Exhibit 10.14

 

Form of PSU Award – US

 

ARALEZ PHARMACEUTICALS INC.

2016 LONG-TERM INCENTIVE PLAN

PERFORMANCE SHARE AWARD

Aralez Pharmaceuticals Inc. (the “Company”) has granted you an award of
Performance Share (“Award”) of the Company under the Aralez Pharmaceuticals Inc.
2016 Long-Term Incentive Plan (the “Plan”).  The terms of the grant are set
forth in the attached Performance Share Award Agreement (the “Agreement”).  The
following provides a summary of the key terms of the Award; however, you should
read the entire Agreement along with the terms of the Plan, to fully understand
the Award.

 

SUMMARY OF GRANT

 

 

 

Grantee:

[____]

 

 

Date of Grant:

[____]

 

 

Target Number of Performance Shares:

[____]

 

 

Performance Period:

March 1, 2016 through December 31, 2018

 

The above is a summary description of certain provisions of the Agreement and is
not intended to be complete.  In the event any aspect of this summary conflicts
with the terms of the Agreement, the terms of the Agreement shall govern.

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Form of PSU Award - US

 

Grantee Acceptance:

 

By signing the acknowledgement below, the Grantee agrees to be bound by the
terms and conditions of the Plan, the Agreement and this Summary of Grant and
accepts the performance share grant in accordance with the terms of this Summary
of Grant, the Agreement and the Plan.  The Grantee will accept as binding,
conclusive and final all decisions or interpretations of the Compensation
Committee of the Company’s Board of Directors upon any questions arising under
the Plan, this Summary of Grant or the Agreement. 

 

 

Grantee:                                                          

 

 

Date:                                                               

 

 

 

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Form of PSU Award - US

 

 

ARALEZ PHARMACEUTICALS INC.

2016 LONG-TERM INCENTIVE PLAN

PERFORMANCE SHARE AWARD AGREEMENT

This PERFORMANCE SHARE AWARD AGREEMENT (the “Agreement”), dated as of the Date
of Grant set forth on the Summary of Grant (the “Date of Grant”), is delivered
by Aralez Pharmaceuticals Inc. (the “Company”) to the individual whose name is
set forth on the Summary of Grant (the “Grantee”).

RECITALS

A.The Aralez Pharmaceuticals Inc. 2016 Long-Term Incentive Plan (the “Plan”)
provides for the grant of stock-based awards with respect to Common Shares of
the Company, in accordance with the terms and conditions of the Plan. The
Company has decided to make a Performance Share award as an inducement for the
Grantee to promote the best interests of the Company and its stockholders.

 

B.The terms and conditions of the Performance Shares should be construed and
interpreted in accordance with the terms and conditions of this Agreement and
the Plan. The Plan is administered and interpreted by the Compensation Committee
of the Board of Directors of the Company (the “Board”) (or a subcommittee
thereof), or such other committee of the Board (including, without limitation,
the full Board) to which the Board has delegated power to act under or pursuant
to the provisions of the Plan (the “Committee”). The Committee may delegate
authority to one or more subcommittees as it deems appropriate.  If a
subcommittee is appointed, all references in this Agreement to the “Committee”
shall be deemed to refer to the committee. Capitalized terms that are used but
not defined herein shall have the respective meanings accorded to such terms in
the Plan. For purposes of this Agreement, “Company” shall mean the Company and
any of its Subsidiaries where applicable.

 

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound
hereby, agree as follows:

1. Grant of Performance Shares.  Subject to the terms and conditions set forth
in this Agreement and the Plan, the Company hereby awards to the Grantee a
target number of Performance Shares (as defined in the Plan) set forth on the
Summary of Grant (the “Target Award”).  The Grantee accepts the Performance
Shares and agrees to be bound by the terms and conditions of this Agreement and
the Plan with respect to the award. Each Performance Share represents the right
to receive one Common Share, subject to the terms and conditions set forth in
this Agreement and the Plan. The number of Performance Shares that the Grantee
actually earns for the Performance Period (up to a maximum of 200% of the Target
Award) will be determined by the level of achievement of the Performance Goals
in accordance with Exhibit A attached hereto.

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Form of PSU Award - US

 

2. Performance Period.  For purposes of this Agreement, the term “Performance
Period” shall mean Performance Period set forth on the Summary of Grant.

3. Performance Goals. The number of Performance Shares earned by the Grantee for
the Performance Period will be determined at the end of the Performance Period
based on the level of achievement of the Performance Goals in accordance with
Exhibit A. All determinations of whether Performance Goals have been achieved
and the number of Performance Shares earned by the Grantee shall be made by the
Committee in its sole discretion. Promptly following completion of the
Performance Period (and no later than March 15 of the year following the last
day of the Performance Period), the Committee will review and certify in writing
(a) whether, and to what extent, the Performance Goals for the Performance
Period have been achieved, and (b) the number of Performance Shares that the
Grantee shall earn, if any, subject to compliance with the requirements of
Section 4. Such certification shall be final, conclusive and binding on the
Grantee, and on all other persons, to the maximum extent permitted by law.

