversion of your shares
based on hypothetical closing prices.
ACTUAL:
MKS will email final exchange ratios as soon as
possible after they are determined on Aug. 28th.
MKS will host a conference call at 5:30 on Aug. 28th to
respond to any questions that you have.
Marlene Maffe will be available by phone until 11:59
p.m. on Aug. 28th to answer any questions and discuss
final exchange ratios.
|
How do I elect to exchange or
withdraw my election?
You can elect to exchange, or withdraw your election,
in either of two ways:
Electronically, on the exchange website
(www.mks.optionelection.com); or
Send a paper election form or paper withdrawal form to
Marlene Maffe in HR by email (marlene_maffe@mksinst.com)
or fax (978 557-5124). The paper forms are posted on the
exchange website (under the "Election" tab) or you can get
them from Marlene (tel. 978 645-5654).
|
Examples
The following examples use the hypothetical
exchange ratios set forth in the Offer to
Exchange and in the website calculator, and
are based on the assumptions described
therein. Actual exchange ratios could vary.
|
Example 1
"Length of Service" grants - December 3, 2003.
Assume: closing date stock price is $17.00.
Option to purchase 250 shares with an exercise price
of $26.86 would have an exchange ratio of 6.3 to 1.
Therefore, this eligible option would be exchangeable
for 39 RSUs.
250 shares ÷ 6.3 = 39.7 shares,
rounded down to the nearest whole share = 39 RSUs
|
Example 2
Assume: closing date stock price is $17.00.
Option to purchase 1,000 shares with an exercise
price of $29.25 would have an exchange ratio of 57.3
to 1. Therefore, this eligible option would be
exchangeable for 17 RSUs:
1,000 shares ÷ 57.3 = 17.45 shares,
rounded down to the nearest whole share = 17 RSUs
|
exv99wxayx1yxry
Exhibit (a)(1)(R)
Learn more about MKS stock option exchange program
Dear MKS Team Member:
This is a reminder that you have the opportunity to participate in the MKS Instruments, Inc. Stock
Option Exchange Program.
|
|
|
If you have any questions about the Stock Option Exchange Program, we will be holding
informational conference calls to discuss the program on Monday, August 24,
2009 and Tuesday, August 25, 2009. |
The conference calls will be held as follows:
|
|
|
Monday August 24, 2009 at 11:30 am |
|
|
|
|
Tuesday, August 25, 2009 at 8:00 am |
|
|
|
|
Tuesday, August 25, 2009 at 3:00 pm |
Dial-in Information:
Telephone: US Participants# 888-839-0965 ; International# 617-597-4110
Passcode: 63252831
For your convenience, we are attaching to this message the slides that we will review at the
meetings and on the conference calls.
To participate or learn more about the program, please click on
http://mks.optionelection.com/
If you are logging into the system for the first time, please follow these log-on instructions:
|
|
|
For U.S. employees, your user name is the last four digits of your social security
number. For employees outside the U.S., your user name is the last four digits of your
employee ID number. |
|
|
|
|
Your initial password is the first four letters of your last name all uppercase,
excluding spaces or characters. Please contact Fidelity Stock Services directly if you
require assistance. |
You have until August 28, 2009 (unless MKS extends the exchange offer), to decide whether you would
like to participate.
More details about the MKS Stock Option Exchange Program and frequently asked questions about the
Program can be found on http://mks.optionelection.com/ and in the offer materials contained
in the link above.
Sincerely,
Leo Berlinghieri,
Chief Executive Officer and President
Learn more about MKS stock option exchange program
Dear MKS Team Member:
This is a reminder that you have the opportunity to participate in the MKS Instruments, Inc. Stock
Option Exchange Program.
If you have any questions about the Stock Option Exchange Program, we will be conducting
informational meetings to discuss the program on Monday, August 24, 2009 at the
following locations and times:
|
|
|
Wilmington 9:00 am in the Asia Conference Room |
|
|
|
|
Andover (6 Shattuck) 11:00 am in the Cafeteria |
|
|
|
|
Andover (2 Tech) 1:00 pm in the big empty space upstairs |
|
|
|
|
Methuen 2:00 pm in the MDP2 conference room |
If you are unable to attend one of these meetings, we will also be holding three conference
calls to go over the information. The conference calls will be held as follows:
|
|
|
Monday August 24, 2009 at 11:30 am |
|
|
|
|
Tuesday, August 25, 2009 at 8:00 am |
|
|
|
|
Tuesday, August 25, 2009 at 3:00 pm |
Dial-in Information:
Telephone: US Participants# 888-839-0965; International# 617-597-4110
Passcode: 63252831
For your convenience, we are attaching to this message the slides that we will review at the
meetings and on the conference calls.
