UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 6, 2014
Date of Report (Date of earliest event reported)
NPS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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0-23272 |
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87-0439579 |
(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification Number) |
550 Hills Drive, 3rd Floor
Bedminster, NJ 07921
(Address of principal executive offices)
(908) 450-5300
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
2014 Omnibus Equity Compensation Plan
At the Annual Meeting of the Stockholders of NPS Pharmaceuticals, Inc. (the Company) held on May 6, 2014 (the 2014 Annual Meeting), the Companys stockholders approved the adoption of the Companys 2014 Omnibus Equity Compensation Plan (the Plan). A description of the material terms of the Plan is set forth in the Companys definitive Proxy Statement on Schedule 14A, in the section of the Proxy Statement entitled Proposal No. 2: Approve 2014 Omnibus Equity Compensation Plan, which was filed with the U.S. Securities and Exchange Commission on April 1, 2014, and such description of the Plan is incorporated by reference herein. The description of the material terms of the Plan incorporated by reference herein from the Proxy Statement is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the Plan, which is filed as Exhibit 10.1 to this Form 8-K and incorporated by reference herein.
On May 5, 2014, the Compensation Committee of the Companys Board of Directors approved the forms of the Incentive Stock Option Award Agreement, the Nonqualified Stock Option Award Agreement and the Restricted Stock Unit Award Agreement (collectively, the Award Agreements). The Award Agreements set forth the terms, conditions and restrictions on which a stock option will become exercisable or shares of the Companys common stock are earned by an award recipient. The foregoing description of the Award Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Award Agreements filed as Exhibits 10.2, 10.3 and 10.4 to this Form 8-K and incorporated by reference herein.
NPS Pharmaceuticals, Inc. Deferred Compensation Plan
On May 6, 2014, the Companys Board of Directors approved and adopted the NPS Pharmaceuticals, Inc. Deferred Compensation Plan (the DCP) to be effective June 1, 2014. The DCP provides eligible employees and directors of the Company and each of its subsidiaries which is a participating company (each, a Participant and collectively, the Participants) an opportunity to elect to defer compensation, which will obligate the Company to pay deferred compensation in the future (the Obligations) in accordance with the terms of the DCP.
The amount of eligible compensation to be deferred by each Participant is determined in accordance with the terms of the DCP based on elections by the Participant. Participants may elect to defer up to a maximum of 75% of their base salaries and up to 100% of their bonuses, restricted stock units, compensation earned under long-term incentive plans, commissions and director fees. The Company will have sole discretion to credit additional amounts each year to a Participants DCP account at any time and in any amount, however, no Participant will have the right to receive any additional contribution from the Company in any year regardless of whether such additional contributions are made on behalf of other Participants.
A Participant will be 100% vested at all times in the amounts credited to the Participants DCP account. A Participant will be vested in Company contributions, if any, in accordance with the vesting schedule or schedules determined by the Company in its sole discretion.
Contributions credited to a Participants DCP account other than restricted stock units are credited or debited with notional investment gains and losses equal to the experience of selected investment funds offered under the DCP and elected by the Participant. Each Participants DCP account will be adjusted to reflect the rate of return, positive or negative, based upon the actual investment performance of the investment funds corresponding to such investment alternatives selected by the Participant. The Company has reserved the right under the DCP to change the investment funds offered for election by the Participants prior to each year.
A Participants deferral of restricted stock units will be automatically allocated to an investment fund that tracks the performance of the Companys common stock (the CS Fund) and all dividends that would have been payable on Companys common stock will be credited to the Participants DCP account in the form of additional shares of the Companys common stock. All amounts allocated to the CS Fund will only be distributable in actual shares of the Companys common stock.
Although the value of a Participants DCP account (and, therefore, the amount of the liability under an Obligation) will be based upon the performance of the investment funds corresponding to the investment alternatives, the Participant will not have an actual interest in such investment funds but only in the Obligations. The Company is under no obligation to invest any portion of the Obligations in any of the investment funds to which investment alternatives are indexed.
The Obligations are general unsecured obligations of the Company to pay deferred compensation in the future to the Participants according to the terms of the DCP from the general assets of the Company, or from one or more grantor trusts established for that purpose by the Company. The grantor trust assets, if any, are subject to the claims of general creditors of the Company. The Participants will be no more than unsecured creditors of the Company with no special or prior right to any assets of the Company or of the grantor trusts, if any, for payment of the Obligations.
The Obligations are payable upon a Participants termination of employment, financial hardship, long-term disability or death, or on a date or dates selected by the Participant in accordance with the terms of the DCP, and are denominated and payable in the form of United States dollars, except for the deferral of restricted stock units which will be paid in shares of the Companys common stock. The Obligations generally are payable in the form of a lump sum distribution or in installments, at the election of the Participant made in accordance with the terms of the DCP.
A Participant may designate one or more beneficiaries to receive any portion of Obligations payable in the event of the Participants death. Participants or, in the case of the Participants death, their beneficiaries, may not alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments under the DCP.
The DCP is administered by on behalf of the Company by a committee designated by the Companys Board of Directors. The DCP may be amended or terminated by the Company at any time. No termination or amendment shall affect the payment of, or decrease the benefits attributable to, compensation deferred prior to such termination or amendment.
The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP filed as Exhibit 10.5 to this Form 8-K and incorporated by reference herein.
Item 5.07. Submission of Matters to a Vote of Security Holders.
The following is a summary of the matters voted on at the 2014 Annual Meeting held on May 6, 2014:
a) The following directors were elected by the stockholders and the voting for each director was as follows:
Nominee |
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For |
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Against |
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Abstain |
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Broker Non- |
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Michael W. Bonney, B.A. |
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84,107,693 |
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439,765 |
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382,546 |
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11,350,450 |
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Colin Broom, M.D. |
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84,440,714 |
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106,683 |
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382,607 |
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11,350,450 |
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Georges Gemayel, Ph.D. |
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83,973,843 |
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573,404 |
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382,757 |
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11,350,450 |
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Pedro Granadillo, B.S. |
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84,433,843 |
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113,388 |
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382,773 |
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11,350,450 |
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James G. Groninger, M.B.A. |
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82,587,874 |
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1,960,023 |
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382,107 |
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11,350,450 |
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Francois Nader, M.D., M.B.A. |
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83,283,335 |
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1,288,307 |
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358,362 |
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11,350,450 |
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Rachel R. Selisker, CPA |
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84,027,130 |
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522,616 |
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380,258 |
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11,350,450 |
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Peter G. Tombros, M.S., M.B.A. |
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82,560,565 |
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2,027,237 |
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342,202 |
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11,350,450 |
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b) The 2014 Omnibus Equity Compensation Plan of the Company was approved by the following stockholder vote:
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For |
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Against |
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Abstain |
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Broker Non- |
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Approval of 2014 Omnibus Equity Compensation Plan |
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76,482,960 |
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8,081,394 |
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365,650 |
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11,350,450 |
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c) The compensation of the Companys named executive officers was approved by the following advisory vote:
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For |
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Against |
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Abstain |
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Broker Non- |
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Advisory Vote on Executive Compensation |
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83,917,368 |
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643,800 |
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368,836 |
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11,350,450 |
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d) The appointment of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2014 was ratified by the following stockholder vote:
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For |
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Against |
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Abstain |
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KPMG LLP |
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92,896,996 |
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2,902,607 |
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480,851 |
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
10.1 |
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NPS Pharmaceuticals, Inc. 2014 Omnibus Equity Compensation Plan |
10.2 |
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Form of Incentive Stock Option Award Agreement |
10.3 |
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Form of Nonqualified Stock Option Award Agreement |
10.4 |
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Form of Restricted Stock Unit Award Agreement |
10.5 |
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NPS Pharmaceuticals, Inc. Deferred Compensation Plan |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 7, 2014 |
NPS PHARMACEUTICALS, INC. | |
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By: |
/s/ Christine Mikail |
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Christine Mikail |
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Senior Vice President, Legal Affairs, General Counsel and Corporate Secretary |
Exhibit 10.1
NPS PHARMACEUTICALS, INC.
2014 OMNIBUS EQUITY COMPENSATION PLAN
NPS PHARMACEUTICALS, INC.
2014 OMNIBUS EQUITY COMPENSATION PLAN
1. Purpose
NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), hereby establishes the NPS Pharmaceuticals, Inc. 2014 Omnibus Equity Compensation Plan (the Plan), as set forth in this document. The Plan is a successor to the NPS Pharmaceuticals, Inc. 2005 Omnibus Incentive Plan (the 2005 Plan). After the Effective Date, no new awards will be granted under the 2005 Plan. All awards granted under the 2005 Plan prior to the Effective Date will remain outstanding in accordance with their terms (subject to such amendments as the Committee determines, consistent with the 2005 Plan, as applicable) and the shares with respect to outstanding grants made under the 2005 Plan will be issued or transferred under the 2005 Plan.
This Plan has been established by the Company to provide a means by which Employees, Directors, and Key Advisors of the Company and its Subsidiaries may be given the opportunity to benefit from increases in the value of Company Stock through the granting of Awards under this Plan. The Company seeks to (a) retain the services of present Employees, Directors, and Key Advisors; (b) secure and retain the services of new Employees, Directors, and Key Advisors; and (c) provide incentives for such persons to exert maximum efforts for the success of the Company and thereby promote the long-term interests of the Company, including growth in value of the Companys equity and enhancement of long-term stockholder return.
2. Definitions
Whenever used in this Plan, the following terms will have the respective meanings set forth below:
(a) Award means an Option, Stock Unit, Stock Award, SAR, Performance Share, Performance Unit, Cash-Based Award or Other Stock-Based Award granted under the Plan.
(b) Award Agreement means the written instrument that sets forth the terms and conditions of an Award, including all amendments thereto.
(c) Board means the Companys Board of Directors.
(d) Cash-Based Award means an Award denominated in cash.
(e) Cause has the meaning set forth in a written agreement between the Participant and the Employer or, if there is no such agreement or no such definition, Cause means (i) an act of material dishonesty by the Participant in connection with the Participants responsibilities as an Employee, Director, or Key Advisor, (ii) the Participants conviction of, or plea of nolo contendere to, a felony, (iii) the Participants gross misconduct in connection with the Participants responsibilities as an Employee, Director, or Key Advisor, (iv) the Participants violation of the written policies or procedures of the Company or a Subsidiary, as applicable; or (v) the Participants continued failure to perform his or her responsibilities as an Employee, Director, or Key Advisor after the Participant has received a written demand for such performance.
(f) Change of Control shall be deemed to have occurred in the event of (i) a dissolution or liquidation or sale of all or substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation; (iii) a reverse merger in which the Company is the surviving corporation but the shares of the Companys common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise; (iv) a strategic corporate event, such as a merger or acquisition, where the Company is technically the surviving entity, but where other elements of a change of control are present, i.e., change in management team or Board composition; (v) a transaction which the Board determines in its sole discretion to constitute a Change of Control of the Company; or (vi) any capital reorganization in which fifty percent 50% of shares of Company Stock entitled to vote are exchanged. A Change of Control does not include the occurrence of an event described in (i), (ii), (iii) or (iv) where
the sole parties to the event are the Company and one of its Subsidiaries. Notwithstanding the foregoing, for any Awards subject to the requirements of section 409A of the Code that will be paid on a Change of Control, the transaction constituting a Change of Control must also constitute a change in control event for purposes of section 409A(a)(2)(A)(v) of the Code.
(g) Code means the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.
(h) Committee means (i) with respect to Awards to Employees, the Compensation Committee of the Board or another committee appointed by the Board to administer the Plan, (ii) with respect to Awards made to Non-Employee Directors, the Compensation Committee or the Board and (iii) with respect to Awards that are intended to be qualified performance-based compensation under section 162(m) of the Code, a committee that consists of two or more persons appointed by the Board, all of whom shall be outside directors as defined under section 162(m) of the Code and related Treasury regulations. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.
(i) Company Stock means the common stock of the Company.
(j) Disability or Disabled means a Participants becoming disabled within the meaning of Section 22(e)(3) of the Code, unless otherwise provided in an Award Agreement.
(k) Dividend Equivalent means an amount calculated with respect to a Stock Unit or Performance Unit, which is determined by multiplying the number of shares of Company Stock subject to the Stock Unit or Performance Unit by the per-share cash dividend, or the per-share fair market value (as determined by the Committee) of any dividend in consideration other than cash, paid by the Company on its Company Stock. If interest is credited on accumulated dividend equivalents, the term Dividend Equivalent shall include the accrued interest.
(l) Effective Date of the Plan means May 6, 2014; provided that the Plan is approved by the stockholders of the Company on that date.
(m) Employee means an employee of the Employer (including an officer or director who is also an employee), but excluding any person who is classified by the Employer as a contractor or consultant, no matter how characterized by the Internal Revenue Service, other governmental agency or a court. Any change of characterization of an individual by the Internal Revenue Service or any court or government agency shall have no effect upon the classification of an individual as an Employee for purposes of this Plan, unless the Committee determines otherwise.
(n) Employer means the Company and its Subsidiaries.
(o) Exchange Act means the Securities Exchange Act of 1934, as amended.
(p) Exercise Price means the per share price at which shares of Company Stock may be purchased under an Option, as designated by the Committee.
(q) Fair Market Value of Company Stock means unless the Committee determines otherwise with respect to a particular Award, (i) if the principal trading market for the Company Stock is a national securities exchange, the last reported sale price of Company Stock during regular trading hours on the relevant date or (if there were no trades on that date) the last reported sale price of Company Stock during regular trading hours on the latest preceding date upon which a sale was reported, (ii) if the Company Stock is not principally traded on such exchange, the mean between the last reported bid and asked prices of Company Stock on the relevant date, as reported on the OTC Bulletin Board, or (iii) if the Company Stock is not publicly traded or, if publicly traded, is not so reported, the Fair Market Value per share shall be as determined by the Committee.
(r) Full Value Award means an Award other than an Incentive Stock Option, Nonqualified Stock Option, or SAR, and which is settled by the issuance of Company Stock.
(s) Incentive Stock Option means an Option that is intended to meet the requirements of an incentive stock option under section 422 of the Code.
(t) Involuntary Termination means the involuntary termination of employment or service of a Participant by the Employer after a Change of Control other than for Cause.
(u) Key Advisor means a consultant or advisor who performs services for the Company or any of its Subsidiaries.
(v) Material Alteration means a change in an Employees employment conditions, without the Employees written consent, involving (a) a material reduction in the Employees authority, duties or responsibilities relative to the Employees authority, duties or responsibilities in effect prior to such reduction, where such reduction was imposed without Cause; (b) a material diminution in the Employees base compensation, where such reduction was imposed without Cause; or (c) a material change in the geographic location at which the Employee must perform his or her duties as an Employee with his or her Employer. Notwithstanding the forgoing, an Employees job shall not have been Materially Altered for the purposes of this Plan unless the following conditions are satisfied: (a) the Employee provided his or her Employer with written notice of Material Alteration within 90 days of the date of such Material Alteration; (b) the Employer did not remedy the condition giving rise to the Material Alteration within the 30 day period following the date the Employee provided notice of the Material Alteration; (c) the Employee terminated his or her employment with his or her Employer following the expiration of the 30 day period the Employer had to remedy the Material Alteration; and, (d) in a timely manner, the Employee signed, and did not revoke, a release of claims in a form approved by his or her Employer.
(w) Non-Employee Director means a member of the Board who is not an Employee.
(x) Nonqualified Stock Option means an Option that is not intended to be taxed as an incentive stock option under section 422 of the Code.
(y) 1933 Act means the Securities Act of 1933, as amended.