4. Vesting of Award/Payment of Shares.  

(a) The Performance Shares are subject to forfeiture until they vest. Except as
otherwise provided herein or in a Company-sponsored plan, policy or arrangement,
or any agreement to which the Company is a party, the Performance Shares will
vest and become nonforfeitable on the last day of the Performance Period,
subject to (i) the achievement of the minimum threshold Performance Goals for
payout set forth in Exhibit A attached hereto, and (ii) the Grantee’s continuous
service from the Grant Date through the last day of the Performance Period. The
number of Performance Shares that vest and become payable under this Agreement
shall be determined by the Committee based on the level of achievement of the
Performance Goals set forth in Exhibit A and shall be rounded to the nearest
whole Performance Share.

(b) If, when, and to the extent the Committee determines the number of
Performance Shares that are earned and such Performance Shares vest, the Company
will issue to the Grantee one Common Share for each whole Performance Share that
has been earned and has vested, subject to satisfaction of the Grantee’s tax
withholding obligations as described in Section 7 below. Such Common Shares
shall be issued and delivered no later than March 15 of the year following the
year in which the Performance Period ends.  The Performance Shares shall cease
to be outstanding upon such issuance of shares.

(c) Unless otherwise provided in a Company-sponsored plan, policy or
arrangement, or any agreement to which the Company is a party, and except as
otherwise set forth herein, the Grantee shall forfeit the unvested Performance
Shares in the event the Grantee ceases to be employed by, or provide service to,
the Company (or one of its Subsidiaries) prior to the last day of the
Performance Period. Except as otherwise set forth in Section 8 of this
Agreement, in the event a Company-sponsored plan, policy or arrangement, or any
agreement to which the Company is a party, would purport to accelerate the
vesting of the Performance Shares upon a termination of employment, the
accelerated Performance Shares will be paid on the date such Performance Shares
would have been paid had the Grantee’s employment continued through the end of
the Performance Period, with such number of Performance Shares that are earned
based on the achievement of the Performance Goals through the end of the
Performance Period and pro-rated

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Form of PSU Award - US

 

based on the number of full months during the Performance Period that the
Grantee was employed by the Company (or one of its Subsidiaries).  

5. Dividend Equivalents.  On each dividend payment date for each cash dividend
on the Common Shares, the Company will credit the Grantee with dividend
equivalents in the form of additional Performance Shares.  All such additional
Performance Shares shall be subject to the same Performance Goals and vesting
requirements applicable to the Performance Shares in respect of which they were
credited and shall be settled in accordance with, and at the time of, settlement
of the earned and vested Performance Shares to which they are related.  The
number of Performance Shares to be credited shall equal the quotient, rounded to
such fraction as may be determined by the Committee, determined by dividing (a)
by (b), where “(a)” is the product of (i) the cash dividend payable per Common
Share, multiplied by (ii) the Target Award, and “(b)” is the Fair Market Value
of a Common Share on the dividend payment date.  The additional Performance
Shares shall be adjusted following the end of the Performance Period as set
forth in Section 3 of this Agreement base on the achievement of the applicable
Performance Goals. If the Grantee’s earned and vested Performance Shares have
been settled after the record date but prior to the dividend payment date, any
Performance Shares that would be credited pursuant to the preceding sentence
shall be settled on or as soon as practicable after the dividend payment date.
Accrued dividends attributed to Performance Shares that are not earned or are
forfeited shall also be forfeited. Nothing herein shall preclude the Committee
from exercising its discretion under the Plan to determine whether to eliminate
fractional units or credit fractional units to accounts, and the manner in which
fractional units will be credited.

6. No Stockholder Rights Prior to Settlement; Issuance of Certificates. The
Grantee shall have no rights as a stockholder with respect to any Common Shares
represented by the Performance Shares until the date of issuance of the Common
Shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), if applicable.  Except as set
forth in Section 5 or otherwise required by the Plan, no adjustment shall be
made for dividends, distributions, or other rights for which the record date is
prior to the date, if any, that Common Shares are issued.

7. Withholding. 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. On or before the
time the Grantee receives a distribution of the shares subject to the Grantee’s
Performance Shares, or at any time thereafter as requested by the Company, the
Grantee hereby authorizes any required withholding from the Common Shares
issuable to the Grantee and/or otherwise agrees to make adequate provision in
cash for any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company which arise in connection with the
Grantee’s Performance Shares (the “Withholding Taxes”).  Additionally, the
Company may, in its sole discretion, satisfy all or any portion of the
Withholding Taxes obligation relating to the Grantee’s Performance Shares by any
of the following means or by a combination of such means: (i) withholding from
any compensation otherwise payable to the Grantee by the Company (or any of its
Subsidiaries); (ii) causing the Grantee to tender a cash payment;
(iii) permitting the Grantee to enter into a “same day sale” commitment with a
broker-dealer that is a member of the Financial Industry Regulatory Authority (a
“FINRA Dealer”) whereby the Grantee irrevocably elects to sell a portion of the
shares to be delivered under the Agreement to satisfy the Withholding Taxes and
whereby the FINRA Dealer irrevocably commits

