Employee Equity Plan – Baxter International Inc.
Baxter International Inc.
Equity Plan
Adopted as of March 4, 2011
1. Purpose
This Equity Plan (the “Plan“) has been adopted by the Compensation
Committee (the “Committee“) of the Board of Directors (the
“Board“) of Baxter International Inc. (“Baxter“).
2. Participants
Participants in this Plan (each a “Participant“) shall be select
employees of Baxter or its subsidiaries (the “Company“) to whom the
Committee may make awards of Stock Options (each an “Option“),
Performance Share Units (each a “PSU”) and Restricted Stock Units (each a
“RSU“, and together with Options and PSUs, “Awards“) under this
Plan.
3. Awards
Awards shall be made pursuant to and for the purposes stated in the Company
incentive compensation program or plan (the “Program“) identified in the
individual grant materials provided to the Participant (the “Grant“).
Such Grant materials consist of a communication letter to Participants notifying
them of their Awards and may include alternative terms with respect to vesting,
in which case the vesting terms in the Grant communication letter shall govern.
All Awards granted hereunder shall be subject to the Company153s Incentive
Compensation Recoupment Policy or Executive Compensation Recoupment Policy, as
applicable. Each Award shall be granted as of the date approved and as provided
in the Grant, or for eligible French employees as soon thereafter as practicable
pursuant to applicable French law (as provided in the attached French Addendum
which shall govern such Awards) (the “Grant Date“). Each Award shall be
granted as of the date approved and as provided in the Grant (the “Grant
Date“). The purchase price for each share of Common Stock subject to an
Option shall be the Fair Market Value of a share of Common Stock on the Grant
Date. The terms of each Award will be as set forth in this Plan. Unless
otherwise indicated, terms defined in the Program shall have the same meaning in
these terms and conditions. Options are not intended to qualify as Incentive
Stock Options within the meaning of section 422 of the United States Internal
Revenue Code, as amended (the “Code“).
4. Options
4.1. Except for Options granted to employees of the
Company153s subsidiaries in France, Options shall become exercisable as follows:
(i) one-third on the first anniversary of the Grant Date, (ii) one-third on the
second anniversary of the Grant Date, and (iii) the remainder on the third
anniversary of the Grant Date. Options granted to employees of the Company153s
subsidiaries in France shall become exercisable on the fourth anniversary of the
Grant Date. If Options would become exercisable on a date that is not a business
day, they will become exercisable on the next business day. A business day is
any day on which the Company153s Common Stock is traded on the New York Stock
Exchange. After Options become exercisable (in each case, in whole or in part)
and until they expire, the Options may be exercised in whole
or in part, in the manner specified by the Committee. Under no circumstances
may Options be exercised after they have expired. Shares of Common Stock may be
used to pay the purchase price for shares of Common Stock to be acquired upon
exercise of Options or fulfill any tax withholding obligation, subject to any
requirements or restrictions specified by the Committee.
4.2. If a Participant153s employment with the Company
terminates before the Participant153s Options becomes exercisable, the Options
will expire when the Participant153s employment with the Company terminates,
except (i) in connection with a Qualifying Retirement or death or disability
(each as outlined below) or (ii) if the Participant is rehired by the Company
within ninety days of termination, in which case the Participant shall be
construed to have been continuously employed by the Company for purposes of
vesting and exercise.
4.3. If a Participant153s employment with the Company
terminates after the Participant153s Options become exercisable, the Options will
not expire immediately but will remain exercisable. Subject to Section 4.6, and
except in the event of a Qualifying Retirement (as provided in Section 4.4), the
Options will expire ninety days after the Participant153s employment with the
Company terminates. If the Participant dies or becomes disabled during the
ninety-day period, the Options will expire on the first anniversary of the
termination date.
4.4. If the employment of a Participant who is at least 65
years of age, or at least 55 years of age with at least 10 years of employment
with the Company, is terminated other than for Cause or by reason of the
Participant153s death or disability (a “Qualifying Retirement“) then (i) if
the date of such termination is after the calendar year of the Grant Date, the
Options shall continue to vest as provided in Section 4.1, or (ii) if the date
of such termination is in the calendar year of the Grant Date, a portion of the
Options shall continue to vest as provided in Section 4.1, which portion shall
be determined as follows: (# shares covered by Option award) * (# of months
worked in that year, rounded to nearest whole month) / 12. Subject to Section
4.6, the Participant153s Options (whether vesting pursuant to (i) or (ii) or
previously vested) shall expire on the fifth anniversary of the termination
date.
4.5. If the employment of a Participant is terminated due to
death or disability, then (i) if the date of such termination is after the
calendar year of the Grant Date, the Options shall vest immediately, or (ii) if
the date of such termination is in the calendar year of the Grant Date, a
portion of the Options shall vest immediately, which portion shall be determined
as follows: (# shares covered by Option award) * (# of months worked in that
year, rounded to nearest whole month) / 12. Subject to Section 4.6, such Options
will expire on the first anniversary of the termination date.