(z) Option means an option to purchase shares of Company Stock, as described in Section 7.
(aa) Other Stock-Based Award means any Award based on, measured by or payable in Company Stock (other than an Option, Stock Unit, Stock Award, SAR, Performance Unit or Performance Share), as described in Section 12.
(bb) Participant means an Employee, Non-Employee Director or Key Advisor designated by the Committee to participate in the Plan.
(cc) Plan means this NPS Pharmaceuticals, Inc. 2014 Omnibus Equity Compensation Plan, as amended from time to time.
(dd) Performance Share means a Stock Award, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance goals have been achieved, as described in Section 11.
(ee) Performance Unit means a Stock Unit, the value of which at the time is payable is determined as a function of the extent to which corresponding performance goals have been achieved, as described in Section 11.
(ff) SAR means a stock appreciation right as described in Section 10.
(gg) Stock Award means an award of Company Stock as described in Section 9.
(hh) Stock Unit means an award of a phantom unit representing a share of Company Stock, as described in Section 8.
(ii) Subsidiary means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than 50% by reason of stock ownership or otherwise.
3. Administration
(a) Committee. The Plan shall be administered and interpreted by the Committee. Ministerial functions may be performed by an administrative committee comprised of Company employees appointed by the Committee.
(b) Committee Authority. The Committee shall have the sole authority to (i) determine the Participants to whom Awards shall be made under the Plan, (ii) determine the type, size and terms and conditions of the Awards to be made to each such Participant, (iii) determine the time when the Awards will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms and conditions of any previously issued Award, subject to the provisions of Section 22 below, and (v) deal with any other matters arising under the Plan.
(c) Committee Determinations. The Committee shall have full power and express discretionary authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committees interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated Participants.
4. Awards
(a) Awards under the Plan may consist of Options as described in Section 7, Stock Units as described in Section 8, Stock Awards as described in Section 9, SARs as described in Section 10, Performance Shares and Performance Units as described in Section 11, Other Stock-Based Awards as described in Section 12, and Other Cash-Based Awards as described in Section 13. All Awards shall be subject to such terms and conditions as the Committee deems appropriate and as are specified in writing by the Committee to the Participant in the Award Agreement.
(b) All Awards shall be made conditional upon the Participants acknowledgement, in writing or by acceptance of the Award, that all decisions and determinations of the Committee shall be final and binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under such Award. Awards under a particular Section of the Plan need not be uniform as among the Participants.
5. Shares Subject to the Plan
(a) Shares Authorized. Subject to adjustment as described below in subsection (d), the total aggregate number of shares of Company Stock that may be issued or transferred under the Plan shall be 7,000,000 new shares. The maximum aggregate number of shares of Company Stock that may be issued or transferred under the Plan with respect to Incentive Stock Options shall be 5,000,000 shares, subject to adjustment as described in subsection (d).
(b) Source of Shares; Share Counting. Shares of Company Stock issued or transferred under the Plan may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. Each share of Company Stock that is actually issued or transferred pursuant to a Full Value Award will count as one and one-half shares against the share limits in subsection (a) (i.e., on a 1:1.5 ratio) and each share of Company Stock that is actually issued or transferred pursuant to an Award other than a Full Value Award (other than an Award paid in cash) will count as one share against the share limits in subsection (a) (i.e., on a 1:1 ratio). If and to the extent Options or SARs granted under the Plan (including options granted under the 2005 Plan) terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, and if and to the extent that any Stock Awards, Stock Units, Performance Shares, Performance Units, or Other Stock-Based Awards (including stock awards, stock units, performance share awards and performance units granted under the 2005 Plan) are forfeited, terminated, exchanged with the Committees permission for Awards not involving Company Stock (prior to the issuance of shares of Company Stock), or otherwise are not paid in full, the shares reserved for such Awards shall again be available for purposes of the Plan, taking into account the ratios described above. If shares of Company Stock otherwise issuable under the Plan are surrendered in payment of the Exercise Price of an Option, then the number of shares of Company Stock surrendered shall be treated as issued or transferred under the Plan in addition to the shares of Company Stock actually issued or transferred with respect to any such Award granted under the Plan, taking into account the ratios described above, for purposes of determining the maximum number of shares of Company Stock available to be issued or transferred under the Plan. If shares of Company Stock otherwise issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of any Award or the issuance of Company Stock thereunder, then the number of shares of Company Stock withheld shall be treated as issued or transferred under the Plan in addition to the shares of Company Stock actually issued or transferred with respect to any such Award granted under the Plan, taking into account the ratios described above, for purposes of determining the maximum number of shares of Company Stock available to be issued or transferred under this Plan. Upon the exercise of an Option through the net exercise procedure under Section 7(e) or upon the exercise of a SAR, then both for purposes of calculating the number of shares of Company Stock remaining available for issuance or transfer under the Plan and the number of shares of Company Stock remaining available for exercise under such Option or SAR, the number of such shares shall be reduced by the gross number of shares for which the Option or SAR is exercised, and without regard to any cash settlement of a SAR. To the extent that any Awards are paid in cash, and not in shares of Company Stock, such Awards shall not count against the share limits in subsection (a).
(c) Individual Limits. All Awards (other than Cash-Based Awards and Dividend Equivalents) under the Plan shall be expressed in shares of Company Stock. The maximum aggregate number of shares of Company Stock that may be subject to such Awards that are granted under the Plan to any individual during any calendar year shall be 1,000,000 shares, subject to adjustment as described in subsection (d) below. The individual share limit set forth above in this subsection (c) shall apply without regard to whether the Awards are to be paid in Company Stock or cash. All cash payments with respect to such Awards shall equal the Fair Market Value of the shares of Company Stock to which the cash payments relate. A Participant may not accrue Dividend Equivalents or be granted Cash-Based Awards settled in cash during any calendar year in excess of an aggregate limit of $2,000,000.
(d) Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Companys receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Companys payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for issuance under the Plan, the maximum number of shares of Company Stock for which any individual may receive Awards in any year, the kind and number of shares covered by outstanding Awards, the kind and number of shares issued or transferred and to be issued or transferred under the Plan, and the price per share or the applicable market value of such Awards shall be equitably adjusted by the Committee, in such manner as the Committee deems appropriate, to reflect any increase or decrease in the number of, or change in the kind or value of, the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding Awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. In addition, in the
event of a Change of Control of the Company, the provisions of Section 19 of the Plan shall apply. Any adjustments to outstanding Awards shall be consistent with section 409A or 424 of the Code, to the extent applicable. Any adjustments determined by the Committee shall be final, binding and conclusive.
6. Eligibility for Participation
(a) Eligible Persons. All Employees and Non-Employee Directors shall be eligible to participate in the Plan. A Key Advisor shall be eligible to participate in the Plan if the Key Advisor renders bona fide services to the Company or its Subsidiaries, the services are not in connection with the offer and sale of securities in a capital-raising transaction, and the Key Advisor does not directly or indirectly promote or maintain a market for the Companys securities.
(b) Selection of Participants. The Committee shall select the Employees, Non-Employee Directors and Key Advisors to receive Awards and shall determine the number of shares of Company Stock subject to each Award.
7. Options
(a) General Requirements. The Committee may grant Options to an Employee, Non-Employee Director or Key Advisor upon such terms and conditions as the Committee deems appropriate under this Section 7. The Committee shall determine the number of shares of Company Stock that will be subject to each Award of Options to Employees, Non-Employee Directors and Key Advisors.
(b) Type of Option, Price and Term.
(i) The Committee may grant Incentive Stock Options or Nonqualified Stock Options or any combination of the two, all in accordance with the terms and conditions set forth herein. Incentive Stock Options may be granted only to Employees of the Company or its parents or subsidiaries, as defined in section 424 of the Code. Nonqualified Stock Options may be granted to Employees, Non-Employee Directors or Key Advisors.
(ii) The Exercise Price of Company Stock subject to an Option shall be determined by the Committee and may be equal to or greater than the Fair Market Value of a share of Company Stock on the date the Option is granted. However, an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary, as defined in section 424 of the Code, unless the Exercise Price per share is not less than 110% of the Fair Market Value of the Company Stock on the date of grant.
(iii) The Committee shall determine the term of each Option, which shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary, as defined in section 424 of the Code, may not have a term that exceeds five years from the date of grant.
(c) Exercisability of Options.
(i) Options shall become exercisable in accordance with such terms and conditions as may be determined by the Committee and specified in the Award Agreement. The Committee may grant Options that are subject to achievement of performance goals or other conditions. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason.
(ii) The Committee may provide in an Award Agreement that the Participant may elect to exercise part or all of an Option before it otherwise has become exercisable. Any shares so purchased shall be restricted shares and shall be subject to a repurchase right in favor of the Company during a specified restriction
period, with the repurchase price equal to the lesser of (A) the Exercise Price or (B) the Fair Market Value of such shares at the time of repurchase, or such other restrictions as the Committee deems appropriate.
(iii) Options granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such Options may become exercisable, as determined by the Committee, upon the Participants death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).
(d) Termination of Employment or Service. Except as provided in the Award Agreement, an Option may only be exercised while the Participant is employed as an Employee or providing service as a Non-Employee Director or Key Advisor. The Committee shall determine in the Award Agreement under what circumstances and during what time periods a Participant may exercise an Option after termination of employment or service.
(e) Exercise of Options. A Participant may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company. The Participant shall pay the Exercise Price for the Option (i) in cash, (ii) if permitted by the Committee, by delivering shares of Company Stock owned by the Participant and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation to ownership of shares of Company Stock having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) with approval of the Committee, by surrender of all or any part of the vested shares of Company Stock for which the Option is exercisable to the Company for an appreciation distribution payable in shares of Company Stock with a Fair Market Value at the time of the Option surrender equal to the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the surrendered portion exceeds the aggregate Exercise Price payable for those shares, or (v) by such other method as the Committee may approve, to the extent permitted by applicable law. Shares of Company Stock used to exercise an Option shall have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares pursuant to the Option, and any required withholding taxes, must be received by the time specified by the Committee depending on the type of payment being made, but in all cases prior to the issuance of the Company Stock. Unless otherwise determined by the Committee, all payments under all methods indicated above shall be paid in United States dollars.
(f) Notification of Disqualifying Disposition. If a Participant makes any disposition of shares issued pursuant to the exercise of an Incentive Stock Options under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), the Participant shall notify the Company of such disposition prior to the end of the calendar year in which such disposition occurred.
(g) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, as defined in section 424 of the Code, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary, as defined in section 424 of the Code.
8. Stock Units
(a) General Requirements. The Committee may grant Stock Units to an Employee, Non-Employee Director or Key Advisor, upon such terms and conditions as the Committee deems appropriate under this Section 8. Each Stock Unit shall represent the right of the Participant to receive a share of Company Stock or an amount based on the value of a share of Company Stock. All Stock Units shall be credited to bookkeeping accounts on the Companys records for purposes of the Plan.
(b) Terms of Stock Units. The Committee may grant Stock Units that are payable on terms and conditions determined by the Committee, which may include payment based on achievement of performance goals, such as Performance Units. Stock Units may be paid at the end of a specified vesting or performance period, or
payment may be deferred to a date authorized by the Committee. The Committee shall determine the number of Stock Units to be granted and the requirements applicable to such Stock Units.
(c) Payment With Respect to Stock Units. Payment with respect to Stock Units shall be made in cash, in Company Stock, or in a combination of the two, as determined by the Committee. The Award Agreement shall specify the maximum number of shares that can be issued under the Stock Units.
(d) Requirement of Employment or Service. The Committee shall determine in the Award Agreement under what circumstances a Participant may retain Stock Units after termination of the Participants employment or service, and the circumstances under which Stock Units may be forfeited.
9. Stock Awards
(a) General Requirements. The Committee may issue shares of Company Stock to an Employee, Non-Employee Director or Key Advisor under a Stock Award, upon such terms and conditions as the Committee deems appropriate under this Section 9. Shares of Company Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration, and subject to restrictions or no restrictions, as determined by the Committee. The Committee may establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according to such other criteria as the Committee deems appropriate, including restrictions based upon the achievement of specific performance goals, such as Performance Shares. The Committee shall determine the number of shares of Company Stock to be issued pursuant to a Stock Award.
(b) Requirement of Employment or Service. The Committee shall determine in the Award Agreement under what circumstances a Participant may retain Stock Awards after termination of the Participants employment or service, and the circumstances under which Stock Awards may be forfeited.
(c) Section 83(b) Election. The Committee may provide in an Award Agreement that the Stock Award is conditioned upon the Participant making or refraining from making an election with respect to the Award under section 83(b) of the Code. If a Participant makes an election pursuant to section 83(b) of the Code concerning a Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.
(d) Restrictions on Transfer. While Stock Awards are subject to restrictions, a Participant may not sell, assign, transfer, pledge or otherwise dispose of the shares of a Stock Award except upon death as described in Section 18. If certificates are issued, each certificate for a share of a Stock Award shall contain a legend giving appropriate notice of the restrictions in the Award. The Participant shall be entitled to have the legend removed when all restrictions on such shares have lapsed. The Company may retain possession of any certificates for Stock Awards until all restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. The Committee shall determine to what extent, and under what conditions, the Participant shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares during the restriction period. The Committee may determine that dividends on Stock Awards shall be withheld while the Stock Awards are subject to restrictions and that the dividends shall be payable only upon the lapse of the restrictions on the Stock Awards, or on such other terms as the Committee determines. Dividends that are not paid currently shall be credited to bookkeeping accounts on the Companys records for purposes of the Plan. Accumulated dividends may accrue interest, as determined by the Committee, and shall be paid in cash, shares of Company Stock, or in such other form as dividends are paid on Company Stock, as determined by the Committee.
10. Stock Appreciation Rights
(a) General Requirements. The Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately or in tandem with an Option. The Committee shall establish the number of shares, the terms and the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be not less than the Fair Market Value of a share of Company Stock as of the date of grant of the SAR.
(b) Tandem SARs. The Committee may grant tandem SARs either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the date of the grant of the Incentive Stock Option. In the case of tandem SARs, the number of SARs granted to a Participant that shall be exercisable during a specified period shall not exceed the number of shares of Company Stock that the Participant may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Company Stock covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Company Stock.
(c) Exercisability; Term. A SAR shall become exercisable in accordance with such terms and conditions as may be specified. The Committee may grant SARs that are subject to achievement of performance goals or other conditions. The Committee may accelerate the exercisability of any or all outstanding SARs at any time for any reason. The Committee shall determine in the Award Agreement under what circumstances and during what periods a Participant may exercise a SAR after termination of employment or service. A tandem SAR shall be exercisable only while the Option to which it is related is exercisable. The Committee shall determine the term of each SAR, which shall not exceed ten years from the date of grant.
(d) Awards to Non-Exempt Employees. SARs granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such SARs may become exercisable, as determined by the Committee, upon the Participants death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).
(e) Exercise of SARs. When a Participant exercises SARs, the Participant shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised. The stock appreciation for a SAR is the amount by which the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR as specified in the Award Agreement.
(f) Form of Payment. The Committee shall determine whether the stock appreciation for a SAR shall be paid in the form of shares of Company Stock, cash or a combination of the two. For purposes of calculating the number of shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market Value on the date of exercise of the SAR. If shares of Company Stock are to be received upon exercise of a SAR, cash shall be delivered in lieu of any fractional share.
11. Performance Units and Performance Shares
(a) General Requirements. The Committee may grant Share Units and Stock Awards with restrictions based upon the achievement of specific performance goals known, respectively, as Performance Units and Performance Shares to an Employee, Non-Employee Director or Key Advisor, upon such terms and conditions as the Committee deems appropriate under this Section 11.
