Exhibit 10.3A
NPS PHARMACEUTICALS, iNC.
CHANGE IN CONTROL SEVERANCE PAY PLAN
Adopted by the Board of Directors
August 8, 2007
-
Introduction. The
purpose of the NPS Pharmaceuticals, Inc. Change in Control
Severance Pay Plan (the "Plan") is to provide severance benefits to
eligible employees of NPS Pharmaceuticals, Inc. and its
subsidiaries (collectively "Company") when there has been a "change
in control" of the Company resulting in the eligible employee's job
prospects being "materially altered." This Plan replaces any prior
severance policy or other policy or practice under which severance
benefits have been provided to employees of the Company, except as
provided in Section 13 herein. This document constitutes both the
written instrument under which the Plan is maintained and the
summary plan description for the Plan.
- Effective Date. The effective date of the Plan is January 1,
2005.
- Term. The Plan shall be in effect until terminated by
the Company.
- ERISA . For Covered Employees in the United States,
the Plan is intended to be, and shall be, administered and
maintained as, a welfare benefit plan under the Employee Retirement
Income Security Act of 1974, as amended.
- Employment Standards Act
. For Covered Employees in Canada,
the Plan is intended to provide the severance benefits required
under the Canadian Employment Standards Act, as amended from time
to time ("Employment Standards Act"). To the extent that any
provisions of the Plan conflict with the Employment Standards Act,
the Employment Standards Act shall govern Covered Employees in
Canada.
- Important Terms. The following words and phases shall have the
following respective meanings unless the context clearly indicates
otherwise:
6.1
" Administrator " means the Company, acting
through its General Counsel, or such other person appointed by the
Board.
6.2
" Base Pay " means the Covered Employee's
annual regular straight-time salary as in effect on the date of
termination of employment.
6.3
" Board " means the Board of Directors of the
Company.
6.4
" Cause " means (i) an act of material
dishonesty by the Covered Employee in connection with the Covered
Employee's responsibilities as an employee, (ii) the Covered
Employee's conviction of, or plea of nolo contendere to, a felony,
(iii) the Covered Employee's gross misconduct in connection with
the Covered Employee's responsibilities as an employee, (iv) the
Covered Employee's violation of the Company's written policies and
procedures; or (v) the Covered Employee's continued failure to
perform his or her responsibilities as an employee after the
Covered Employee has received a written demand for such
performance.
6.5
" Change in Control " means (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
Company's 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 which the
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Board
determines in its sole discretion that other elements of a Change
in Control are present, i.e., a substantial change in the
management team or composition of the Board; (v) a transaction
which the Board determines in its sole discretion to constitute a
Change in Control of the Company: or (vi) any other capital
reorganization in which more than 50% of the shares of the Company
entitled to vote are exchanged. A Change in Control does not
include the occurrence of an event described in (i), (ii), (iii) or
(iv) where the sole parties to the event are NPS Pharmaceuticals,
Inc. and one of its subsidiaries.
6.6
" Company " means NPS Pharmaceuticals, Inc., a
Delaware corporation, and any of its wholly owned subsidiaries and
any successor by merger, acquisition, consolidation or otherwise
that assumes the obligations of the Company under the
Plan.
6.7
" Covered Employee " means a regular full-time
employee of the Company who is paid at Grade 9 or above of the
Company's Compensation Structure for Executives and
Non-Executives.
6.8
" Full-Time Employee " means those employees
whose employment status is expected to last four consecutive months
or longer working 80 percent or more of the normal possible annual
working hours for that position.
6.9
" Determination Period " means the time period,
not to exceed twenty-four (24) months, beginning on the date of the
Change in Control.
6.10
" Involuntary Termination " means the Company's
termination of employment of the Covered Employee after a Change in
Control other than for Cause.
6.11
" Materially Altered " means without the
Covered Employee's written consent, (i) a material reduction in the
Covered Employee's authority, duties or responsibilities relative
to the Covered Employee's authority, duties or responsibilities in
effect prior to such reduction where such reduction was imposed
without Cause, (ii) a material diminution in the Covered Employee's
base compensation, where such reduction was imposed without Cause,
or (iii) a material change in the geographical relocation at which
the Covered Employee must perform his or her duties as an employee
of the Company.
6.12
"Plan " means the NPS Pharmaceuticals, Inc.
Change in Control Severance Pay Plan, as set forth in this
document, and as hereafter amended from time to time.
6.13
"Release Period" means the forty-five (45) day
period, commencing on the date of the Covered Employee's Separation
from Service, by which he or she must sign the Release in order to
receive a Severance Benefit, as provided in Exhibit B.
6.14
"Section 409A" means Section 409A of the
Internal Revenue Code of 1986, as amended. This Plan is intended to
comply with all of the requirements of Section 409A and any
regulatory, administrative or judicial guidance thereunder and
shall be administered and interpreted in accordance with those
requirements.
6.15
"Separation from Service" means separation from
Service as defined under Section 409A.
6.16
"Severance Benefit" means the compensation and
other benefits the Covered Employee will be provided pursuant to
Section 8.
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6.17
" Severance Period " means the time period, not
to exceed twenty-four months, beginning on the date of a Covered
Employee's Separation from Service as a result of an Involuntary
Termination or the Covered Employee's job prospects being
Materially Altered as a result of a Change in Control. The
Severance Period for each job classification is set forth on
Exhibit A.
6.18
"Short Term Incentive" means the target
percentage of the Covered Employee's Base Salary in the Short Term
Incentive Plan as determined by the Company in effect on the date
of termination of employment. It does not include the short term
incentive earned but not paid prior to the Covered Employee's date
of termination.