4.6. Options that have not previously expired will expire at
the close of business on the tenth anniversary of the Grant Date; provided,
however, that Options granted to employees residing in Switzerland on the Grant
Date shall expire on the eleventh anniversary of the Grant Date. If Options
would expire on a date that is not a business day, they will expire at the close
of business on the last business day preceding that date. A business day is any
day on which the Common Stock is traded on the New York Stock Exchange.
4.7. Except as the Committee may otherwise provide, Options
may only be exercised by the Participant, the Participant153s legal
representative, or a person to whom the Participant153s rights in the Options are
transferred by will or the laws of descent and distribution.
4.8. A transfer of employment within the Company will not
constitute a termination of employment within the meaning of the Plan.
4.9. A transfer of employment to a company that assumes an
Option or issues a substitute option in a transaction to which Section 424 of
the Code applies will not constitute a termination of employment within the
meaning of the Plan.
4.10. Except to the extent that it would cause the Option to
be subject to Section 409(A) of the Code, the Committee may, in its sole
discretion and without receiving permission from any Participant, substitute
stock appreciation rights (“SARs“) for any or all outstanding Options.
Upon the grant of substitute SARs, the related Options replaced by the
substitute SARs shall be cancelled. The grant price of the substitute SARs shall
be equal to the Option Price of the related Options, the term of the substitute
SARs shall not exceed the term of the related Options, and the terms and
conditions applicable to the substitute SARs shall otherwise be substantially
the same as those applicable to the related Options replaced by the substitute
SARs. Upon exercise, the SARs will be settled in Common Stock.
5. Performance Share Units
5.1. The PSUs will be earned based on the rank of Baxter153s
growth in shareholder value (“GSV“) relative to the GSV of companies in
the healthcare peer group selected by the Committee. GSV will be measured over a
three-year period beginning with the first day of the calendar year of the Grant
Date and ending on the last day of the third calendar year (the “Performance
Period“).
The PSUs will pay out in shares of Common Stock in a range of 0% to 200% of
the number of PSUs awarded to the Participant as follows:
|
Baxter Rank |
Percentage of Target Grant Earned |
|||
|
85th percentile of peer group or above |
200 |
% |
||
|
75th percentile |
150 |
% |
||
|
60th percentile |
100 |
% |
||
|
25th percentile |
25 |
% |
||
|
Below 25th percentile |
0 |
% |
||
The PSUs will pay out linearly between each set of data points. GSV will be
measured based on the average closing stock prices over the last twenty days of
the Performance Period (plus reinvested dividends) divided by average closing
stock prices over the twenty trading days prior to the beginning of the
Performance Period.
Following the end of the Performance Period, the Committee shall determine
the payout, which determination shall be final and binding. Shares of Common
Stock earned will be delivered or otherwise made available to the Participant as
soon as practical after the Committee makes its determination but not later than
the March 15 after the end of the Performance Period. PSUs will
only be settled in shares of Common Stock. Any other settlement modality
shall be considered an exception, which would have to be approved separately by
the Committee.
5.2. If a Participant153s employment with the Company
terminates before the end of the Performance Period, any unvested PSUs shall be
forfeited on the effective date of termination, except (i) in connection with a
Qualifying Retirement or death or disability (each as outlined below), or (ii)
if the Participant is rehired by the Company within ninety days of termination,
in which case the Participant shall be construed to have been continuously
employed by the Company for purposes of vesting.
5.3. If the employment of a Participant terminates in a
Qualifying Retirement then (i) if the date of such termination is after the
calendar year of the Grant Date, the PSUs will remain eligible for payout at the
end of the Performance Period on the terms provided in Section 5.1, or (ii) if
the date of such termination is in the calendar year of the Grant Date a portion
of the PSUs shall remain eligible for payout at the end of the Performance
Period on the terms provided in Section 5.1, which portion shall be determined
as follows: (# PSUs awarded) * (# of months worked in that year, rounded to
nearest whole month) / 12.
5.4. If the employment with the Company of a Participant is
terminated due to death or disability, the PSUs shall vest as follows: (i) if
the date of such termination is after the calendar year of the Grant Date, the
PSUs shall pay out within sixty days at 100% of the Target Grant (as depicted in
the table in Section 5.1.), or (ii) if the date of such termination is in the
calendar year of the Grant Date a portion of the PSUs shall pay out as provided
in (i), which portion shall be determined as follows: (# PSUs awarded) * (# of
months worked in that year, rounded to nearest whole month) / 12.