(b) Terms of Performance Units and Performance Shares. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which such goals are met, will determine the value and/or number of Performance Units and/or Performance Shares that will be paid out or issued to the Participant, as applicable.
(c) Payment With Respect to Performance Units and Performance Shares. Payment with respect to Performance Units and/or Performance Shares shall be made in cash, in Company Stock, or in a combination of the two, as determined by the Committee. Any shares of Company Stock granted with respect to Performance Units and/or Performance Shares may be subject to restrictions deemed appropriate by the Committee.
(d) Requirement of Employment or Service. The Committee shall determine in the Award Agreement under what circumstances a Participant may retain Performance Units and/or Performance Shares after termination
of the Participants employment or service, and the circumstances under which Performance Units and/or Performance Shares may be forfeited. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.
12. Other Stock-Based Awards
The Committee may grant other awards not specified in Sections 7, 8, 9, 10, or 11 above that are based on or measured by Company Stock to Employees, Non-Employee Directors and Key Advisors, on such terms and conditions as the Committee deems appropriate. Other Stock-Based Awards may be granted subject to achievement of performance goals or other conditions and may be payable in Company Stock or cash, or in a combination of the two, as determined by the Committee in the Award Agreement. Such provisions shall be determined in the sole discretion of the Committee and may be included in an Award Agreement entered into with each Participant, but need not be uniform among all Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination. Other Stock-Based Awards may be designed, without limitation, to comply with or take advantage of the applicable laws of jurisdictions other than the United States.
13. Other Cash-Based Awards
The Committee may grant cash-based awards to Employees, Non-Employee Directors and Key Advisors, on such terms and conditions as the Committee deems appropriate. Other Cash-Based Awards may be granted subject to achievement of performance goals or other conditions and may be payable in Company Stock or cash, or in a combination of the two, as determined by the Committee in the Award Agreement. Such provisions shall be determined in the sole discretion of the Committee and may be included in an Award Agreement entered into with each Participant, but need not be uniform among all Other Cash-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
14. Dividend Equivalents
The Committee may grant Dividend Equivalents based on the dividends declared on shares of Company Stock that are subject to any Stock Unit or Performance Unit, under such terms and conditions as the Committee deems appropriate. Dividend Equivalents may be paid to Participants currently or may be deferred. All Dividend Equivalents that are not paid currently shall be credited to bookkeeping accounts on the Companys records for purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be converted to shares of Company Stock for the Participant, and deferred Dividend Equivalents may accrue interest, all as determined by the Committee. The Committee may provide that Dividend Equivalents shall be payable based on the achievement of specific performance goals. Dividend Equivalents may be payable in cash or shares of Company Stock or in a combination of the two, as determined by the Committee.
15. Qualified Performance-Based Compensation
(a) Designation as Qualified Performance-Based Compensation. The Committee may determine that Awards granted to an Employee shall be considered qualified performance-based compensation under section 162(m) of the Code, in which case the provisions of this Section 15 shall apply.
(b) Performance Goals. When Awards are made under this Section 15, the Committee shall establish in writing (i) the objective performance goals that must be met, (ii) the period during which performance will be measured, (iii) the maximum amounts that may be paid if the performance goals are met, and (iv) any other conditions that the Committee deems appropriate and consistent with the requirements of section 162(m) of the Code for qualified performance-based compensation. The performance goals shall satisfy the requirements for qualified performance-based compensation, including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the performance goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall not have discretion to increase the amount of compensation that is
payable, but may reduce the amount of compensation that is payable, pursuant to Awards identified by the Committee as qualified performance-based compensation.
(c) Criteria Used for Objective Performance Goals. The Committee shall use objectively determinable performance goals based on one or more of the following criteria:
(i) Net earnings or net income (before or after taxes);
(ii) Earnings per share;
(iii) Net sales or revenue growth;
(iv) Net operating profit;
(v) Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);
(vi) Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);
(vii) Earnings before or after taxes, interest, depreciation, and/or amortization;
(viii) Gross or operating margins;
(ix) Productivity ratios;
(x) Share price (including, but not limited to, growth measures and total stockholder return);
(xi) Expense targets;
(xii) Margins;
(xiii) Operating efficiency;
(xiv) Market share;
(xv) Customer satisfaction;
(xvi) Working capital targets;
(xvii) Economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital);
(xviii) Product development;
(xix) Growth in assets;
(xx) Inventory;
(xxi) Strategic business measures consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, geographic business expansion goals or cost targets; and
(xxii) Goals relating to mergers, acquisitions, including licensing deals, or divestitures within time deadlines and other parameters set by the Committee.
Such performance goals may also be particular to a Participant or the division, department, branch, line of business, Subsidiary or other unit in which the Participant works, or may be based on attaining a specified absolute level of the performance goal, or a percentage increase or decrease in the performance goal compared to a pre-established target, previous years results, or a designated market index or comparison group, all as determined by the Committee. Performance goals need not be uniform as among Participants. In the event that applicable tax and/or securities laws change to permit the Committee discretion to alter the governing performance goals without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval.
(d) Timing of Establishment of Goals. Performance goals must be pre-established by the Committee. A performance goal is considered pre-established if it is established in writing not later than 90 days after the commencement of the period of service to which the performance goal relates, provided that the outcome is substantially uncertain at the time the Committee actually established the goal. However, in no event will a performance goal be considered pre-established if it is established after 25% of the period of service (as scheduled in good faith at the time the goal is established) has elapsed.
(e) Certification of Results. The Committee shall certify the performance results for the performance period specified in the Award Agreement after the performance period ends. The Committee shall determine the amount, if any, to be paid pursuant to each Award based on the achievement of the performance goals and the satisfaction of all other terms of the Award Agreement.
(f) Death, Disability or Other Circumstances. The Committee may provide in the Award Agreement that Awards under this Section 15 shall be payable, in whole or in part, in the event of the Participants death or Disability, a Change of Control or under other circumstances consistent with the Treasury regulations and rulings under section 162(m) of the Code.
16. Deferrals
The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to the Participant in connection with any Award. The Committee shall establish rules and procedures for any such deferrals, consistent with applicable requirements of section 409A of the Code.
17. Withholding of Taxes
(a) Required Withholding. All Awards under the Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company may require that the Participant or other person receiving or exercising Awards pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to such Awards, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Awards.
(b) Election to Withhold Shares. If the Committee so permits, shares of Company Stock may be withheld to satisfy the Companys tax withholding obligation with respect to Awards paid in Company Stock, at the time such Awards become taxable, up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.
18. Transferability of Awards
(a) Restrictions on Transfer. Except as described in subsection (b) below, only the Participant may exercise rights under an Award during the Participants lifetime, and a Participant may not transfer those rights except by will or by the laws of descent and distribution. When a Participant dies, the personal representative or
other person entitled to succeed to the rights of the Participant may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Award under the Participants will or under the applicable laws of descent and distribution.
(b) Transfer of Nonqualified Stock Options to or for Family Members. Notwithstanding the foregoing, the Committee may provide, in an Award Agreement, that a Participant may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Committee may determine; provided that the Participant receives no consideration for the transfer of a Nonqualified Stock Option and the transferred Nonqualified Stock Option shall continue to be subject to the same terms and conditions as were applicable to the Nonqualified Stock Option immediately before the transfer.
19. Consequences of a Change of Control
Unless otherwise set forth in an Award Agreement, if, after or upon a Change of Control, (i) an Employees job is Materially Altered and the Employee voluntary terminates employment; or (ii) an Employees employment is Involuntarily Terminated, other than for Cause or death or Disability; then, the time during which Awards outstanding under the Plan become vested shall be accelerated and all outstanding Awards shall become immediately vested and exercisable, if applicable, upon termination of employment and such Awards shall continue to be exercisable, if applicable, until the later of (i) 24 months from the effective date of such event, or (ii) the time specified in the Award Agreement during which the Award is exercisable following a Participants termination of service; provided, however, that in no event shall the Award be exercisable after the expiration of its term. For the purposes of this paragraph, any Award that vests based on the attainment of performance goals shall vest assuming that the performance goals were attained at the target level of performance, or at such greater level of performance as the Committee may determine.
20. Requirements for Issuance of Shares
No Company Stock shall be issued in connection with any Award hereunder unless and until all legal requirements applicable to the issuance of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Award made to any Participant hereunder on such Participants undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Committee shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. No Participant shall have any right as a stockholder with respect to Company Stock covered by an Award until shares have been issued to the Participant.
21. Beneficiary Designation
Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participants lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participants death shall be paid or exercised by the Participants executor, administrator, or legal representative.
22. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without approval of the stockholders of the Company if such approval is required in order to comply with the Code or applicable laws, or to comply with applicable stock exchange requirements. No amendment or termination of this Plan shall, without the consent of the Participant, materially impair any rights or
obligations under any Award previously made to the Participant under the Plan, unless such right has been reserved in the Plan or the Award Agreement, or except as provided in Section 19(b) below. Notwithstanding anything in the Plan to the contrary, the Board may amend the Plan in such manner as it deems appropriate in the event of a change in applicable law or regulations.
(b) No Repricing Without Stockholder Approval. Notwithstanding anything in the Plan to the contrary, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or SARs or cancel outstanding Options or SARS in exchange for cash, other awards of Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs without stockholder approval.
(c) Stockholder Approval for Qualified Performance-Based Compensation. If Awards are made under Section 15 above, the Plan must be reapproved by the Companys stockholders no later than the first stockholders meeting that occurs in the fifth year following the year in which the stockholders previously approved the provisions of Section 15, if additional Awards are to be made under Section 15 and if required by section 162(m) of the Code or the regulations thereunder.
(d) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its Effective Date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders. The termination of the Plan shall not impair Awards outstanding or the power and authority of the Committee with respect to an outstanding Award.
23. Miscellaneous
(a) Effective Date. The Plan shall be effective as of the Effective Date, if approved by the Companys stockholders on such date.
(b) Awards in Connection with Corporate Transactions and Otherwise. Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Awards under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Awards to employees thereof who become Employees, or for other proper corporate purposes, or (ii) limit the right of the Company to grant stock options or make other stock-based awards outside of this Plan. Without limiting the foregoing, the Committee may make an Award to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company in substitution for a grant made by such corporation. The terms and conditions of the Awards may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives, as determined by the Committee.
(c) Compliance with Law.
(i) The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Awards shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of section 422 of the Code, and Awards of qualified performance-based compensation comply with the applicable provisions of section 162(m) of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 422 or 162(m) as set forth in the Plan ceases to be required under section 16 of the Exchange Act or section 422 or 162(m) of the Code, that Plan provision shall cease to apply. The Committee may revoke any Award if it is contrary to law or modify an Award to bring it into compliance with any valid and mandatory government regulation. The Committee
may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree to limit its authority under this Section.
(ii) The Plan is intended to comply with the requirements of section 409A of the Code, to the extent applicable. Each Award shall be construed and administered such that the Award either (A) qualifies for an exemption from the requirements of section 409A of the Code or (B) satisfies the requirements of section 409A of the Code. If an Award is subject to section 409A of the Code, (I) distributions shall only be made in a manner and upon an event permitted under section 409A of the Code, (II) payments to be made upon a termination of employment shall only be made upon a separation from service under section 409A of the Code, (III) unless the Award specifies otherwise, each installment payment shall be treated as a separate payment for purposes of section 409A of the Code, and (IV) in no event shall a Participant, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with section 409A of the Code.
(iii) Any Award that is subject to section 409A of the Code and that is to be distributed to a Key Employee (as defined below) upon separation from service shall be administered so that any distribution with respect to such Award shall be postponed for six months following the date of the Participants separation from service, if required by section 409A of the Code. If a distribution is delayed pursuant to section 409A of the Code, the distribution shall be paid within 15 days after the end of the six-month period. If the Participant dies during such six-month period, any postponed amounts shall be paid within 90 days of the Participants death. The determination of Key Employees, including the number and identity of persons considered Key Employees and the identification date, shall be made by the Committee or its delegate each year in accordance with section 416(i) of the Code and the specified employee requirements of section 409A of the Code.
(iv) Notwithstanding anything in the Plan or any Award agreement to the contrary, each Participant shall be solely responsible for the tax consequences of Awards under the Plan, and in no event shall the Company have any responsibility or liability if an Award does not meet any applicable requirements of section 409A of the Code. Although the Company intends to administer the Plan to prevent taxation under section 409A of the Code, the Company does not represent or warrant that the Plan or any Award complies with any provision of federal, state, local or other tax law.
(d) Enforceability. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.
(e) Funding of the Plan; Limitation on Rights. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Awards under this Plan. Nothing contained in the Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary relationship between the Company and any Participant or any other person. No Participant or any other person shall under any circumstances acquire any property interest in any specific assets of the Company. To the extent that any person acquires a right to receive payment from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.
(f) Rights of Participants. Nothing in this Plan shall entitle any Employee, Non-Employee Director, Key Advisor or other person to any claim or right to receive an Award under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employment or service of the Employer.
(g) Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Company Stock or cash paid pursuant to such Awards, except pursuant to Annual Incentive Awards for Employees designated as eligible to receive qualified performance-based compensation under Section 15, may be included as compensation for purposes of computing the benefits payable to any Participant under the Companys or any Subsidiarys retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participants benefit.
(h) No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
(i) Employees Subject to Taxation Outside the United States. With respect to Participants who are subject to taxation in countries other than the United States, the Committee may make Awards on such terms and conditions as the Committee deems appropriate to comply with the laws of the applicable countries, and the Committee may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws.
(j) Forfeiture. The Committee may specify in an Award Agreement that the Participants rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for Cause, termination of the Participants provision of services to the Company and/or a Subsidiary, violation of material Company and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Subsidiaries.
(k) Clawback Rights. All Awards under the Plan will be subject to any compensation, clawback and recoupment policies that may be applicable to the employees of the Company, as in effect from time to time and as approved by the Board or Committee, whether or not approved before or after the effective date of the Plan.
(l) Statute of Limitations. A Participant or any other person filing a claim for benefits under the Plan must file the claim within one year after the Participant or other person knew or reasonably should have known of the principal facts on which the claim is based.
(m) Governing Law. The validity, construction, interpretation and effect of the Plan and Award Agreements issued under the Plan shall be governed and construed by and determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof. Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.
(n) Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
(o) Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
Exhibit 10.2
NPS PHARMACEUTICALS, INC.
2014 OMNIBUS EQUITY COMPENSATION PLAN
INCENTIVE STOCK OPTION SUMMARY OF AWARD
NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), pursuant to its 2014 Omnibus Equity Compensation Plan (the Plan), hereby awards to the individual listed below (the Participant), an Incentive Stock Option to purchase shares of common stock of the Company (Company Stock) that may become vested and exercisable as set forth below (the Option). The Option is subject in all respects to the terms and conditions set forth herein, in the Incentive Stock Option Award Agreement attached hereto as Exhibit A (the Incentive Stock Option Award Agreement) and the Plan, each of which is incorporated herein by reference and made part hereof. Unless otherwise defined herein, capitalized terms used in this Incentive Stock Option Summary of Award (the Summary of Award) and the Incentive Stock Option Award Agreement will have the meanings set forth in the Plan.
The Option is designated as an Incentive Stock Option, as described in Section 5 of the Incentive Stock Option Award Agreement. However, if and to the extent the Option exceeds the limits for an Incentive Stock Option, as described in Section 5 of the Incentive Stock Option Award Agreement, the Option shall be a Nonqualified Stock Option.