To participate or learn more about the program, please click on
http://mks.optionelection.com/
If you are logging into the system for the first time, please follow these log-on instructions:
|
|
|
For U.S. employees, your user name is the last four digits of your social security
number. For employees outside the U.S., your user name is the last four digits of your
employee ID number. |
|
|
|
|
Your initial password is the first four letters of your last name all uppercase,
excluding spaces or characters. Please contact Fidelity Stock Services directly if you
require assistance. |
You have until August 28, 2009 (unless MKS extends the exchange offer), to decide whether you would
like to participate.
More details about the MKS Stock Option Exchange Program and frequently asked questions about the
Program can be found on http://mks.optionelection.com/ and in the offer materials contained
in the link above.
Sincerely,
Leo Berlinghieri,
Chief Executive Officer and President
corresp
August 20, 2009
Via EDGAR
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, DC 20549
Attention: Mellissa Duru, Esq.
|
|
|
Re: |
|
MKS Instruments, Inc.
Schedule TO-I
Filed August 3, 2009
File No. 5-58011 |
Dear Ms. Duru:
We are writing on behalf of our client, MKS Instruments, Inc. (the Company), in response to
the comment of the staff (the Staff) of the Securities Exchange Commission (the SEC) set forth
in the letter to me, dated August 19, 2009, from Mellissa Duru, Special Counsel, Office of Mergers
and Acquisitions (the Letter). Submitted herewith for filing is Amendment No. 3 to the Schedule
TO-I referenced above, as amended by Amendment No. 1 filed with the SEC on August 12, 2009 and
Amendment No. 2 filed with the SEC on August 17, 2009 (collectively, the Schedule TO), including
the revised Exhibit (a)(1)(A) thereto (the Offer to Exchange).
We have set forth below in italics the Staffs comment set forth in the Letter. The response
is based on information provided to us by representatives of the Company.
Schedule TO-I/A
Exhibit 99(a)(1)(A): Offering Memorandum
1. |
|
We note your response to prior comment 3. In support of your ability to rely on the global
exemptive order, you indicate that exclusions of eligible optionholders, if they do occur,
would not have a material impact on the compensatory purposes of the offer in the aggregate.
With a view toward possible revised disclosure, based on an assumed expiration date as of the
date of your revised response and assuming full participation in the offer by all eligible
optionholders, supplementally quantify the hypothetical number of eligible optionholders that
would face exclusion as a result of the application of the exchange ratio expressed as a
percentage of overall optionholders with eligible options. |
|
|
|
The Company supplementally advises the Staff that based upon an assumed expiration of the
exchange offer on August 19, 2009, using the Black-Scholes option valuation |
Securities and Exchange Commission
August 20, 2009
Page 2
|
|
methodology with the assumptions underlying the table of hypothetical exchange ratios
contained in the Offer to Exchange and an assumed closing price of $17.91 (the closing price
on August 19, 2009), a total of 75,326 eligible options held by 40 option holders would
round to zero RSUs, which represents 5.2% of the total number of eligible options. The
Company further supplementally advises the Staff that of such 40 option holders, 39 hold
other eligible option grants that would entitle them to RSUs in the exchange offer. The one
option holder that doesnt hold multiple eligible option grants holds an option to purchase
one share. |
|
|
|
In response to the Staffs comment, the Company has amended the Offer to Exchange to
quantify the potential exclusions based upon the hypothetical exchange ratios and an assumed
closing price of $17.91. |
* * *
Please do not hesitate to telephone the undersigned at 617-526-6675 if you have any questions
regarding this response letter, the Amendment or any related matters.
|
|
|
|
|
|
Very truly yours,
|
|
|
/s/ Mark G. Borden
|
|
|
Mark G. Borden, Esq. |
|
|
|
|
cc: |
|
Leo Berlinghieri
Kathleen Burke, Esq. |