5.5. The PSUs shall not be transferable and may not be sold,
assigned, pledged, hypothecated or otherwise encumbered.
5.6. A transfer of employment within the Company will not
constitute a termination of employment within the meaning of the Plan.
5.7. Until the shares of Common Stock have been delivered or
otherwise made available as provided in Section 5.1, the Participant shall not
be treated as a shareholder as to those shares of Common Stock relating to the
PSUs. Notwithstanding the foregoing, the Participant shall be permitted to
receive additional PSUs with respect to the PSUs based upon the dividends and
distributions paid on shares of Common Stock to the same extent as if each PSU
were a share of Common Stock (without adjustment prior to vesting for payment
levels set forth in the table in Section 5.1), which additional PSUs shall be
determined in amount and value in the Company153s discretion and shall be
delivered or made available at the same time and to the same extent as the PSUs
to which they relate or as otherwise determined by the Company.
6. Restricted Stock Units
6.1. Except for RSUs granted to the employees of the
Company153s subsidiaries in France, RSUs are subject to being earned and vested as
follows: (i) one-third on the first anniversary of the Grant Date, (ii)
one-third on the second anniversary of the Grant Date, and (iii) the remainder
on the third anniversary of the Grant Date (as applicable, the “Vesting
Date“). RSUs granted to
the employees of the Company153s subsidiaries in France are subject to being
earned and vested on the second anniversary of the Grant Date in accordance with
the attached French Addendum. If RSUs would become earned and vested on a date
that is not a business day, the next business day shall be the Vesting Date. The
Company will deliver or otherwise make available to the Participant within
21/2 months following the applicable Vesting Date one share of Common
Stock for each RSU that vests. RSUs will only be settled in shares of Common
Stock. Any other settlement method would be considered an exception and would
have to be approved separately by the Committee.
6.2. If a Participant153s employment with the Company
terminates before an RSU Vesting Date, the RSU will be forfeited when the
Participant153s employment with the Company terminates, except (i) in connection
with a Qualifying Retirement or death or disability (each as outlined below), or
(ii) if the Participant is rehired by the Company within ninety days of
termination, in which case the Participant shall be construed to have been
continuously employed by the Company for purposes of vesting and payout.
6.3. If the employment of a Participant terminates in a
Qualifying Retirement then (i) if the date of such termination is after the
calendar year of the Grant Date, the RSUs will remain eligible for payout on the
terms provided in Section 6.1, or (ii) if the date of such termination is in the
calendar year of the Grant Date a portion of the RSUs shall remain eligible for
payout on the terms provided in Section 6.1, which portion shall be determined
as follows: (# RSUs awarded) * (# of months worked in that year, rounded to
nearest whole month) / 12.
6.4. If the employment with the Company of a Participant is
terminated due to death or disability, the RSUs shall vest as follows: (i) if
the date of such termination is after the calendar year of the Grant Date, all
the RSUs shall pay out within sixty days, or (ii) if the date of such
termination is in the calendar year of the Grant Date a portion of the RSUs
shall pay out as provided in (i), which portion shall be determined as follows:
(# RSUs awarded) * (# of months worked in that year, rounded to nearest whole
month) / 12.
6.5. The RSUs shall not be transferable and may not be sold,
assigned, pledged, hypothecated or otherwise encumbered.
6.6. A transfer of employment within the Company will not
constitute a termination of employment within the meaning of the Plan.
6.7. Until the shares of Common Stock have been delivered or
otherwise made available as provided in Section 6.1, the Participant shall not
be treated as a shareholder as to those shares of Common Stock relating to the
RSUs. Notwithstanding the foregoing, the Participant shall be permitted to
receive additional RSUs with respect to the RSUs based upon the dividends and
distributions paid on shares of Common Stock to the same extent as if each RSU
were a share of Common Stock, which additional RSUs shall be delivered or made
available at the same time and to the same extent as the RSUs to which they
relate or as otherwise determined by the Company.
7. Change in Control
Notwithstanding any other provision of the Program or this Plan (and in lieu
of vesting at the times otherwise provided in the Program), if the termination
of employment of a Participant occurs upon or within twenty-four (24) months
following a Change in Control by reason of (a) termination by the Company for
reasons other than for Cause or (b) termination by the Participant for Good
Reason, then (i) all Awards shall become immediately vested and exercisable, and
(ii) in the case of PSUs, all performance targets shall be deemed to be met at
100% of the Target Grant (consistent with the table in Section 5.1), as may be
equitably increased in the discretion of the Committee to reflect actual
performance through the date of the Change in Control.
8. Additional Definitions
For purposes of the Plan, the following capitalized terms shall have the
meanings provided below.
“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Securities Exchange Act of 1934, as amended.