Participant: |
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[[FIRSTNAME]] [[LASTNAME]] |
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Award Number: |
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[[GRANTNUMBER]] |
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Date of Grant: |
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[[GRANTDATE]] |
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Plan: |
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2014 Omnibus Equity Compensation Plan |
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Type: |
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[[GRANTTYPE]] |
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Total Number of Shares Awarded: |
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[[SHARESGRANTED]] of shares of Company Stock |
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Exercise Price: |
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[[GRANTPRICE]] |
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Expiration Date: |
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[[GRANTEXPIRATIONDATE]] |
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Exercisability of the Option: |
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Except as set forth herein, the Option will vest and become exercisable with respect to 25% of the shares of Company Stock subject to the Option on the first anniversary of the Date of Grant and 6.25% of the shares of Company Stock subject to the Option every three months thereafter (each a Vesting Date), provided that the Participant continues to be employed as an Employee through the applicable Vesting Date. |
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For example, if the Participants Date of Grant was January 15, 25% of the shares of Company Stock subject to the Option would vest and become exercisable on January 15 of the following year, and 6.25% each April 15, July 15, October 15, and January 15 thereafter, until the shares subject to the Option are fully vested |
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and exercisable, provided that the Participant continues to be employed as an Employee. |
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Vesting Upon Death or Disability: |
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The Option will automatically accelerate and become fully vested and exercisable as of the date on which the Participant ceases to be employed as an Employee on account of the Participants death or Disability, as applicable. |
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Vesting Upon Retirement: |
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In the event the Participant ceases to be employed as an Employee due to the Participants Retirement, the Option will vest and become exercisable with respect to the number of shares of Company Stock subject to the Option that would have vested and become exercisable had the Participant continued to be employed as an Employee through the second anniversary of the date of Retirement. |
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Retirement means the termination of employment as Employee on or after the date on which the Participants number of completed years of employment with the Employer and age equal or exceed seventy (70) (including termination due to death or Disability after such time). |
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Vesting Upon Certain Termination Events Following a Change of Control: |
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In the event a Change of Control occurs while the Participant is employed as an Employee, the Option will automatically accelerate and become fully vested and exercisable if, upon or after the Change in Control, 1) the Participants job is Materially Altered and the Participant voluntarily terminates employment as an Employee within the time period specified in the Plan after complying with the notice requirements specified in the Plan, or 2) the Participants employment as an Employee is Involuntarily Terminated, other than for Cause, death, or Disability. |
Participant Acceptance:
By signing the acknowledgement below, the Participant agrees to be bound by the terms and conditions of the Plan, the Incentive Stock Option Award Agreement and this Summary of Award and accepts the Option. The Participant accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Summary of Award or the Incentive Stock Option Award Agreement.
The Participant acknowledges delivery of the Plan and the Plan prospectus together with this Summary of Award and the Incentive Stock Option Award Agreement. Additional copies of the Plan and the Plan prospectus are available at the intranet site at [ ] or by contacting the Companys Human Resources Department at [ ].
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Agreed and accepted: |
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Participant |
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Date |
EXHIBIT A
NPS PHARMACEUTICALS, INC.
INCENTIVE STOCK OPTION AWARD AGREEMENT
(Pursuant to the 2014 Omnibus Equity Compensation Plan)
This Incentive Stock Option Award Agreement (this Agreement) is delivered by NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), pursuant to the Summary of Award delivered with this Agreement to the individual named in the Summary of Award (the Participant). The Summary of Award, which specifies the Participant, the date as of which the Award is made (the Date of Grant), the vesting schedule and other specific details of the Award is incorporated herein by reference.
1. Option Award.
(a) Upon the terms and conditions set forth in this Agreement and in the Companys 2014 Omnibus Equity Compensation Plan (the Plan), the Company hereby awards to the Participant an Incentive Stock Option to purchase the number of shares of common stock of the Company (Company Stock) set forth in the Summary of Award (the Option). The Participant hereby acknowledges the receipt of a copy of the official prospectus for the Plan. Copies of the Plan and the official Plan prospectus are available on the Companys intranet site at [ ] or by contacting the Companys Human Resources Department at [ ]. This Agreement is made pursuant to the Plan and is subject in its entirety to all applicable provisions of the Plan. Capitalized terms used herein and not otherwise defined will have the meanings set forth in the Plan. The Participant agrees to be bound by all of the terms and conditions of the Plan.
(b) The Option is designated as an Incentive Stock Option, as described in Section 5 below. However, if and to the extent the Option exceeds the limits for an Incentive Stock Option, as described in Section 5, the Option shall be a Nonqualified Stock Option.
2. Exercisability of the Option.
(a) The Option will become vested and exercisable as set forth in the Summary of Award, provided that the Participant continues to be employed as an Employee through the Vesting Date (as defined in the Summary of Award).
(b) The exercisability of the Option is cumulative, but shall not exceed 100% of the shares of Company Stock subject to the Option. If the schedule set forth in the Summary of Award would produce fractional shares of Company Stock, the number of shares of Company Stock for which the Option becomes exercisable shall be rounded down to the nearest whole share of Company Stock.
3. Term of Option.
(a) The Option will have a term from the Date of Grant to the Expiration Date specified on the Summary of Award and will terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.
(b) The Option will automatically terminate upon the happening of the first of the following events:
(i) The expiration of the ninety (90) day period after the Participant ceases to be employed as an Employee, if the termination is for any reason other than Disability, death, Retirement (as defined in the Summary of Award), voluntary termination of the Participants employment as an Employee upon Material Alteration of the Participants job upon or after a Change of Control, or Involuntary Termination of the Participants employment as an Employee without Cause upon or after a Change of Control.
(ii) The expiration of the twelve (12) month period after the Participant ceases to be employed as an Employee on account of the Participants Disability.
(iii) The expiration of the eighteen (18) month period after the Participant ceases to be employed as an Employee, if the Participant dies while employed as an Employee.
(iv) The Expiration Date if the Participant ceases to be employed as an Employee on account of the Participants Retirement.
(v) The later of 1) the expiration of the twenty-four (24) month period after a Change of Control, or 2) the ninety (90) day period after the Participant ceases to be employed as an Employee, if the Participant is an Employee who ceases to be employed as an Employee on account of A) voluntary termination of the Participants employment as an Employee upon Material Alteration of the Participants job upon or after such Change of Control, or B) Involuntary Termination of the Participants employment as an Employee without Cause upon or after such Change of Control.
(vi) The date on which the Participant ceases to be employed as an Employee for Cause. In addition, notwithstanding the prior provisions of this Section 3, if the Participant engages in conduct that constitutes Cause after the Participants employment as an Employee terminates, the Option will immediately terminate.
Notwithstanding the foregoing, in no event may the Option be exercised after the Expiration Date. Any portion of the Option that is not exercisable at the time the Participant ceases to be employed as an Employee will immediately terminate.
4. Exercise Procedures.
(a) Subject to the provisions of Sections 2 and 3 above, the Participant may exercise part or all of the exercisable Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of shares of Company Stock as to which the Option is to be exercised. Not less than one hundred shares of the shares of Company Stock subject to the Option may be purchased at any time unless the number purchased is the total number at the time purchasable under the Option. At such time as the Committee shall determine, the Participant shall pay the exercise price (i) in cash, (ii) with the approval of the Committee, by delivering shares of Company Stock, which shall be valued at their Fair Market Value on the date of delivery, or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of
exercise equal to the exercise price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) with the approval of the Committee, by surrender of all or any part of the vested shares of Company stock for which the Option is exercisable to the Company for an appreciation distribution payable in shares of Company with a Fair Market Value at the time of the Option surrender equal to the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the surrendered portion exceeds the aggregate Exercise Price payable for those shares of Company Stock, or (v) by such other method as the Committee may approve, to the extent permitted by applicable law. The Committee may impose from time to time such limitations as it deems appropriate on the use of shares of Company Stock to exercise the Option. Shares of Company Stock used to exercise an Option shall have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option.
(b) The obligation of the Company to deliver shares of Company Stock upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. The Company may require that the Participant (or other person exercising the Option after the Participants death) represent that the Participant is purchasing shares of Company Stock for the Participants own account and not with a view to or for sale in connection with any distribution of the shares of Company Stock, or such other representation as the Committee deems appropriate.
(c) All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable. Subject to Committee approval, the Participant may elect to satisfy any tax withholding obligation of the Employer with respect to the Option by having shares of Company Stock withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.
5. Designation as Incentive Stock Option.
(a) This Option is designated an Incentive Stock Option. If the aggregate fair market value of the stock on the Date of Grant with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. If and to the extent that the Option fails to qualify as an Incentive Stock Option, the Option shall remain outstanding according to its terms as a Nonqualified Stock Option.
(b) The Participant understands that favorable Incentive Stock Option tax treatment is available only if the Option is exercised while the Participant is an Employee of the Company or a Subsidiary or within a period of time specified in the Code after the Participant ceases to be an Employee. The Participant understands that the Participant is responsible for the income tax consequences of the Option, and, among other tax consequences, the Participant understands that he or she may be subject to the alternative minimum tax under the Code in the
year in which the Option is exercised. The Participant will consult with his or her tax adviser regarding the tax consequences of the Option.
(c) The Participant agrees that the Participant shall immediately notify the Company in writing if the Participant sells or otherwise disposes of any shares of Company Stock acquired upon the exercise of the Option and such sale or other disposition occurs on or before the later of (i) two years after the Date of Grant or (ii) one year after the transfer of the shares of Company Stock to the Participant upon exercise of the Option. The Participant also agrees to provide the Company with any information requested by the Company with respect to such sale or other disposition.
6. No Shareholder Rights. Neither the Participant, nor any person entitled to exercise the Participants rights in the event of the Participants death, shall have any of the rights and privileges of a stockholder with respect to the shares of Company Stock subject to the Option, until certificates for shares of Company Stock have been issued upon the exercise of the Option.
7. Change of Control. Except as set forth in the Summary of Award, the provisions of the Plan applicable to a Change of Control will apply to the Option, and, in the event of a Change of Control, the Committee may take such actions as it deems appropriate pursuant to the Plan.
8. Restrictions on Exercise. Only the Participant may exercise the Option during the Participants lifetime and, after the Participants death, the Option will be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Participant, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.
9. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the Option awarded hereby and may not be changed orally but only by an instrument in writing signed by the party against whom enforcement of any change, modification or extension is sought.
10. Award Subject to Plan Provisions. This Award is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects will be interpreted in accordance with the Plan. This Award is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the shares, (c) changes in capitalization of the Company and (d) other requirements of applicable law. The Committee will have the authority to interpret and construe this Award pursuant to the terms of the Plan, and its decisions will be conclusive as to any questions arising hereunder.
11. Assignment and Transfers. The rights and interests of the Participant under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event
of the death of the Participant, by will or by the laws of descent and distribution. In the event of any attempt by the Participant to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Participant, and the Option and all rights hereunder will thereupon become null and void. The rights and protections of the Company hereunder will extend to any successors or assigns of the Company and to the Companys parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Participants consent.
12. No Employment or Other Rights. This Agreement will not confer upon the Participant any right to be retained in the employment of the Company and will not interfere in any way with the right of the Company to terminate the Participants employment at any time. The right of the Company to terminate at will the Participants employment at any time for any reason is specifically reserved.
13. Notice. Any notice to the Company provided for in this instrument will be addressed to the Company in care of the Corporate Secretary and General Counsel at the Companys corporate headquarters, and any notice to the Participant will be addressed to such Participant at the current address shown on the payroll records of the Company, or to such other address as the Participant may designate to the Company in writing. Any notice will be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.
14. Recoupment Policy. The Participant agrees that the Participant will be subject to any compensation, clawback and recoupment policies that may be applicable to the Participant as an employee of the Company, as in effect from time to time and as approved by the Board of Directors, the Committee or a duly authorized committee thereof, whether or not approved before or after the Date of Grant.
15. Applicable Law. The validity, construction, interpretation and effect of this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. Participants are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware to resolve any and all issues that may arise out of or relate to this Agreement or Plan.
16. Statute of Limitations. A Participant or any other person claiming benefits under the Plan of this Agreement must make a claim for such benefits within one year after the Participant or other person knew or reasonably should have known of the principal facts on which the claim is based.
17. Application of Section 409A of the Code. This Agreement is intended to be exempt from Section 409A of the Code, and to the extent this Agreement is subject to Section 409A of the Code, it will in all respects be administered in accordance with Section 409A of the Code.
Exhibit 10.3
NPS PHARMACEUTICALS, INC.
2014 OMNIBUS EQUITY COMPENSATION PLAN
NONQUALIFIED STOCK OPTION SUMMARY OF AWARD
NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), pursuant to its 2014 Omnibus Equity Compensation Plan (the Plan), hereby awards to the individual listed below (the Participant), a Nonqualified Stock Option to purchase shares of common stock of the Company (Company Stock) that may become vested and exercisable as set forth below (the Option). The Option is subject in all respects to the terms and conditions set forth herein, in the Nonqualified Stock Option Award Agreement attached hereto as Exhibit A (the Nonqualified Stock Option Award Agreement) and the Plan, each of which is incorporated herein by reference and made part hereof. Unless otherwise defined herein, capitalized terms used in this Nonqualified Stock Option Summary of Award (the Summary of Award) and the Nonqualified Stock Option Award Agreement will have the meanings set forth in the Plan.
Participant: |
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[[FIRSTNAME]] [[LASTNAME]] |
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Award Number: |
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[[GRANTNUMBER]] |
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Date of Grant: |
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[[GRANTDATE]] |
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Plan: |
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2014 Omnibus Equity Compensation Plan |
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Type: |
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[[GRANTTYPE]] |
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Total Number of Shares Awarded: |
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[[SHARESGRANTED]] of shares of Company Stock |
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Exercise Price: |
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[[GRANTPRICE]] |
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Expiration Date: |
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[[GRANTEXPIRATIONDATE]] |
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Exercisability of the Option: |
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Except as set forth herein, the Option will vest and become exercisable with respect to 25% of the shares of Company Stock subject to the Option on the first anniversary of the Date of Grant and 6.25% of the shares of Company Stock subject to the Option every three months thereafter (each a Vesting Date), provided that the Participant continues to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director through the applicable Vesting Date.
For example, if the Participants Date of Grant was January 15, 25% of the shares of Company Stock subject to the Option would vest and become exercisable on January 15 of the following year, and 6.25% each April 15, July 15, October 15, and January 15 thereafter, until the shares subject to the Option are fully vested and exercisable, provided that the Participant continues to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director. |
Vesting Upon Death or Disability: |
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The Option will automatically accelerate and become fully vested and exercisable as of the date on which the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director on account of the Participants death or Disability, as applicable.
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Vesting Upon Retirement: |
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In the event the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director due to the Participants Retirement, the Option will vest and become exercisable with respect to the number of shares of Company Stock subject to the Option that would have vested and become exercisable had the Participant continued to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director through the second anniversary of the date of Retirement.
Retirement means the termination of employment as an Employee or service as a Key Advisor or Non-Employee Director on or after the date on which the Participants number of completed years of employment or service with the Employer and age equal or exceed seventy (70) (including termination due to death or Disability after such time).
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Vesting Upon Certain Termination Events Following a Change of Control: |
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In the event a Change of Control occurs while the Participant is employed as an Employee, the Option will automatically accelerate and become fully vested and exercisable if, upon or after the Change in Control, 1) the Participants job is Materially Altered and the Participant voluntarily terminates employment as an Employee within the time period specified in the Plan after complying with the notice requirements specified in the Plan, or 2) the Participants employment as an Employee is Involuntarily Terminated, other than for Cause, death, or Disability. |
Participant Acceptance:
By signing the acknowledgement below, the Participant agrees to be bound by the terms and conditions of the Plan, the Nonqualified Stock Option Award Agreement and this Summary of Award and accepts the Option. The Participant accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Summary of Award or the Nonqualified Stock Option Award Agreement.