6.19
" Total Cash Compensation Target " means the
Covered Employee's Annual Base Pay and target Short Term Incentive
divided by twelve (12) months and multiplied by the number of
months of the Covered Employee's Severance Period.
- Eligibility for Severance
Benefit. An individual is
eligible for the Severance Benefit under the Plan, in the amount
set forth in Section 8 and for the duration set forth in Exhibit A,
only if he or she is a Covered Employee on the effective date of a
Change in Control.
- Severance Benefit .
8.1.1
" Termination Following a Change in Control .
Except as provided in Section 13, at any time within the
Determination Period for a Covered Employee following a Change in
Control (i) the Covered Employee's job prospects are Materially
Altered followed by the termination of the Covered Employee's
employment in accordance with the notice and cure requirements of
this Section 8.1.1, or (ii) the Covered Employee's employment is
Involuntarily Terminated, other than for Cause or death or
permanent disability, then the Covered Employee may be entitled to
his or her Severance Benefit under the Plan.
In the
instance of the Involuntarily Termination of the Covered Employee,
other than for Cause or death or permanent disability, the Covered
Employee shall be entitled to receive the Severance Benefit
described in the remainder of this Section 8.1 from the Company,
provided the Covered Employee signs the Release in a timely manner
as provided in Section 8.2.
In the
instance of the Covered Employee's job prospects being Materially
Altered, the Covered Employee must exercise his or her rights under
the Plan by providing the Company with written notice that his or
her job prospects have been Materially Altered within ninety (90)
days of the date of such Material Alteration, upon the notice of
which the Company will be provided a period of thirty (30) days
during which it may remedy the condition giving rise to the
Material Alteration of the Covered Employee's job prospects. In
such instance, the Covered Employee's employment with the Company
shall terminate following the expiration of the thirty (30) day
cure period without the Company remedying the condition giving rise
to the Material Alteration of the Covered Employee's job prospects,
following which, provided the Covered Employee signs the Release in
a timely manner as provided in Section 8.2, the Covered Employee
will receive the following Severance Benefit from the
Company:
8.1.2
" Total Cash Compensation Target. Within 10
days of the completion of the Release Period, if the Covered
Employee has executed and not revoked the Release as required by
Section 8.2 herein and the return of the Company's property as
required by Section 25 herein, the Covered Employee will be paid a
lump sum single payment equal to his or her Total Cash
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Compensation Target; provided, however, that if
the Covered Employee is a specified employee (as defined under
Section 409A) as of his or her date of Separation from Service and
the lump sum single payment equal to his or her Total Cash
Compensation Target is determined to be nonqualified deferred
compensation subject to Section 409A, then such payment shall be
made on date which is the earlier of: (a) the date six months after
the Covered Employee's Separation from Service, or (b) the date of
the Covered Employee's death.
8.1.3
" Covered Employees in Canada . For
Covered Employees in Canada, the amount of severance pay for a
Covered Employee whose severance pay is governed by the Employment
Standards Act will be the greater of that determined under Section
8.1.1 or the amount required under the Employment Standards
Act.
8.1.4
" Continued Medical Benefits. If Covered
Employee, and any spouse and/or dependents of Covered Employee
("Family Members"), has medical and dental coverage on the date of
Covered Employee's termination of employment under a group health
plan sponsored by the Company, the Company will reimburse Covered
Employee for the total applicable premium cost for medical and
dental coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1986, 29 U.S.C. Sections 11611168; 26 U.S.C.
Section 4980B(f), as amended, and all applicable regulations
(referred to collectively as "COBRA") for Covered Employee and his
Family Members during the full term of the Severance Period (to the
extent COBRA coverage lasts for the full term); provided, that the
Company shall have no obligation to reimburse Covered Employee for
the premium cost of COBRA coverage beginning on or after the date
Covered Employee and his Family Members first become eligible to
obtain comparable benefits from a subsequent employer.
8.1.5
" Stock Option Accelerated Vesting and Extended
Exercise Period. Provisions for acceleration of vesting upon a
Change in Control as defined above may be found in the Company's
Employee Stock Option Plans in effect on February 19, 2003 or
thereafter, and options previously granted thereunder and then
outstanding. Those Stock Option Plans and Options also provide for
an extended time for exercise of such Options upon an Involuntary
Termination initiated by the Covered Employee or a termination
initiated by the Company in either case upon a Change in Control
for Company employees generally and for Covered Employees in
particular. The terms of such stock option plans and grants made
thereunder remain in full force and effect.
8.1.6
" Short Term Incentive Earned Prior to Date of
Termination. In the event that the Covered Employee's date of
termination is prior to the date that the amount of short term
incentive earned by employees of the Company for that year is
determined, if any, the Covered Employee will be entitled to
receive, in addition to the Total Cash Compensation Target, a pro
rata share of his or her actual short term incentive target for
such year, if any, e.g., if the Covered Employee's date of
termination is July 1, he or she will be entitled to receive 50% of
his or her actual short term incentive. Such pro rata short term
incentive payment will be paid according to the terms of the
Company's compensation program in effect for the calendar year in
which the Involuntary Termination of the Covered Employee occurs,
but not later than March 15 of the calendar year after the calendar
year of the Separation from Service of the Covered Employee. The
Covered Employee's pro rata share of actual short term incentive
for such year will be paid to the Covered Employee at the same time
that it is paid to employees of the Company generally but not later
than March 15 of the calendar year after the calendar year of the
Separation from Service of the Covered Employee, regardless of the
Covered Employee's date of termination of employment.
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8.1.7
" Additional Limitation. Anything in this Plan
to the contrary notwithstanding, in the event that any
compensation, payment or distribution by the Company to or for the
benefit of the Covered Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Plan or
otherwise (the "Severance Payments"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue
Co