“Cause” means (i) the willful and continued failure by the Participant
to substantially perform his duties with the Company that has not been cured
within 30 days after written demand for substantial performance is delivered by
the Company, which demand specifically identifies the manner in which the
Participant has not substantially performed (other than any such failure
resulting from the Participant153s incapacity due to physical or mental illness),
(ii) the willful engaging by the Participant in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise, or (iii) the
engaging by the Participant in egregious misconduct involving serious moral
turpitude, determined in the reasonable judgment of the Committee. For purposes
hereof, no act, or failure to act, on the Participant153s part shall be deemed
“willful” unless done, or omitted to be done, by the Participant not in good
faith and without reasonable belief that such action was in the best interest of
the Company. Notwithstanding the foregoing, if a Participant is a party to a
Change in Control Agreement, “Cause” with respect to such Participant shall have
the meaning given to such term in the Change in Control Agreement.
“Change in Control” means the first to occur of any of the following:
(i) any Person is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Baxter (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates) representing 30% or more
of the combined voting power of Baxter153s then outstanding securities, excluding
any Person who becomes such a beneficial owner in connection with a merger or
consolidation of Baxter or any direct or indirect subsidiary of Baxter with any
other corporation immediately following which the individuals who comprise the
Board immediately prior thereto constitute at least a majority of the board of
directors of (A) any parent of Baxter or the entity surviving such merger or
consolidation or (B) if there is no such parent, of Baxter or such surviving
entity; (ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the Grant
Date, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of Baxter) whose appointment or election by the
Board or nomination for election by Baxter153s shareholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the Grant Date or whose appointment,
election or nomination for election was previously so approved or recommended;
(iii) there is consummated a merger or consolidation of Baxter or any direct or
indirect subsidiary of Baxter with any other corporation or other entity, other
than a merger or consolidation immediately following which the individuals who
comprise the Board immediately prior thereto constitute at least a majority of
the board of directors of (A) any parent of Baxter or the entity surviving such
merger or consolidation or (B) if there is no such parent, of Baxter or such
surviving entity; or (iv) the shareholders of Baxter approve a plan of complete
liquidation
or dissolution of Baxter or there is consummated an agreement for the sale or
disposition by Baxter of all or substantially all of Baxter153s assets, other than
a sale or disposition by Baxter of all or substantially all of Baxter153s assets
immediately following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors of (A)
any parent of Baxter or of the entity to which such assets are sold or disposed
or (B) if there is no such parent, of Baxter or such entity.
“Change in Control Agreement” means an employment agreement, change in
control agreement or plan, severance agreement or plan, or other agreement
between the Company and a Participant or Company plan covering a Participant
that provides for benefits upon termination for good reason or cause in
connection with a change in control of Baxter and that has been approved by the
Board or the Committee.
“Good Reason” means the occurrence (without the Participant153s express
written consent) of any of the following which occur on or after a Change in
Control: (i) reduction by the Company in the Participant153s annual base salary as
in effect on the Grant Date or as the same may be increased from time to time;
(ii) the relocation of the Participant153s principal place of employment to a
location more than fifty (50) miles from the Participant153s principal place of
employment immediately prior to the Change in Control or the Company153s requiring
the Participant to be based anywhere other than such principal place of
employment (or permitted relocation thereof) except for required travel on the
Company153s business to an extent substantially consistent with the Participant153s
business travel obligations as in effect immediately prior to the Change in
Control; or (iii) the failure by the Company to pay to the Participant any
portion of the Participant153s current compensation or to pay to the Participant
any portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of the date such
compensation is due. Notwithstanding the foregoing, if a Participant is a party
to a Change in Control Agreement, “Good Reason” with respect to such Participant
shall have the meaning given to such term in the Change in Control Agreement.
“Person” shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) Baxter or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of Baxter or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
shareholders of Baxter in substantially the same proportions as their ownership
of stock of Baxter.
9. Withholding
Except as otherwise provided by the Committee, all Awards (including the
payout of Awards) under the Plan are subject to withholding of all applicable
taxes, which withholding obligations may be satisfied, with the consent of the
Committee, through the surrender of shares of Company Common Stock that the
Participant already owns or to which a Participant is otherwise entitled under
the Plan; provided, however, with the consent of the Committee, previously-owned
Shares that have been held by the Participant or Shares to which the Participant
is entitled under the Plan may only be used to satisfy the minimum tax
withholding required by applicable law (or other rates that will not have a
negative accounting impact).
10. Program Controls
Except as specifically provided in the Plan, in the event of any
inconsistency between the Plan and the Program, the Program will control, but
only to the extent such Program provisions will not violate the provisions of
section 409A of the Code.
BAXTER INTERNATIONAL INC.