The Participant acknowledges delivery of the Plan and the Plan prospectus together with this Summary of Award and the Nonqualified Stock Option Award Agreement. Additional copies of the Plan and the Plan prospectus are available at the intranet site at [ ] or by contacting the Companys Human Resources Department at [ ].
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Agreed and accepted: |
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Participant |
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EXHIBIT A
NPS PHARMACEUTICALS, INC.
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
(Pursuant to the 2014 Omnibus Equity Compensation Plan)
This Nonqualified Stock Option Award Agreement (this Agreement) is delivered by NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), pursuant to the Summary of Award delivered with this Agreement to the individual named in the Summary of Award (the Participant). The Summary of Award, which specifies the Participant, the date as of which the Award is made (the Date of Grant), the vesting schedule and other specific details of the Award is incorporated herein by reference.
1. Option Award. Upon the terms and conditions set forth in this Agreement and in the Companys 2014 Omnibus Equity Compensation Plan (the Plan), the Company hereby awards to the Participant a Nonqualified Stock Option to purchase the number of shares of common stock of the Company (Company Stock) set forth in the Summary of Award (the Option). The Participant hereby acknowledges the receipt of a copy of the official prospectus for the Plan. Copies of the Plan and the official Plan prospectus are available on the Companys intranet site at [ ] or by contacting the Companys Human Resources Department at [ ]. This Agreement is made pursuant to the Plan and is subject in its entirety to all applicable provisions of the Plan. Capitalized terms used herein and not otherwise defined will have the meanings set forth in the Plan. The Participant agrees to be bound by all of the terms and conditions of the Plan.
2. Exercisability of the Option.
(a) The Option will become vested and exercisable as set forth in the Summary of Award, provided that the Participant continues to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director through the Vesting Date (as defined in the Summary of Award).
(b) The exercisability of the Option is cumulative, but shall not exceed 100% of the shares of Company Stock subject to the Option. If the schedule set forth in the Summary of Award would produce fractional shares of Company Stock, the number of shares of Company Stock for which the Option becomes exercisable shall be rounded down to the nearest whole share of Company Stock.
3. Term of Option.
(a) The Option will have a term from the Date of Grant to the Expiration Date specified on the Summary of Award and will terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.
(b) The Option will automatically terminate upon the happening of the first of the following events:
(i) The expiration of the ninety (90) day period after the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director, if the termination is for any reason other than Disability, death, Retirement (as defined in the Summary of Award), voluntary termination of the Participants employment as an Employee upon Material Alteration of the Participants job upon or after a Change of Control, or Involuntary Termination of the Participants employment as an Employee without Cause upon or after a Change of Control.
(ii) The expiration of the twelve (12) month period after the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director on account of the Participants Disability.
(iii) The expiration of the eighteen (18) month period after the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director, if the Participant dies while employed as an Employee or providing service as a Key Advisor or Non-Employee Director.
(iv) The Expiration Date if the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director on account of the Participants Retirement.
(v) The later of 1) the expiration of the twenty-four (24) month period after a Change of Control, or 2) the ninety (90) day period after the Participant ceases to be employed as an Employee, if the Participant is an Employee who ceases to be employed as an Employee on account of A) voluntary termination of the Participants employment as an Employee upon Material Alteration of the Participants job upon or after such Change of Control, or B) Involuntary Termination of the Participants employment as an Employee without Cause upon or after such Change of Control.
(vi) The date on which the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director for Cause. In addition, notwithstanding the prior provisions of this Section 3, if the Participant engages in conduct that constitutes Cause after the Participants employment or service terminates, the Option will immediately terminate.
Notwithstanding the foregoing, in no event may the Option be exercised after the Expiration Date. Any portion of the Option that is not exercisable at the time the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director will immediately terminate.
4. Exercise Procedures.
(a) Subject to the provisions of Sections 2 and 3 above, the Participant may exercise part or all of the exercisable Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of shares of Company Stock as to which the Option is to be exercised. Not less than one hundred shares of the shares of Company Stock subject to the Option may be purchased at any time unless the number
purchased is the total number at the time purchasable under the Option. At such time as the Committee shall determine, the Participant shall pay the exercise price (i) in cash, (ii) with the approval of the Committee, by delivering shares of Company Stock, which shall be valued at their Fair Market Value on the date of delivery, or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the exercise price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) with the approval of the Committee, by surrender of all or any part of the vested shares of Company stock for which the Option is exercisable to the Company for an appreciation distribution payable in shares of Company with a Fair Market Value at the time of the Option surrender equal to the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the surrendered portion exceeds the aggregate Exercise Price payable for those shares of Company Stock, or (v) by such other method as the Committee may approve, to the extent permitted by applicable law. The Committee may impose from time to time such limitations as it deems appropriate on the use of shares of Company Stock to exercise the Option. Shares of Company Stock used to exercise an Option shall have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option.
(b) The obligation of the Company to deliver shares of Company Stock upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. The Company may require that the Participant (or other person exercising the Option after the Participants death) represent that the Participant is purchasing shares of Company Stock for the Participants own account and not with a view to or for sale in connection with any distribution of the shares of Company Stock, or such other representation as the Committee deems appropriate.
(c) All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable. Subject to Committee approval, the Participant may elect to satisfy any tax withholding obligation of the Employer with respect to the Option by having shares of Company Stock withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.
5. No Shareholder Rights. Neither the Participant, nor any person entitled to exercise the Participants rights in the event of the Participants death, shall have any of the rights and privileges of a stockholder with respect to the shares of Company Stock subject to the Option, until certificates for shares of Company Stock have been issued upon the exercise of the Option.
6. Change of Control. Except as set forth in the Summary of Award, the provisions of the Plan applicable to a Change of Control will apply to the Option, and, in the event of a Change of Control, the Committee may take such actions as it deems appropriate pursuant to the Plan.
7. Restrictions on Exercise. Except as provided in section 10(b) of this Agreement and as the Committee may otherwise permit pursuant to the Plan, only the Participant may exercise the Option during the Participants lifetime and, after the Participants death, the Option will be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Participant, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.
8. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the Option awarded hereby and may not be changed orally but only by an instrument in writing signed by the party against whom enforcement of any change, modification or extension is sought.
9. Award Subject to Plan Provisions. This Award is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects will be interpreted in accordance with the Plan. This Award is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the shares, (c) changes in capitalization of the Company and (d) other requirements of applicable law. The Committee will have the authority to interpret and construe this Award pursuant to the terms of the Plan, and its decisions will be conclusive as to any questions arising hereunder.
10. Assignment and Transfers.
(a) Except as described in subsection (b) below and as the Committee may otherwise permit pursuant to the Plan, the rights and interests of the Participant under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Participant, by will or by the laws of descent and distribution. In the event of any attempt by the Participant to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Participant, and the Option and all rights hereunder will thereupon become null and void. The rights and protections of the Company hereunder will extend to any successors or assigns of the Company and to the Companys parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Participants consent.
(b) Notwithstanding subsection (a) above, a Participant may transfer the Option to the Participants spouse, children or grandchildren (Immediate Family Members), a trust or trusts for the exclusive benefit of such Immediate Family Members, or a partnership in which such Immediate Family Members are the only partners, provided that 1) the Participant receives no consideration for such transfer, 2) subsequent transfers of the transferred Option shall be prohibited except those occurring by will or the laws of descent and distribution, and 3) the Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer. The Options shall be exercisable by the transferee only
to the extent and for the periods specified in the Summary of Agreement, this Agreement, and the Plan. The Company expressly disclaims any obligation to provide notice to a transferee of the expiration of the Option.
11. No Employment or Other Rights. This Agreement will not confer upon the Participant any right to be retained in the employment of the Company and will not interfere in any way with the right of the Company to terminate the Participants employment at any time. The right of the Company to terminate at will the Participants employment at any time for any reason is specifically reserved. In the event that this Option is awarded in connection with performance of services as a Key Advisor or Non-Employee Director, no rights as an Employee shall arise as a result of this Agreement.
12. Notice. Any notice to the Company provided for in this instrument will be addressed to the Company in care of the Corporate Secretary and General Counsel at the Companys corporate headquarters, and any notice to the Participant will be addressed to such Participant at the current address shown on the payroll records of the Company, or to such other address as the Participant may designate to the Company in writing. Any notice will be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.
13. Recoupment Policy. The Participant agrees that the Participant will be subject to any compensation, clawback and recoupment policies that may be applicable to the Participant as an employee of the Company, as in effect from time to time and as approved by the Board of Directors, the Committee or a duly authorized committee thereof, whether or not approved before or after the Date of Grant.
14. Applicable Law. The validity, construction, interpretation and effect of this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. Participants are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware to resolve any and all issues that may arise out of or relate to this Agreement or Plan.
15. Statute of Limitations. A Participant or any other person claiming benefits under the Plan of this Agreement must make a claim for such benefits within one year after the Participant or other person knew or reasonably should have known of the principal facts on which the claim is based.
16. Application of Section 409A of the Code. This Agreement is intended to be exempt from section 409A of the Code, and to the extent this Agreement is subject to section 409A of the Code, it will in all respects be administered in accordance with section 409A of the Code.
Exhibit 10.4
NPS PHARMACEUTICALS, INC.
2014 OMNIBUS EQUITY COMPENSATION PLAN
RESTRICTED STOCK UNIT SUMMARY OF AWARD
NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), pursuant to its 2014 Omnibus Equity Compensation Plan (the Plan), hereby awards to the individual listed below (the Participant), this Restricted Stock Unit Award representing the number of Restricted Stock Units set forth below (the Restricted Stock Units) that may become vested as set forth below. The Restricted Stock Units are subject in all respects to the terms and conditions set forth herein, in the Restricted Stock Unit Award Agreement attached hereto as Exhibit A (the Restricted Stock Unit Award Agreement) and the Plan, each of which is incorporated herein by reference and made part hereof. Unless otherwise defined herein, capitalized terms used in this Restricted Stock Unit Summary of Award (the Summary of Award) and the Restricted Stock Unit Award Agreement will have the meanings set forth in the Plan.
Participant: |
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[[FIRSTNAME]] [[LASTNAME]] |
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Award Number: |
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[[GRANTNUMBER]] |
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Date of Grant: |
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[[GRANTDATE]] |
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Plan: |
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2014 Omnibus Equity Compensation Plan |
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Award Type: |
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[[GRANTTYPE]] |
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Total Number of Units: |
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[[SHARESGRANTED]] Restricted Stock Units |
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Fair Market Value on Date of Grant: |
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[[MARKETPRICEATAWARD]] |
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Vesting Schedule: |
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[Vesting schedule with definition of Vesting Date]. |
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Vesting Upon Death or Disability: |
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The vesting of the Restricted Stock Units shall accelerate and vest in full as of the date on which the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director on account of the Participants death or Disability, as applicable. |
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Vesting Upon Certain Termination Events Following a Change of Control: |
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In the event a Change of Control occurs while the Participant is employed as an Employee, the Restricted Stock Units shall accelerate and vest in full if, upon or after the Change in Control, 1) the Participants job is Materially Altered and the Participant voluntarily terminates employment as an Employee within the time period specified in the Plan after complying with the notice requirements specified in the Plan, or 2) the Participants employment as an Employee is Involuntarily Terminated, other than for Cause, death, or Disability. |
Issuance Schedule: |
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Upon vesting of the Restricted Stock Units in accordance with this Restricted Stock Unit Award Agreement, the Company shall cause to be issued and registered in the Participants name or in the name of Participants legal representatives, beneficiaries or heirs, as the case may be, shares of Company Stock in payment of such vested Restricted Stock Units. The date of such issuance (the Payment Date) will occur as soon as practicable following the date the Restricted Stock Units become vested; provided, however, that such distribution will be made not later than March 15 of the calendar year following the calendar year in which such Restricted Stock Units vest. Distribution will be made with respect to the Restricted Stock Units on the Payment Date in shares of Company Stock, with each vested Restricted Stock Unit equivalent to one share of Company Stock. In no event will any fractional shares of Company Stock be issued. Except as set forth herein or as otherwise determined by the Committee, the Participant must be employed as an Employee or providing service as a Key Advisor or Non-Employee Director on the Vesting Date in order to vest in the Restricted Stock Units. |
Participant Acceptance:
By signing the acknowledgement below, the Participant agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Unit Award Agreement and this Summary of Award and accepts the Restricted Stock Units following the date of the Companys notification to the Participant of the award of the Restricted Stock Units (the Notification Date). The Participant accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Summary of Award or the Restricted Stock Unit Award Agreement.
The Participant acknowledges delivery of the Plan and the Plan prospectus together with this Summary of Award and the Restricted Stock Unit Award Agreement. Additional copies of the Plan and the Plan prospectus are available at the intranet site at [ ] or by contacting the Companys Human Resources Department at [ ].
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Agreed and accepted: |
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Participant |
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Date |
EXHIBIT A
NPS PHARMACEUTICALS, INC.
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Pursuant to the 2014 Omnibus Equity Compensation Plan)
This Restricted Stock Unit Award Agreement (this Agreement) is delivered by NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), pursuant to the Summary of Award delivered with this Agreement to the individual named in the Summary of Award (the Participant). The Summary of Award, which specifies the Participant, the date as of which the award is made (the Date of Grant), the vesting schedule and other specific details of the award is incorporated herein by reference.
1. Award of Restricted Stock Units. Upon the terms and conditions set forth in this Agreement and in the Companys 2014 Omnibus Equity Compensation Plan (the Plan), the Company hereby awards to the Participant the number of restricted stock units set forth in the Summary of Award (the Restricted Stock Units). The Participant hereby acknowledges the receipt of a copy of the official prospectus for the Plan. Copies of the Plan and the official Plan prospectus are available on the Companys intranet site at [ ] or by contacting the Companys Human Resources Department at [ ]. Each Restricted Stock Unit will entitle the Participant to receive, at such time as is determined in accordance with the provisions of this Agreement, one fully paid, non-assessable share of common stock of the Company (the Company Stock). This Agreement is made pursuant to the Plan and is subject in its entirety to all applicable provisions of the Plan. Capitalized terms used herein and not otherwise defined will have the meanings set forth in the Plan. The Participant agrees to be bound by all of the terms and conditions of the Plan.
2. Vesting of Restricted Stock Units.
(a) The Restricted Stock Units will become vested as set forth in the Summary of Award, provided that the Participant continues to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director through the Vesting Date (as defined in the Summary of Award).
(b) Except as set forth in the Summary of Award, if the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director for any reason prior to the Vesting Date, the Participant will forfeit all rights to receive shares of Company Stock hereunder and the Participant will not have any rights with respect to any portion of the shares of Company Stock that have not yet become vested as of the date the Participant ceases to be employed as an Employee or provide service as a Key Advisor or Non-Employee Director.
(c) Issuance of Company Stock. One share of Company Stock will be issued to the Participant for each vested Restricted Stock Unit in accordance with the Issuance Schedule set forth in the Summary of Award. Any Restricted Stock Units not vested will be forfeited. In no event will any fractional shares of Company Stock be issued. Accordingly, the total number of shares of Company Stock to be issued pursuant to this Agreement will, to the
extent necessary, be rounded down to the next whole share of Company Stock in order to avoid the issuance of a fractional share.