French Addendum To 2011 Equity Plan
Adopted as of March 4, 2011
1. PURPOSES OF THIS ADDENDUM
The Baxter International Inc. 2007 Incentive Plan (the “Program“) was
adopted by the Board of the Company on February 13, 2007 and approved by the
shareholders of the Company on May 1, 2007 for the benefit of employees,
officers and directors, of the Company and its Affiliates, including its French
subsidiary(ies).
This Addendum (the “Addendum“) approved on March 4, 2011, sets out the
terms for French Qualified Stock Options and French Qualified Free Shares
granted jointly under the 2007 Incentive Plan (the “Program“) and the
Equity Plan (the “Plan“) adopted as of March 4, 2011 by Baxter
International Inc. (the “Company“) to Eligible Participants, residents in
France, or otherwise selected by the Committee for participation under this
Addendum. This Addendum is adopted in accordance with Sections 3
“Administration” and 9 “Amendment and Termination” of the Program to benefit
from the specific tax and social security treatment applicable in France to
Qualified Option Awards and Qualified Free Share Awards.
For the avoidance of doubt, the present Addendum is not applicable to awards
paid in cash and to awards of Performance Shares, Restricted Shares, Performance
Units, Cash Incentive Awards or Stock Appreciation Rights. Consequently,
dispositions of the Program and/or the Plans applicable to these are not
applicable to Awards made further to the present Addendum.
The rules contained in the Program and the Plans will apply to Awards made
under this Addendum, unless specifically stated otherwise. The terms and
conditions of the present Addendum are identical to the Plan except as provided
below. Words and expressions used in this Addendum and not defined herein shall
have the same meaning as those words and expressions used in the Program and
Plans. The additional terms and conditions in this Addendum are to be read in
conjunction with the Program and Plans.
To the extent that the Program and the Plans contradict the provisions set
forth hereinafter, the Addendum provisions shall prevail. In addition, to the
extent that the terms and conditions specified in the applicable grant
communication letter contradict the provisions set forth hereinafter, the
Addendum provisions shall prevail.
2. OPTION AWARDS
2.1. General
The Addendum contains the term of “Qualified Stock Option” which refers to
the awards of Options granted as per Section 6 of the Program jointly with
Section 4 of the Equity Plan in accordance with articles L.225-177 to L.225-185
of the French Commercial Code. Consequently, the terms “Stock Option”,
“Options”, “Qualified Stock Option Awards” and “Option Award” herein shall be
construed and interpreted accordingly.
2.2. Grant of Options
Notwithstanding the provisions of the Plan, the following rules shall apply
to Options Awards granted under this Addendum.
In no event shall the number of shares of Common Stock subject to outstanding
unexercised Options granted pursuant to this Addendum give right to subscribe
shares exceeding one-third (1/3) of the Company153s share capital. The total
number of shares of Common Stock that may be granted to Participants under this
Addendum shall not exceed 10% of the Granting Company153s share capital at Grant
Date, when Options are over existing shares. Outstanding unvested Full Value
Awards shall be treated as shares of Common Stock in order to determine the
threshold of 10% of the granting Company153s share capital.
If an Option provides a right to acquired already existing shares / treasury
shares, the Company shall procure sufficient shares to satisfy the Exercise of
such Option at least one day prior to the Participant153s having the right to
Exercise such Option. Shares acquired by the Participant upon Option Exercise
shall be registered in the name of the Participant or held in an identifiable
account. Participants will have the voting and dividend rights attached to the
Shares acquired upon Exercise Date as of that date. Upon Exercise, no cash
replacement of shares of Common Stock is allowed.
Any market repurchased shares of Common Stock to be delivered to Eligible
Individuals upon exercise of Awards granted hereunder shall be acquired by the
Company at least one (1) day before the applicable vesting date. The Vesting
Date designates the date upon which options, in full or in part, become
exercisable by the Participant.
2.3. Grant Date
No Options may be granted under this Addendum: (a) before the end of a period
of twenty (20) trading days following (i) a dividend record date for any
dividend or (ii) an agreement by the shareholders of the Company to increase the
issued share capital of the Company; (b) within a period of ten (10) trading
days before and after the publication of consolidated accounting results of the
Company (e.g., the filing of an Annual Report on Form 10-K); or (c) within a
period beginning with the date upon which the Company153s executive officers
become aware of any nonpublic information that, if it were to become publicly
known, would reasonably be expected to affect the value of the Company153s shares
of Common Stock and ending ten (10) trading days after that information has been
publicized.
The Grant Date shall be the date upon which the Committee approves grants to
Eligible Individuals or as soon thereafter as possible, ensuring that the above
dispositions are respected. The Grant date shall be stated in the grant
documentation letter.
2.4. Eligible Individuals
Notwithstanding the provisions of Sections 2(k) and 4 of the Plan, Section 2
of the Equity Plan, Options may only be granted under this Addendum to Eligible
Individuals. No Option Award may be made to Eligible Individuals holding more
than ten percent (10%) of the issued share capital in the Company.