3. Tax Consequences.
(a) The Participant acknowledges that the Company has not advised the Participant regarding the Participants income tax liability in connection with the award or vesting of the Restricted Stock Units and the delivery of shares of Company Stock in connection therewith. The Participant has reviewed with the Participants own tax advisors the federal, state, and local and tax consequences of the award and vesting of the Restricted Stock Units and the delivery of shares of Company Stock in connection therewith as contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) will be responsible for the Participants own tax liability that may arise as a result of the transactions contemplated by this Agreement.
(b) Unless the Committee provides otherwise, the number of shares of Company Stock issued to the Participant with respect to the Restricted Stock Units will be reduced by a number of shares of Company Stock sufficient to satisfy the amount of any federal, state or local income and employment taxes associated with the issuance of shares of Company Stock. Notwithstanding the foregoing, the Employer may require that the Participant receiving any distribution or payment hereunder pay to the Employer the amount of any federal, state or local income and employment taxes that the Employer is required to withhold with respect to such payment, or the Employer may deduct from other compensation paid by the Employer the amount of any federal, state or local income and employment taxes due with respect to the Restricted Stock Units. In no event will the amount of withholding exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities. [Note to Draft: Please confirm that by default RSUs are withheld to satisfy income tax withholding and payroll tax obligations.]
4. Rights of Participant.
(a) Prior to the issuance, if any, of shares of Company Stock to the Participant with respect to vested Restricted Stock Units pursuant to the Issuance Schedule set forth in the Summary of Award, the Participant will not have any rights of a shareholder of the Company on account of the Restricted Stock Units.
(b) [Note to Draft: The 2005 Plan RSU agreements did not provide for dividend equivalents; this section providing for dividend equivalents comes from our model agreement. Please let us know if this section should be removed.] [Notwithstanding the foregoing, if any dividend or other distribution, whether regular or extraordinary and whether payable in cash, securities or other property (other than shares of Company Stock), is declared and paid on the outstanding Company Stock prior to the issuance of shares of Company Stock with respect to the vested Restricted Stock Units pursuant to the Issuance Schedule (i.e., those shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account will be established for the Participant and credited with a phantom dividend equal to the actual dividend or distribution which would have been paid on
the Restricted Stock Units subject to this Agreement had shares been issued with respect to such Restricted Stock Units and been outstanding and entitled to that dividend or distribution. The phantom dividend equivalents so credited will vest at the same time as the Restricted Stock Units to which they relate and will be distributed to the Participant (in the same form the actual dividend or distribution was paid to the holders of the Company Stock entitled to that dividend or distribution or in such other form as the Committee deems appropriate) concurrently with the issuance of shares of Company with respect to the vested Restricted Stock Units pursuant the Issuance Schedule set forth in the Summary of Award.]
5. Restrictions on Issuance of Company Stock. The obligation of the Company to deliver shares of Company Stock to the Participant with respect to vested Restricted Stock Units will be subject to the condition that if at any time the Committee will determine in its discretion that the listing, registration or qualification of the shares of Company Stock upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of shares of Company Stock, the shares of Company Stock may not be issued in whole or in part unless such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Committee.
6. Recoupment Policy. The Participant agrees that the Participant will be subject to any compensation, clawback and recoupment policies that may be applicable to the Participant as an employee of the Company, as in effect from time to time and as approved by the Board of Directors, the Committee or a duly authorized committee thereof, whether or not approved before or after the Date of Grant.
7. Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement will inure to the benefit of, and be binding upon, the Company and its successors and assigns. During the period prior to the Payment Date, the right to receive shares of Company Stock may not be assigned, transferred, pledged or otherwise disposed of by the Participant, except as permitted under the Plan or by the Committee. Any attempt to assign, transfer, pledge or otherwise dispose of the right to receive shares of Company Stock contrary to the provisions the Summary of Award, this Agreement and the Plan, and the levy of any execution, attachment or similar process upon the right to receive the shares, will be null, void and without effect. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Committee, the Participant may designate a third party who, in the event of the Participants death, shall thereafter be entitled to payment of the shares of Company Stock subject to the Restricted Stock Units hereunder.
8. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the Restricted Stock Units awarded hereby and may not be changed orally but only by an instrument in writing signed by the party against whom enforcement of any change, modification or extension is sought.
9. Award Subject to Plan Provisions. This award is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects will be interpreted in accordance with the Plan. This award is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in
accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the shares, (c) changes in capitalization of the Company and (d) other requirements of applicable law. The Committee will have the authority to interpret and construe this award pursuant to the terms of the Plan, and its decisions will be conclusive as to any questions arising hereunder.
10. No Employment or Other Rights. This Agreement will not confer upon the Participant any right to be retained in the employment of the Company and will not interfere in any way with the right of the Company to terminate the Participants employment at any time. The right of the Company to terminate at will the Participants employment at any time for any reason is specifically reserved. In the event that this Award is made in connection with performance of services as a Key Advisor or Non-Employee Director, no rights as an Employee shall arise as a result of this Agreement.
11. Notice. Any notice to the Company provided for in this instrument will be addressed to the Company in care of the Corporate Secretary and General Counsel at the Companys corporate headquarters, and any notice to the Participant will be addressed to such Participant at the current address shown on the payroll records of the Company, or to such other address as the Participant may designate to the Company in writing. Any notice will be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.
12. Applicable Law. The validity, construction, interpretation and effect of this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. Participants are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware to resolve any and all issues that may arise out of or relate to this Agreement or Plan.
13. Statute of Limitations. A Participant or any other person claiming benefits under the Plan or this Agreement must make a claim for such benefits within one year after the Participant or other person knew or reasonably should have known of the principal facts on which the claim is based.
14. Application of Section 409A of the Code. This Agreement is intended to comply with section 409A of the Internal Revenue Code of 1986, as amended (the Code), and will in all respects be administered in accordance with section 409A of the Code. The issuance of Company Stock pursuant this Agreement is intended to be subject to a substantial risk of forfeiture under section 409A of the Code, and issued within the short term deferral exception under such statute following the lapse of the applicable forfeiture condition. Notwithstanding any provision in this Agreement to the contrary, if the Participant is a specified employee (as defined in section 409A of the Code) and it is necessary to postpone the commencement of any payments otherwise payable under this Agreement to prevent any accelerated or additional tax under section 409A of the Code, then the Company will postpone the payment until five (5) days after the end of the six-month period following the original payment date. If the Participant dies during the postponement period prior to the payment of postponed amount, the amounts withheld
on account of section 409A of the Code will be paid to the beneficiary designated by the Participant pursuant to Section 7, or, if the Participant has not designated a beneficiary, the personal representative of the Participants estate, within sixty (60) days after the date of the Participants death. The determination of who is a specified employee, including the number and identity of persons considered specified employees and the identification date, will be made by the Committee or its delegate in accordance with the provisions of sections 416(i) and 409A of the Code. In no event will the Participant, directly or indirectly, designate the calendar year of distribution. This Agreement may be amended without the consent of the Participant in any respect deemed by the Committee or its delegate to be necessary in order to preserve compliance with section 409A of the Code.
Exhibit 10.5
NPS PHARMACEUTICALS, INC.
DEFERRED COMPENSATION PLAN
NPS Pharmaceuticals, Inc., a Delaware corporation (the Company), hereby establishes the NPS Pharmaceuticals, Inc., Deferred Compensation Plan (the Plan), effective June 1, 2014 (the Effective Date), for the purpose of attracting and retaining high quality executives and Directors, and promoting in them increased efficiency and an interest in the successful operation of the Company. The Plan is intended to, and shall be interpreted to, comply in all respects with Code Section 409A and those provisions of ERISA applicable to an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of management or highly compensated employees.
ARTICLE I
DEFINITIONS
1.1 Account or Accounts shall mean the bookkeeping account or accounts established under this Plan pursuant to Article 4.
1.2 Base Salary shall mean a Participants annual base salary, excluding incentive and discretionary bonuses, commissions, reimbursements and other non-regular remuneration, received from the Company prior to reduction for any salary deferrals under benefit plans sponsored by the Company, including but not limited to, plans established pursuant to Code Section 125 or qualified pursuant to Code Section 401(k).
1.3 Beneficiary or Beneficiaries shall mean the person, persons or entity designated as such pursuant to Section 7.1.
1.4 Board shall mean the Board of Directors of the Company.
1.5 Bonus(es) shall mean amounts paid to the Participant by the Company in the form of discretionary or annual incentive compensation or any other bonus designated by the Committee, before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Company.
1.6 Code shall mean the Internal Revenue Code of 1986, as amended, as interpreted by Treasury regulations and applicable authorities promulgated thereunder.
1.7 Committee shall mean the person or persons appointed by the Board to administer the Plan in accordance with Article 9.
1.8 Commissions shall mean commissions payable to the Participant for the applicable Plan Year (as determined by the Committee in compliance with Code Section 409A)
before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Company.
1.9 Company Contributions shall mean the contributions made by the Company pursuant to Section 3.3.
1.10 Company Contribution Account shall mean the Account maintained for the benefit of the Participant which is credited with Company Contributions, if any, pursuant to Section 4.2.
1.11 Compensation shall mean all amounts eligible for deferral for a particular Plan Year under Section 3.1.
1.12 Crediting Rate shall mean the notional gains and losses credited on the Participants Account balance which are based on the Participants choice among the investment alternatives made available by the Committee pursuant to Section 3.4 of the Plan.
1.13 Deferral Account shall mean an Account maintained for each Participant that is credited with Participant deferrals pursuant to Section 4.1
1.14 Director shall mean a non-employee member of the Board.
1.15 Directors Fees shall mean compensation for services as a member of the Board of Directors of the Company, excluding reimbursement of expenses or other non-regular forms of compensation, before reductions for contributions to or deferrals under any deferred compensation plan sponsored by the Company. The Committee may, in its discretion, provide for separate Participant Elections for the portion of the Directors Fees that serves as a cash retainer and the portion of the Directors Fees that reflects meeting fees, as applicable.
1.16 Disability or Disabled shall mean (consistent with the requirements of Code Section 409A) that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participants Employer. For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration. A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participants Employer, provided that the definition of disability applied under such disability insurance program complies with the requirements of this Section.
1.17 Distributable Amount shall mean the vested balance in the applicable Account as determined under Article 4.
1.18 Eligible Executive shall mean a highly compensated or management level employee or Director of an Employer selected by the Committee to be eligible to participate in the Plan.
1.19 Employer(s) shall be defined as follows:
(a) Except as otherwise provided in part (b) of this Section, the term Employer shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.
(b) For the purpose of determining whether a Participant has experienced a Separation from Service, the term Employer shall mean:
(1) The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and
(2) All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable. In order to identify the group of entities described in the preceding sentence, the Committee shall use an ownership threshold of at least 50% as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (A) Code Section 1563 for determining a controlled group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).
1.20 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended, including Department of Labor and Treasury regulations and applicable authorities promulgated thereunder.
1.21 Financial Hardship shall mean a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participants spouse, or a dependent (as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B))) of the Participant, loss of the Participants property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but shall in all events correspond to the meaning of the term unforeseeable emergency under Code Section 409A.
1.22 Fund or Funds shall mean one or more of the investments selected by the Committee pursuant to Section 3.4 of the Plan.
1.23 Hardship Distribution shall mean an accelerated distribution of benefits or a cancellation of deferral elections pursuant to Section 6.5 to a Participant who has suffered a Financial Hardship.
1.24 Interest Rate shall mean, for each Fund, an amount equal to the net gain or loss on the assets of such Fund during each month, as determined by the Committee.
1.25 LTIP Amounts shall mean any portion of the compensation attributable to a Plan Year that is earned by a Participant under a long-term incentive plan or any other long-term incentive arrangement designated by the Committee, before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Company.
1.26 Participant shall mean any Eligible Executive who becomes a Participant in this Plan in accordance with Article 2.
1.27 Participant Election(s) shall mean the forms or procedures by which a Participant makes elections with respect to (a) voluntary deferrals of his/her Compensation, (b) the Funds, which shall act as the basis for crediting of interest on Account balances, and (c) the form and timing of distributions from Accounts. Participant Elections may take the form of an electronic communication followed by appropriate confirmation according to specifications established by the Committee.
1.28 Payment Date shall mean the date by which a total distribution of the Distributable Amount shall be made or the date by which installment payments of the Distributable Amount shall commence.
(a) For benefits triggered by the Participants Separation from Service, the Payment Date shall be the first business day of the seventh month commencing after the month in which the Separation from Service occurs, and the applicable amount shall be calculated as of the last business day of the sixth month commencing after the month in which the Separation from Service occurs. Subsequent installments, if any, shall be calculated as of the last business day of March of each Plan Year following the Plan Year in which the initial installment occurs, and shall be made in April of such succeeding Plan Year.
(b) For benefits triggered by the death or Disability of a Participant, the Payment Date shall be the first business day of the month commencing after the month in which the event triggering the payout occurs, and the applicable amount shall be calculated as of the last business day of the month in which the event triggering the payout occurs. In the case of death, the Committee shall be provided with documentation reasonably necessary to establish the fact of the Participants death; and
(c) The Payment Date of a Scheduled Distribution shall be the first business day of April of the Plan Year in which the distribution is scheduled to commence, and the applicable Distributable Amount shall be calculated as of the last business day of March of such Plan Year. Subsequent installments, if any, shall be calculated as of the last business day of March of each succeeding Plan Year, and shall be made in April of such succeeding Plan Year. Notwithstanding the foregoing, the Payment Date shall not be before the earliest date on which benefits may be distributed under Code Section 409A without violation of the provisions thereof, as reasonably determined by the Committee.
1.29 Performance-Based Compensation shall mean compensation the entitlement to or amount of which is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).
1.30 Plan Year shall mean the calendar year, except that the first Plan Year shall begin on the Effective Date and end on the last day of the calendar year in which the Effective Date occurs.
1.31 Restricted Stock Units shall mean rights to receive shares of Stock selected by the Committee in its sole discretion and awarded to the Participant under an equity incentive plan or director compensation program, and the deferred amount shall be calculated using the closing price of Stock at the end of the business day closest to the date such Restricted Stock Unit would otherwise vest, but for the election to defer. The portion of any Restricted Stock Unit deferred shall, at the time the Restricted Stock Unit would otherwise vest under the terms of the applicable equity incentive plan or director compensation program, but for the election to defer, be reflected on the books of the Company as an unfunded, unsecured promise to deliver to the Participant a specific number of actual shares of Stock in the future.
1.32 Separation from Service shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:
(a) For a Participant who provides services to an Employer as an employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such employer. A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her employer reasonably anticipate that either (i) no further services will be performed for the employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the Participant has been providing services to the Employer less than 36 months).
If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.
(b) For a Participant, if any, who provides services to an Employer as an independent contractor, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for such Employer, provided that the expiration of such contract(s) is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and such Employer.
(c) For a Participant, if any, who provides services to an Employer as both an employee and an independent contractor, a Separation from Service generally shall not occur until the Participant has ceased providing services for such Employer as both an employee and as an independent contractor, as determined in accordance with the provisions set forth in parts (a) and (b) of this Section, respectively. Similarly, if a Participant either (i) ceases providing services for an Employer as an independent contractor and begins providing services for such Employer as an employee, or (ii) ceases providing services for an Employer as an employee and begins providing services for such Employer as an independent contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services for such Employer in both capacities, as determined in accordance with the applicable provisions set forth in parts (a) and (b) of this Section.
Notwithstanding the foregoing provisions in this part (c), if a Participant provides services for an Employer as both an employee and as a Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an employee, and the services provided by such Participant as an employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service as a Director.
1.33 Scheduled Distribution shall mean a scheduled distribution date elected by the Participant for distribution of amounts from a specified Deferral Account, including notional earnings thereon, as provided under Section 6.4.
1.34 Stock shall mean the Companys common stock, $0.001 par value per share, or any other equity securities of the Company designated by the Committee.
ARTICLE II
PARTICIPATION
2.1 Enrollment Requirements; Commencement of Participation
(a) As a condition to participation, each Eligible Executive shall complete, execute and return to the Committee the appropriate Participant Elections, as well as such other documentation and information as the Committee reasonably requests, by the deadline(s) established by the Committee. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.
(b) Each Eligible Executive shall commence participation in the Plan on the date that the Committee determines that the Eligible Executive has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.
(c) If an Eligible Executive fails to meet all requirements established by the Committee within the period required, that Eligible Executive shall not be eligible to participate in the Plan during such Plan Year.
ARTICLE III
CONTRIBUTIONS & DEFERRAL ELECTIONS
3.1 Elections to Defer Compensation. Elections to defer Compensation shall take the form of a whole percentage (less applicable payroll withholding requirements for Social Security and income taxes and employee benefit plans, as determined in the sole and absolute discretion of the Committee) of up to a maximum of:
(1) 75% of Base Salary,
(2) 100% of Bonuses,
(3) 100% of Restricted Stock Units,
(4) 100% of LTIP Amounts,
(5) 100% of Commissions, and
(6) 100% of Directors Fees.
The Committee may, in its sole discretion, adjust for subsequent Plan Years on a prospective basis the minimum and maximum deferral percentages described in this Section for one or more types of Compensation (including, without limitation, for particular types of Bonuses) and for one or more subsequent Plan Years; such revised deferral percentages shall be indicated on a Participant Election form approved by the Committee. Notwithstanding the foregoing, in no event shall the minimum and maximum deferral percentages be adjusted after the last date on which deferral elections for the applicable type(s) of Compensation must be submitted and become irrevocable in accordance with Section 3.2 below and the requirements of Code Section 409A.
3.2 Timing of Deferral Elections; Effect of Participant Election(s).
(a) General Timing Rule for Deferral Elections. Except as otherwise provided in this Section 3.2, in order for a Participant to make a valid election to defer Compensation, the Participant must submit Participant Election(s) on or before the deadline established by the Committee, which shall be no later than the December 31st preceding the Plan Year in which such compensation will be earned. In the case of deferrals of Restricted Stock Units, except where otherwise permitted in accordance with this Section 3.2 and Code Section 409A, the Participant must submit such Participant Election on or before the deadline established by the Committee, which shall be no later than the December 31st preceding the Plan Year in which Restricted Stock Units may be initially granted to the Participant under the terms of the applicable equity incentive plan or director compensation program.
Any deferral election made in accordance with this Section 3.2(a) shall be irrevocable; provided, however, that if the Committee permits or requires Participants to make a deferral election by the deadline described above for an amount that qualifies as Performance-Based Compensation, the Committee may permit a Participant to subsequently change his or her deferral election for such compensation by submitting new Participant Election(s) in accordance with Section 3.2(d) below.
(b) Timing of Deferral Elections for New Plan Participants. An Eligible Executive who first becomes eligible to participate in the Plan on or after the beginning of a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the plan aggregation rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted to make an election to defer the portion of Compensation attributable to services to be performed after such election, provided that the Participant submits Participant Election(s) on or before the deadline established by the Committee, which in no event shall be later than thirty (30) days after the Participant first becomes eligible to participate in the Plan.
If a deferral election made in accordance with this Section 3.2(b) relates to compensation earned based upon a specified performance period, the amount eligible for deferral shall be equal to (i) the total amount of compensation for the performance period, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in the service period after the Participants deferral election is made, and the denominator of which is the total number of days in the performance period.
Any deferral election made in accordance with this Section 3.2(b) shall become irrevocable no later than the 30th day after the date the Participant first becomes eligible to participate in the Plan.
(c) Timing of Deferral Elections for Performance-Based Compensation. Subject to the limitations described below, the Committee may determine that an irrevocable deferral election for an amount that qualifies as Performance-Based Compensation may be made by submitting Participant Election(s) on or before the deadline established by the Committee, which in no event shall be later than six (6) months before the end of the performance period.
In order for a Participant to be eligible to make a deferral election for Performance-Based Compensation in accordance with the deadline established pursuant to this Section 3.2(c), the Participant must have performed services continuously from the later of (i) the beginning of the performance period for such compensation, or (ii) the date upon which the performance criteria for such compensation are established, through the date upon which the Participant makes the deferral election for such compensation. In no event shall a deferral election submitted under this Section 3.2(c) be permitted to apply to any amount of Performance-Based Compensation that has become readily ascertainable.
(d) Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture. With respect to compensation (i) to which a Participant has a legally binding right to payment in a subsequent year, and (ii) that is subject to a forfeiture condition requiring the Participants continued services for a period of at least twelve (12) months from the date the Participant obtains the legally binding right, the Committee may determine that an irrevocable deferral election for such compensation may be made by timely delivering Participant Election(s) to the Committee in accordance with its rules and procedures, no later than the 30th day after the Participant obtains the legally binding right to the compensation, provided that the election is made at least twelve (12) months in advance of the earliest date at which the forfeiture condition could lapse, as determined in accordance with Treas. Reg. §1.409A-2(a)(5).
Any deferral election(s) made in accordance with this Section 3.2(d) shall become irrevocable no later than the 30th day after the Participant obtains the legally binding right to the compensation subject to such deferral election(s).
(e) Separate Deferral Elections for Each Plan Year. In order to defer Compensation for a Plan Year, a Participant must submit a separate deferral election with respect to Compensation for such Plan Year by affirmatively filing a Participant Election during the enrollment period established by the Committee prior to the beginning of such Plan Year (or at such other time contemplated under this Section 3.2), which election shall be effective on the first day of the next following Plan Year (unless otherwise specified on the Participant Election).
3.3 Company Contributions. The Company shall have the discretion to make Company Contributions to the Plan at any time and in any amount on behalf of any Participant. Company Contributions shall be made in the complete and sole discretion of the Company and no Participant shall have the right to receive any Company Contribution in any particular Plan Year regardless of whether Company Contributions are made on behalf of other Participants.
3.4 Investment Elections.
(a) Participant Designation. At the time of entering the Plan and/or of making a deferral election under the Plan, the Participant shall designate, on a Participant Election provided by the Committee, the Funds in which the Participants Accounts shall be deemed to be invested for purposes of determining the amount of earnings and losses to be credited to each Account. The Participant may specify that all or any percentage of his or her Accounts shall be deemed to be invested, in whole percentage increments, in one or more of the Funds selected as alternative investments under the Plan from time to time by the Committee pursuant to
subsection (b) of this Section. If a Participant fails to make an election among the Funds as described in this section, the Participants Account balance shall automatically be allocated into the lowest-risk Fund, as determined by the Committee in its sole discretion. A Participant may change any designation made under this Section as permitted by the Committee by filing a revised election, on a Participant Election provided by the Committee. Notwithstanding the foregoing, the Committee, in its sole discretion, may impose limitations on the frequency with which one or more of the Funds elected in accordance with this Section may be added or deleted by such Participant; furthermore, the Committee, in its sole discretion, may impose limitations on the frequency with which the Participant may change the portion of his or her Account balance allocated to each previously or newly elected Fund.
(b) Investment Funds. Prior to the beginning of each Plan Year, the Committee may select, in its sole and absolute discretion, each of the types of commercially available investments communicated to the Participant pursuant to subsection (a) of this Section to be the Funds. The Interest Rate of each such commercially available investment shall be used to determine the amount of earnings or losses to be credited to the Participants Account under Article IV. The Participants choice among investments shall be solely for purposes of calculation of the Crediting Rate on Accounts. The Company and the Employers shall have no obligation to set aside or invest amounts as directed by the Participant and, if the Company and/or the Employer elects to invest amounts as directed by the Participant, the Participant shall have no more right to such investments than any other unsecured general creditor.
(c) Company Stock Unit Fund.
(1) A Participants Restricted Stock Unit deferrals will be automatically and irrevocably allocated to a Fund that tracks the performance of the Companys Stock (the Company Stock Unit Fund). Participants may not select any other Fund to be used to determine the amounts to be credited or debited to their Restricted Stock Unit deferrals. Furthermore, no other portion of the Participants Accounts can be either initially allocated or re-allocated to the Company Stock Unit Fund. Amounts allocated to the Company Stock Unit Fund shall only be distributable in actual shares of Stock.
(2) Any stock dividends, cash dividends or other non-cash dividends that would have been payable on the Stock credited to a Participants Accounts shall be credited to the Participants Accounts in the form of additional shares of Stock and shall automatically and irrevocably be deemed to be re-invested in the Company Stock Unit Fund until such amounts are distributed to the Participant. The number of shares credited to the Participant for a particular stock dividend shall be equal to (A) the number of shares of Stock credited to the Participants Account as of the payment date for such dividend in respect of each share of Stock, multiplied by (B) the number of additional or fractional shares of Stock actually paid as a dividend in respect of each share of Stock. The number of shares credited to the Participant for a particular cash dividend or other non-cash dividend shall be equal to (A) the number of shares of Stock credited to the Participants Account as of the payment date for such dividend in respect of each share of Stock, multiplied by (B) the fair market value of the dividend, divided by (C) the fair market value of the Stock on the payment date for such dividend.
(3) The number of shares of Stock credited to the Participants Account may be adjusted by the Committee, in its sole discretion, to prevent dilution or enlargement of Participants rights with respect to the portion of his or her Account allocated to the Company Stock Unit Fund in the event of any reorganization, reclassification, stock split, or other unusual corporate transaction or event which affects the value of the Stock, provided that any such adjustment shall be made taking into account any crediting of shares of Stock to the Participant under this Section.
(4) For purposes of this Section, the fair market value of the Stock shall be, in the event the Stock is traded on a recognized securities exchange, an amount equal to the closing price of the Stock on such exchange on the date set for valuation or, if no sales of Stock were made on said exchange on that date, the closing price of the Stock on the next preceding day on which sales were made on such exchange; or, if the Stock is not so traded, the value determined, in its sole discretion, by the Committee in compliance with Section 409A.
3.5 Distribution Elections.
(a) Initial Election. At the time of making a deferral election under the Plan, the Participant shall designate the time and form of distribution of deferrals made pursuant to such election from among the alternatives specified under Article VI for the applicable distribution. Such distribution election for a given Plan Year shall relate solely to that Plan Years deferrals. A new distribution election may be made at the time of subsequent deferral elections, in accordance with the Participant Election forms.
(b) Modification of Election. A distribution election with respect to previously deferred amounts may only be changed under the terms and conditions specified in Code Section 409A and this Section. Except as permitted under Code Section 409A, no acceleration of a distribution is permitted. A subsequent election that delays payment or changes the form of payment shall be permitted if and only if all of the following requirements are met:
(1) the new election does not take effect until at least twelve (12) months after the date on which the new election is made;
(2) in the case of payments made on account of Separation from Service or a Scheduled Distribution, the new election delays payment for at least five (5) years from the date that payment would otherwise have been made, absent the new election; and
(3) in the case of payments made according to a Scheduled Distribution, the new election is made not less than twelve (12) months before the date on which payment would have been made (or, in the case of installment payments, the first installment payment would have been made) absent the new election.
For purposes of application of the above change limitations, installment payments shall be treated as a single payment under Code Section 409A. Election changes made pursuant to this Section shall be made in accordance with rules established by the Committee and shall comply with all requirements of Code Section 409A and applicable authorities.
ARTICLE IV
ACCOUNTS
4.1 Deferral Accounts. The Committee shall establish and maintain up to six (6) Deferral Accounts for each Participant under the Plan, one of which may be payable upon the Participants Separation from Service, as further described in Section 6.1 (the Separation from Service Account), and five (5) of which may be payable upon a fixed date or pursuant to a fixed schedule, as further described in Section 6.4 (the Scheduled Distribution Accounts). Each Participants Deferral Accounts shall be further divided into separate subaccounts (Fund Subaccounts), each of which corresponds to a Fund designated pursuant to Section 3.4. A Participants Deferral Accounts shall be credited as follows:
(a) As soon as reasonably possible after amounts are withheld and deferred from a Participants Compensation, the Committee shall credit the Fund Subaccounts of the Participants Deferral Accounts with an amount equal to Compensation deferred by the Participant in accordance with the designation under Section 3.4; that is, the portion of the Participants deferred Compensation designated to be deemed to be invested in a Fund shall be credited to the Fund Subaccount to be invested in that Fund;
(b) Each business day, each Fund Subaccount of a Participants Deferral Accounts shall be credited with earnings or losses in an amount equal to that determined by multiplying the balance credited to such Fund Subaccount as of the prior day, less any distributions valued as of the end of the prior day, by the Interest Rate for the corresponding Fund as determined by the Committee pursuant to Section 3.4(b); and
(c) In the event that a Participant elects for a given Plan Years deferral of Compensation a Scheduled Distribution, all amounts attributed to the deferral of Compensation for such Plan Year shall be accounted for in a manner which allows separate accounting for the deferral of Compensation and investment gains and losses associated with amounts allocated to each such separate Scheduled Distribution.
4.2 Company Contribution Account. The Committee shall establish and maintain a Company Contribution Account for each Participant under the Plan. Each Participants Company Contribution Account shall be further divided into separate Fund Subaccounts corresponding to the Fund designated pursuant to Section 3.4(a). A Participants Company Contribution Account shall be credited as follows:
(a) As soon as reasonably possible after a Company Contribution is made, the Company shall credit the Fund Subaccounts of the Participants Company Contribution Account with an amount equal to the Company Contributions, if any, made on behalf of that Participant, that is, the proportion of the Company Contributions, if any, designated to be deemed to be invested in a certain Fund shall be credited to the Fund Subaccount to be invested in that Fund. Unless the Participant elects otherwise, any Company Contribution that may not be deemed
invested in such a Fund shall be deemed invested in the default Fund selected by the Committee for such purpose; and
(b) Each business day, each Fund Subaccount of a Participants Company Contribution Account shall be credited with earnings or losses in an amount equal to that determined by multiplying the balance credited to such Fund Subaccount as of the prior day, less any distributions valued as of the end of the prior day, by the Interest Rate for the corresponding Fund as determined by the Committee pursuant to Section 3.4(b).
4.3 Trust. The Company shall be responsible for the payment of all benefits under the Plan. At its discretion, the Company may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Companys creditors. Benefits paid to the Participant from any such trust or trusts shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan.
4.4 Statement of Accounts. The Committee shall provide each Participant with electronic statements at least quarterly setting forth the Participants Account balance as of the end of each calendar quarter.
ARTICLE V
VESTING
5.1 Vesting of Deferral Accounts. The Participant shall be vested at all times in amounts credited to the Participants Deferral Account(s).
5.2 Vesting of Company Contribution Account. Amounts credited to the Participants Company Contribution Account shall be vested based upon the schedule or schedules determined by the Company in its sole discretion and communicated to the Participant.
ARTICLE VI
DISTRIBUTIONS
6.1 Separation from Service Distributions.
(a) Timing and Form of Separation from Service Distributions. Except as otherwise provided herein, in the event of a Participants Separation from Service, the Distributable Amount credited to the Participants Deferral Accounts and Company Contribution Account shall be paid to the Participant in a lump sum on the Payment Date following the Participants Separation from Service, unless the Participant has made an alternative benefit election on a timely basis to receive substantially equal annual installments over up to ten (10) years.