2.5. Option Price
The Option Price shall be the greatest of: (a) the Fair Market Value of a
share of Common Stock on the Grant Date; (b) eighty percent (80%) of the average
opening price of a share of Common Stock over the twenty (20) trading days
preceding Grant Date; (c) if treasury shares are used to satisfy exercise of the
Options, eighty percent (80%) of the average repurchase price per share paid by
the Company for such treasury shares. The Option Price is stated in the grant
documentation letter and is fixed on the Grant Date.
2.6. Adjustment to Option Price
The number of Options and the Option Price for grants made pursuant to this
Addendum may be adjusted in connection with changes in capital operations
described in article L.225-181 of the French Commercial Code so that economic
rights are maintained.
2.7. Vesting and Exercise of Options
Options granted pursuant to this Addendum shall first become exercisable on
the fourth (4th) anniversary of the Grant Date. In case of earlier exercise of
Options further notably to Change of Control or Termination of Employment, the
Committee may, upon discretionary decision, impose a share sale restriction to
the Participant until the fourth anniversary of grant to secure eligibility to
the French stock-option regime.
2.8. Termination of Employment
Notwithstanding anything to the contrary, no Option may be exercised before
the first anniversary of the Grant Date and shares underlying Options exercised
before the fourth anniversary of the Grant Date shall be subject to a share sale
restriction until the fourth anniversary of grant. By exception, the Committee
may discretionarily decide that Options may be exercised at an earlier date and
/ or shares sold at an earlier date.
If a Participant153s employment with the Company terminates after the
Participant153s Options become exercisable, the Options will not expire
immediately but will remain exercisable. Subject to Section 4.6 of the Plans,
and except in the event of a Qualifying Retirement, the Options will expire
ninety days after the Participant153s employment with the Company terminates. If
the Participant dies or becomes disabled during the ninety-day period, the
Options will expire on the first anniversary of the termination date.
If the employment of a Participant who is at least 65 years of age, or at
least 55 years of age with at least 10 years of employment with the Company, is
terminated other than for Cause or by reason of the Participant153s death or
disability (a “Qualifying Retirement“) then (i) if the date of such
termination is after the calendar year of the Grant Date, the Options shall
continue to vest as provided in Section 2.7, or (ii) if the date of such
termination is in the calendar year of the Grant Date, a portion of the Options
shall continue to vest as provided in Section 2.7, which portion shall be
determined as follows: (# shares covered by Option award) * (# of months worked
in that year, rounded to nearest whole month) / 12. Subject to Section 4.6 of
the Plans, the Participant153s Options (whether vesting pursuant to (i) or (ii) or
previously vested) shall expire on the fifth anniversary of the termination
date.
If the employment of a Participant is terminated due to death, all Options
shall vest immediately and the shares shall be immediately transferable.
If the employment of a Participant is terminated due to disability
corresponding to the 2nd or 3rd categories of Article L.341-4 of the French
Social Security Code 1, then (i) if the date of such termination is after the
calendar year of the Grant Date, the Options shall vest immediately, or (ii) if
the date of such termination is in the calendar year of the Grant Date, a
portion of the Options shall vest immediately, which portion shall be determined
as follows: (# shares covered by Option award) * (# of months worked in that
year, rounded to nearest whole month) / 12. Subject to Section 4.6, such Options
will expire on the first anniversary of the termination date. The shares
acquired upon option exercise shall be immediately transferable.
If the employment of a Participant is terminated due to disability other than
to the 2nd or 3rd categories of Article L.341-4 of the French Social Security
Code, then (i) if the date of such termination is after the calendar year of the
Grant Date, the Options shall continue to vest as provided in Section 2.7, or
(ii) if the date of such termination is in the calendar year of the Grant Date,
a portion of the Options shall continue to vest as provided in Section 2.7,
which portion shall be determined as follows: (# shares covered by Option award)
* (# of months worked in that year, rounded to nearest whole month) / 12.
Subject to Section 4.6, such Options will expire on the first anniversary of the
termination date.
2.9. Substitution of SARs for Options : Tandem Awards
Neither SARs nor any other incentive may be substituted for Options granted
pursuant to this Addendum. No tandem awards may be made pursuant to this
Addendum.
3. FULL VALUE AWARDS
3.1. Definitions
“Full Value Award” means a grant made by Baxter International Inc. to
the Participant of a right to receive one Share in the future at a nil cost, in
the form of a Restricted Stock Unit. Such grant can be paid exclusively in
shares of Common Stock, is awarded respectively in accordance with Section 7 of
the Program, in accordance with Section 5 of the 2011 Annual Equity Plan for
Restricted Stock Units, and in accordance with articles L.225-197-1 to
L.225-197-6 of the French Commercial Code on Qualified Free Shares Awards. Such
grant cannot be subject to conditions, restrictions and contingencies relating
to dividend or dividend equivalent rights and deferred payment or settlement.