(b) Small Benefit Exception. Notwithstanding a distribution election to the contrary, if on commencement of benefits payable by reason of a Participants Separation from Service (i.e., the Separation from Service Account, Company Contribution Account and any Scheduled Distribution Accounts for which payment has not commenced) the total Distributable Amount payable by reason of such Separation from Service is less than or equal to twenty-five thousand dollars ($25,000), such Distributable Amount shall be paid in a lump sum on the Payment Date following the Participants Separation from Service.
6.2 Disability Distributions. Except as otherwise provided herein, in the event of a Participants Disability prior to Separation from Service, the Distributable Amount credited to the Participants Deferral Accounts and Company Contribution Account shall be paid to the Participant in a lump sum on the Payment Date following the Participants Disability.
6.3 Death Benefits. In the event that a Participant dies prior to complete distribution of his or her Accounts, the Company shall pay to the Participants Beneficiary a death benefit equal to the total Distributable Amount remaining in the Participants Deferral Accounts and Company Contribution Account in a lump sum on the Payment Date following the Participants death.
6.4 Scheduled Distributions.
(a) Scheduled Distribution Election. Participants shall be entitled to elect to receive a Scheduled Distribution from a Deferral Account. In the case of a Participant who has elected to receive a Scheduled Distribution, such Participant shall receive the Distributable Amount, with respect to the specified deferrals, including earnings thereon, which have been elected by the Participant to be subject to such Scheduled Distribution election in accordance with Section 3.5 of the Plan. The Committee shall determine the earliest commencement date that may be elected by the Participant for each Scheduled Distribution and such date shall be indicated on the Participant Election. The Participant may elect to receive the Scheduled Distribution in a single lump sum or substantially equal annual installments over a period of up to five (5) years. A Participant may delay and change the form of a Scheduled Distribution, provided such extension complies with the requirements of Section 3.5.
(b) Small Benefit Exception. Notwithstanding any distribution election to the contrary, if on commencement of a Scheduled Distribution Account the balance of such Scheduled Distribution Account is less than or equal to ten thousand dollars ($10,000), the Scheduled Distribution shall be paid in the form of a single lump sum distribution on the scheduled commencement date.
(c) Relationship to Other Benefits.
(1) In the event of a Participants Separation from Service, Disability or death prior to commencement of a Scheduled Distribution, the amounts subject to such Scheduled Distribution shall not be distributed under this Section 6.4, but rather shall be distributed in accordance with the other applicable Section of this Article VI. Accordingly,
any Scheduled Distribution Accounts for which a Separation from Service occurs prior to commencement of distribution shall be distributed at such time and in such form as applicable under Section 6.1 above.
(2) In the event of a Participants Separation from Service or Disability after a Scheduled Distribution Account has commenced installment payments, such Scheduled Distribution Accounts shall continue to be paid at the same time and in the same form as they would have been paid to the Participant had the Separation from Service or Disability, as applicable, not occurred.
(3) In the event of a Participants death after a Scheduled Distribution Account has commenced installment payments, the amounts subject to such Scheduled Distribution shall not be distributed under this Section 6.4, but rather shall be distributed in accordance with Section 6.3.
6.5 Hardship Distribution. Upon a finding that the Participant has suffered a Financial Hardship, in accordance with Code Section 409A, the Committee may, at the request of the Participant, accelerate distribution of benefits and/or approve cancellation of deferral elections under the Plan, subject to the following conditions:
(a) The request to take a Hardship Distribution shall be made by filing a form provided by and filed with the Committee prior to the end of any calendar month.
(b) Upon a finding that the Participant has suffered a Financial Hardship in accordance with Treasury Regulations promulgated under Code Section 409A, the Committee may, at the request of the Participant, accelerate distribution of benefits and/or approve cancellation of current deferral elections under the Plan in the amount reasonably necessary to alleviate such Financial Hardship. The amount distributed pursuant to this Section with respect to the Financial Hardship shall not exceed the amount necessary to satisfy such Financial Hardship, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participants assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).
(c) The amount (if any) determined by the Committee as a Hardship Distribution shall be paid in a single cash lump sum as soon as practicable after the end of the calendar month in which the Hardship Distribution determination is made by the Committee.
ARTICLE VII
PAYEE DESIGNATIONS AND LIMITATIONS
7.1 Beneficiaries.
(a) Beneficiary Designation. The Participant shall have the right, at any time, to designate any person or persons as Beneficiary (both primary and contingent) to whom payment under the Plan shall be made in the event of the Participants death. If the Participant names someone other than his or her spouse as a Beneficiary, the Committee may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Committee, executed by such Participants spouse and returned to the Committee. The Beneficiary designation shall be effective when it is submitted to and acknowledged by the Committee during the Participants lifetime in the format prescribed by the Committee.
(b) Absence of Valid Designation. If a Participant fails to designate a Beneficiary as provided above, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participants benefits, then the Committee shall deem the Participants estate to be the Beneficiary and shall direct the distribution of such benefits to the Participants estate.
7.2 Payments to Minors. In the event any amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead such payment shall be made (a) to that persons living parent(s) to act as custodian, (b) if that persons parents are then divorced, and one parent is the sole custodial parent, to such custodial parent, to act as custodian, or (c) if no parent of that person is then living, to a custodian selected by the Committee to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides. If no parent is living and the Committee decides not to select another custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and currently acting within sixty (60) days after the date the amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the minor.
7.3 Payments on Behalf of Persons Under Incapacity. In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of any and all liability of the Committee and the Company under the Plan.
ARTICLE VIII
LEAVE OF ABSENCE
8.1 Paid Leave of Absence. If a Participant is authorized by the Participants Employer to take a paid leave of absence from the employment of the Employer, and such leave of absence does not constitute a Separation from Service, (a) the Participant shall continue to be considered eligible for the benefits provided under the Plan, and (b) deferrals shall continue to be withheld during such paid leave of absence in accordance with Article III.
8.2 Unpaid Leave of Absence If a Participant is authorized by the Participants Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a Separation from Service, such Participant shall continue to be eligible for the benefits provided under the Plan. During the unpaid leave of absence, the Participant shall not be allowed to make any additional deferral elections. However, if the Participant returns to employment, the Participant may elect to defer for the Plan Year following his or her return to employment and for every Plan Year thereafter while a Participant in the Plan, provided such deferral elections are otherwise allowed and a Participant Election is delivered to and accepted by the Committee for each such election in accordance with Article III above.
ARTICLE IX
ADMINISTRATION
9.1 Committee. The Plan shall be administered by a Committee appointed by the Board, which shall have the exclusive right and full discretion (a) to appoint agents to act on its behalf, (b) to select and establish Funds, (c) to interpret the Plan, (d) to decide any and all matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or admissions), (e) to make, amend and rescind such rules as it deems necessary for the proper administration of the Plan and (f) to make all other determinations and resolve all questions of fact necessary or advisable for the administration of the Plan, including determinations regarding eligibility for benefits payable under the Plan. All interpretations of the Committee with respect to any matter hereunder shall be final, conclusive and binding on all persons affected thereby. No member of the Committee or agent thereof shall be liable for any determination, decision, or action made in good faith with respect to the Plan. The Company will indemnify and hold harmless the members of the Committee and its agents from and against any and all liabilities, costs, and expenses incurred by such persons as a result of any act, or omission, in connection with the performance of such persons duties, responsibilities, and obligations under the Plan, other than such liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or criminal acts of such persons.
9.2 Claims Procedure. Any Participant, former Participant or Beneficiary may file a written claim with the Committee setting forth the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement to such benefit. The Committee shall determine the validity of the claim and communicate a decision to the claimant promptly and, in any event, not later than ninety (90) days after the date of the claim. The claim may be deemed by the claimant to have been denied for purposes of further review described below in the event a decision is not furnished to the claimant within such ninety (90) day period. If additional information is necessary to make a determination on a claim, the claimant shall be advised of the need for such additional information within forty-five (45) days after the date of the claim. The claimant shall have up to one hundred eighty (180) days to supplement the claim information, and the claimant shall be advised of the decision on the claim within forty-five (45) days after the earlier of the date the supplemental information is supplied or the end of the one hundred
eighty (180) day period. Every claim for benefits which is denied shall be denied by written notice setting forth in a manner calculated to be understood by the claimant (a) the specific reason or reasons for the denial, (b) specific reference to any provisions of the Plan (including any internal rules, guidelines, protocols, criteria, etc.) on which the denial is based, (c) description of any additional material or information that is necessary to process the claim, and (d) an explanation of the procedure for further reviewing the denial of the claim and shall include an explanation of the claimants right to submit the claim for binding arbitration in the event of an adverse determination on review.
9.3 Review Procedures. Within sixty (60) days after the receipt of a denial on a claim, a claimant or his/her authorized representative may file a written request for review of such denial. Such review shall be undertaken by the Committee and shall be a full and fair review. The claimant shall have the right to review all pertinent documents. The Committee shall issue a decision not later than sixty (60) days after receipt of a request for review from a claimant unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision shall be rendered as soon as possible but not later than one hundred twenty (120) days after receipt of the claimants request for review. The decision on review shall be in writing and shall include specific reasons for the decision written in a manner calculated to be understood by the claimant with specific reference to any provisions of the Plan on which the decision is based and shall include an explanation of the claimants right to submit the claim for binding arbitration in the event of an adverse determination on review.
ARTICLE X
MISCELLANEOUS
10.1 Termination of Plan. Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to terminate the Plan with respect to all of its Participants. In the event of a Plan termination, no new deferral elections shall be permitted for the affected Participants and such Participants shall no longer be eligible to receive new Company Contributions. However, after the Plan termination the Account balances of such Participants shall continue to be credited with deferrals attributable to any deferral election that was in effect prior to the Plan termination to the extent deemed necessary to comply with Code Section 409A and related Treasury Regulations, and additional amounts shall continue to be credited or debited to such Participants Account balances pursuant to Article IV. In addition, following a Plan termination, Participant Account balances shall remain in the Plan and shall not be distributed until such amounts become eligible for distribution in accordance with the other applicable provisions of the Plan. Notwithstanding the preceding sentence, to the extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix) or as otherwise permitted under Code Section 409A, the Employer may provide that upon termination of the Plan, all Account balances of the Participants shall be distributed, subject to and in accordance with any rules established by such Employer deemed necessary to comply with the applicable requirements and limitations of Code Section 409A. The termination and
liquidation of the Plan pursuant to Treas. Reg. §1.409A-3(j)(4)(ix)(B) may only occur proximate to a change in control event as provided under Treas. Reg. §1.409A-3(i)(5).
10.2 Amendment Any Employer may, at any time, amend or modify the Plan in whole or in part with respect to that Employer. Notwithstanding the foregoing, no amendment or modification shall be effective to decrease the value of a Participants vested Account balance in existence at the time the amendment or modification is made.
10.3 Unsecured General Creditor. The benefits paid under the Plan shall be paid from the general assets of the Company, and the Participant and any Beneficiary or their heirs or successors shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations hereunder. It is the intention of the Company that this Plan be unfunded for purposes of ERISA and the Code.
10.4 Restriction Against Assignment. The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or entity. No part of a Participants Accounts shall be liable for the debts, contracts, or engagements of any Participant, Beneficiary, or their successors in interest, nor shall a Participants Accounts be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. No part of a Participants Accounts shall be subject to any right of offset against or reduction for any amount payable by the Participant or Beneficiary, whether to the Company or any other party, under any arrangement other than under the terms of this Plan.
10.5 Withholding. The Participant shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements, Social Security and other employee tax or other requirements applicable to the granting, crediting, vesting or payment of benefits under the Plan. There shall be deducted from each payment made under the Plan or any other Compensation payable to the Participant (or Beneficiary) all taxes that are required to be withheld by the Company in respect to such payment or this Plan. To the extent permissible under Code Section 409A, the Company shall have the right to reduce any payment (or other Compensation) by the amount of cash sufficient to provide the amount of said taxes.
10.6 Code Section 409A. The Company intends that the Plan comply with the requirements of Code Section 409A (and all applicable Treasury Regulations and other guidance issued thereunder) and shall be operated and interpreted consistent with that intent. Notwithstanding the foregoing, the Company makes no representation that the Plan complies with Code Section 409A.
10.7 Receipt or Release. Any payment made in good faith to a Participant or the Participants Beneficiary shall, to the extent thereof, be in full satisfaction of all claims against the Committee, its members, the Employer and the Company. The Committee may require such
Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.
10.8 Errors in Account Statements, Deferrals or Distributions. In the event an error is made in an Account statement, such error shall be corrected on the next statement following the date such error is discovered. In the event of an operational error, including, but not limited to, errors involving deferral amounts, overpayments or underpayments, such operational error shall be corrected in a manner consistent with and as permitted by any correction procedures established under Code Section 409A. If any portion of a Participants Account(s) under this Plan is required to be included in income by the Participant prior to receipt due to a failure of this Plan to comply with the requirements of Code Section 409A, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of (i) the portion of his or her Account required to be included in income as a result of the failure of the Plan to comply with the requirements of Code Section 409A, or (ii) the unpaid vested Account balance.
10.9 Domestic Relations Orders. Notwithstanding any provision in this Plan to the contrary, in the event that the Committee receives a domestic relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a spouse or former spouse of a Participant has an interest in the Participants benefits under the Plan, the Committee shall have the right to immediately distribute the spouses or former spouses interest in the Participants benefits under the Plan to such spouse or former spouse to the extent necessary to fulfill such domestic relations order, provided that such distribution is in accordance with the requirements of Code Section 409A.
10.10 Employment Not Guaranteed. Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to continue the provision of services in any capacity whatsoever to the Employer.
10.11 No Guarantee of Tax Consequences. The Employer, Company, Board and Committee make no commitment or guarantee to any Participant that any federal, state or local tax treatment will apply or be available to any person eligible for benefits under the Plan and assume no liability whatsoever for the tax consequences to any Participant.
10.12 Successors of the Company. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.
10.13 Notice. Any notice or filing required or permitted to be given to the Company or the Participant under this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, in the case of the Company, to the principal office of the Company, directed to the attention of the Committee, and in the case of the Participant, to the last known address of the Participant indicated on the employment records of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Notices to the Company may be permitted by electronic communication according to specifications established by the Committee.
10.14 Headings. Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.
10.15 Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
10.16 Governing Law. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of management or highly compensated employees within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA. To the extent any provision of, or legal issue relating to, this Plan is not fully preempted by federal law, such issue or provision shall be governed by the laws of the State of New Jersey.
10.17 Entire Agreement. Unless specifically indicated otherwise, this Plan supersedes any and all prior communications, understandings, arrangements or agreements between the parties, including the Employer, the Company, the Board, the Committee and any and all Participants, whether written, oral, express or implied relating thereto.
10.18 Binding Arbitration. Any claim, dispute or other matter in question of any kind relating to this Plan which is not resolved by the claims procedures under this Plan shall be settled by arbitration in accordance with the applicable employment dispute resolution rules of the American Arbitration Association. Notice of demand for arbitration shall be made in writing to the opposing party and to the American Arbitration Association within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall a demand for arbitration be made after the date when the applicable statute of limitations would bar the institution of a legal or equitable proceeding based on such claim, dispute or other matter in question. The decision of the arbitrators shall be final and may be enforced in any court of competent jurisdiction. The arbitrators may award reasonable fees and expenses to the prevailing party in any dispute hereunder and shall award reasonable fees and expenses in the event that the arbitrators find that the losing party acted in bad faith or with intent to harass, hinder or delay the prevailing party in the exercise of its rights in connection with the matter under dispute.
IN WITNESS WHEREOF, the Board of Directors of the Company has approved the adoption of this Plan as of the Effective Date and has caused the Plan to be executed by its duly authorized representative this day of , 2014.
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