The purpose of this Addendum is to ensure that grants over shares of Common
Stock are in conformity with the applicable French legislation, and are entitled
to the corresponding specific French tax and social security treatment. One (1)
award gives right to acquire one (1) share subject to satisfaction of applicable
considerations, contingencies, conditions, restrictions, if any.
“Grant Date” means the date on which the Committee designates the
Participant eligible to receive a Full Value Award further to the present
Addendum, and specifies the terms and conditions of such Award, including the
maximum number of underlying shares, the Vesting and Share Sale Restriction
Periods. The Grant Date is stated in the grant communication letter.
“Vesting Date” means the date on which the Participant acquires the
shares of Common Stock. The Vesting Date is stated in the grant communication
letter.
3.2. Grant
Notwithstanding the provisions of the Plan, the following rules shall apply
to Full Value Awards granted under this Addendum.
The total number of shares of Common Stock that may be granted to
Participants under this Addendum shall not exceed 10% of the Granting Company153s
share capital at Grant Date. Outstanding unvested Full Value Awards shall be
treated as shares of Common Stock in order to determine the threshold of 10% of
the granting Company153s share capital. Shares of Common Stock of the Company to
be delivered under the Plan may be market repurchased shares (already existing
shares) or newly issued shares. For Full Value Awards granted over already
existing shares, corresponding shares shall be repurchased by the Company at
least one day before the applicable Vesting Date.
A Full Value Award may not be made to employees and/or Corporate Officers
holding more than 10% of the issued share capital in the Company or who, after
having received shares under a Full Value Award granted hereunder, would hold
more than 10% of the issued share capital in the Company.
Shares acquired by the Participant upon Vesting Date will be registered in
the name of the Participant or be held in an identifiable account. Participants
will have the voting and dividend rights attached to the Shares acquired upon
Vesting Date as of that date.
3.3. Vesting period / Performance period
Notwithstanding anything to the contrary, in relation to Full Value Awards,
the Vesting Date shall not be earlier than the second anniversary of the Grant
Date, in any circumstances other than in the event of the death of the
Participant or in the event of disability corresponding to the 2nd or 3rd
categories of Article L.341-4 of the French Social Security Code1.
Unless otherwise stated in the grant documentation letter, the Vesting Date
for Restricted Stock Units shall be the second anniversary of the Grant Date.
The Board of Directors or the Committee reserves the right to reduce or modify
the Vesting Date in accordance with and to conform with any amendments to the
French Tax Code and/or to the provisions of the French Commercial Code governing
Qualified Free Shares. By exception, the Board or the Committee may
discretionarily decide that Vesting Date may occur before the second (2nd)
anniversary of the Grant Date.
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For information purposes, please note that |
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Second category stands for a disabled person unable to perform any |
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Third category stands for a disabled person unable to perform any |
3.4. Share Sale Restriction Period
As of the Vesting Date, shares of Common Stock acquired pursuant to Full
Value Award are subject to a minimum of two (2) year share sale restriction,
during which the shares may not be sold (the “Share Sale Restriction
Period“). If the Participant leaves the employment of the Company or any
Affiliate(s), at any time after the Vesting Date, the shares acquired shall not
be freely transferable before the expiration of the Share Sale Restriction
Period.
By exception, in the event of the Participant153s death, the heirs shall not be
subject to the Share Sale Restriction Period, the shares being freely
transferable upon the Participant153s death. By exception, notwithstanding any
provision of the Plan and the present Addendum to the contrary, in case of
disability corresponding to the 2nd or 3rd categories of Article L.341-4 of the
French Social Security Code1, the Participant is entitled to sell the shares
prior to the end of the Share Sale Restriction Period, if any.
For the avoidance of doubt, if the Participant leaves the employment, the
Company or any Affiliate(s), at any time before the term of the Share Sale
Restriction Period, due to his/her Disability other than of second (2nd) or
third (3rd) category as defined in Article L.341-4 of the French Social Security
Code1, the Participant shall not be entitled to sale the shares before the
second (2nd) anniversary of the Vesting Date.
By exception, the Board or the Committee may discretionarily decide that a
Participant shall not be subject to the Share Sale Restriction Period.
3.5. Additional Full Value Awards
Notwithstanding anything to the contrary in the Program or the Plans, the
Participant shall not be permitted to receive additional Full Value Awards with
respect to the Restricted Stock Units based upon the dividends and distributions
paid on shares of Common Stock as if each Restricted Stock Unit was a share of
Common Stock.
3.6. Termination of Employment
Notwithstanding anything to the contrary in the Program or the Plans, in case
of Participant153s death, his/her heirs may request the acquisition of the
unvested Restricted Stock Units within six (6) months following this event.
By exception, if the Participant ceases his employment within the Company or
any Affiliate(s) due to his disability corresponding to the 2nd or 3rd
categories of Article L.341-4 of the French Social Security Code1,
the Award shall vest as follows: (i) if the date of such termination is after
the calendar year of the Grant Date, all the RSUs shall pay out within sixty
days, or (ii) if the date of such termination is in the calendar year of the
Grant Date a portion of the RSUs shall pay out as provided in (i), which portion
shall be determined as follows: (# RSUs awarded) * (# of months worked in that
year, rounded to nearest whole month) / 12.
Notwithstanding anything to the contrary, if the employment with the Company
or any Affiliate(s) is terminated due to disability other than of second (2nd)
or third (3rd) category as defined in Article L.341-4 of the French Social
Security Code, (i) if the date of such termination
is after the calendar year of the Grant Date, the RSUs will remain eligible
for payout on the terms provided in Section 3.3, or (ii) if the date of such
termination is in the calendar year of the Grant Date a portion of the RSUs
shall remain eligible for payout on the terms provided in Section 3.3, which
portion shall be determined as follows: (# RSUs awarded) * (# of months worked
in that year, rounded to nearest whole month) / 12.
Notwithstanding anything to the contrary, if the employment with the Company
or any Affiliate(s) is terminated due to Qualified Retirement, (i) if the date
of such termination is after the calendar year of the Grant Date, the RSUs will
remain eligible for payout on the terms provided in Section 3.3, or (ii) if the
date of such termination is in the calendar year of the Grant Date a portion of
the RSUs shall remain eligible for payout on the terms provided in Section 3.3,
which portion shall be determined as follows: (# RSUs awarded) * (# of months
worked in that year, rounded to nearest whole month) / 12.
4. Non-Transferability of Awards
No Award granted under the Plan shall be transferable other than by will or
the law of descent and distribution.
4.1. Change in Control
When a tax favourable treatment may be available further to French
legislation (article 163 bis C-1 bis of the French Tax Code), the Committee,
upon discretionary decision, may give the choice to French participants, but has
no obligation to. When the Company decides to exchange shares with no cash
consideration, pursuant to applicable French legal and tax rules and notably,
article L.225-197-1 § III of the French Commercial Code (as amended), then the
dispositions of the Plan as well as the periods of Vesting and Share Sale
Restriction will remain applicable to shares or rights received in exchange.
5. Tax Withholding
Notwithstanding any provision to the contrary, no shares of Common Stock may
be used to satisfy any social security or tax withholding due for Awards granted
further to the present Addendum.
The Company or its Affiliates shall have the right to require payment from a
Participant to cover any applicable withholding or other employment taxes due
with respect to Awards granted hereunder or shall have the right to deduct any
applicable withholding or other employment taxes due from other compensation
income paid to the Participant.
6. Amendment, Modifications to this Addendum.
No modification can be made to this Addendum, or to outstanding Awards
granted hereunder, which is disadvantageous to the Participant or which is in
contradiction to the French Commercial Code and French Tax Code provisions,
unless the modification is the result of a new law or regulation or any other
obligatory disposition or ruling applied to the Company or any other Subsidiary,
having legal, fiscal or social implications.
The terms of this Addendum shall be interpreted in accordance with the
relevant provisions set forth by French tax and social laws, as well as the
regulations issued by the French tax and social administrations.
In the event of any conflict between the provisions of this Addendum and the
Plan, the provisions of the Addendum shall prevail for any Awards made to
Participants under this Addendum.
7. Additional Definitions
“Affiliate” means any entity:
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in which at least 50% of the equity or voting rights are held, directly or |
“Company” means Baxter International Inc., a Delaware
corporation.
“Corporate Officers” mean “Pr sident du Conseil d153Administration”
(Chairman of the Board); “Directeur G n ral” (Managing Director); “Directeurs
G n raux D l gu s” (Delegated Managing Directors); Members of the “Directoire”;
“G rant” of a “Soci t en Commandite par Actions”; “Pr sident” (if a private
individual) d153une Soci t par Actions Simplifi e”.
“Eligible Individual” means any employee with a valid employment
contract (“contrat de travail”) at Grant Date, and/or Corporate Officer with or
without an employment contract with the Company or Affiliate(s). For the
avoidance of doubt, officers and directors of the Company, or of Affiliate(s),
are eligible Participants if they have a valid employment contract with one of
these entities, or if they are Corporate Officers. Awards cannot be granted
under this Addendum to non-employee members of a “Conseil d153Administration” (the
Board), to consultant, to independent agent of the Company or Affiliate(s).
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