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Form of PSU Award - US

 

to forward the proceeds necessary to satisfy the Withholding Taxes directly to
the Company; or (iv) withholding Common Shares from the Common Shares issued or
otherwise issuable to the Grantee in connection with the Performance Shares with
a Fair Market Value (measured as of the date Common Shares are issued to the
Grantee pursuant to Section 4) equal to the amount of such Withholding Taxes;
provided, however, that the number of such Common Shares so withheld shall not
exceed the amount necessary to satisfy the Company’s required tax withholding
obligations using the minimum statutory withholding rates for federal, state,
local and foreign tax purposes, including payroll taxes, that are applicable to
supplemental taxable income.  Unless the tax withholding obligations of the
Company are satisfied, the Company shall have no obligation to deliver to the
Grantee any Common Shares.  In the event the Company’s obligation to withhold
arises prior to the delivery to the Grantee of Common Shares or it is determined
after the delivery of Common Shares to the Grantee that the amount of the
Company’s withholding obligation was greater than the amount withheld by the
Company, the Grantee agrees to indemnify and hold the Company harmless from any
failure by the Company to withhold the proper amount.

8. Change in Control.  Notwithstanding any provisions of the Plan to the
contrary, upon a Change in Control (as defined in the Plan) unless the
Performance Shares are continued or assumed by the surviving or successor entity
or parent thereof on terms identical to the terms set forth herein and such
continued or substitute awards are subject to the same Performance Goals,
without adjustment, the Grantee will be deemed to have earned and vest in the
number of Performance Shares equal to the greater of (i) the Target Award and
(ii) the actual number of Performance Shares that would have been vested and
earned if the last day of the Performance Period had been the date of the Change
in Control. Common Shares equal to the number of Performance Shares earned shall
be issued and delivered no later than March 15 of the year following the year in
which the Change in Control occurs. In the event the Performance Shares are
continued or assumed by the surviving or successor entity or parent thereof, and
the Grantee is terminated without Cause or resigns for Good Reason (each as
defined in the Grantee’s written employment agreement or, if the Grantee does
not have an employment agreement, in the Company’s current severance plan)
following the Change in Control but prior to the last day of the Performance
Period, the Grantee will be deemed to have earned and vest in the number of
Performance Shares as set forth above in this paragraph, and Common Shares equal
to the number of Performance Shares earned and vested shall be issued and
delivered no later than March 15 of the year following the year of the Grantee’s
termination of employment. Notwithstanding anything in the Plan to the contrary,
in no event shall the Committee exercise its discretion to accelerate the
payment or settlement of the Performance Shares where such payment or settlement
constitutes deferred compensation within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) unless, and solely to the
extent that, such accelerated payment or settlement is permissible under
Treasury Regulation section 1.409A-3(j)(4) or any successor provision.

9. Adjustments.  The provisions of the Plan applicable to adjustments (as
described in Section 10 of the Plan) shall apply to the Performance Shares.

10. Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan.  The Performance Shares are
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 (i) rights
and

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Form of PSU Award - US

 

obligations with respect to withholding taxes, (ii) the registration,
qualification or listing of the Common Shares, (iii) changes in capitalization
of the Company and (iv) other requirements of applicable law.  The Committee
shall have the authority to interpret and construe the Performance Shares
pursuant to the terms of the Plan, and its decisions shall be conclusive as to
any questions arising hereunder.

11. No Employment or Other Rights.  The grant of the Performance Shares shall
not confer upon the Grantee any right to be retained by or in the employ or
service of the Company (or any of its Subsidiaries) and shall not interfere in
any way with the right of the Company (or any of its Subsidiaries) to terminate
the Grantee’s employment or service at any time.  The right of the Company (or
any of its Subsidiaries) to terminate at will the Grantee’s employment or
service at any time for any reason is specifically reserved.

12. Delivery Subject to Legal Requirements. The obligation of the Company to
deliver stock shall be subject to the condition that if at any time the Board
shall determine in its discretion that the listing, registration or
qualification of the shares 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 issue of
shares, the shares may not be issued in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board.  The issuance of
shares to the Grantee pursuant to this Agreement is subject to any applicable
taxes and other laws or regulations of the United States or of any state having
jurisdiction thereof.

13. Assignment and Transfers.  The rights and interests of the Grantee under
this Agreement may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Grantee, by will or by the laws of
descent and distribution.  In the event of any attempt by the Grantee to
alienate, assign, pledge, hypothecate, or otherwise dispose of the Performance
Shares or any right hereunder, 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 Performance Shares by notice to the Grantee, and the
Performance Shares and all rights hereunder shall thereupon become null and
void.  The rights and protections of the Company hereunder shall extend to any
successors or assigns of the Company and to the Company’s parents, Subsidiaries,
and affiliates.  This Agreement may be assigned by the Company without the
Grantee’s consent. 

14. Applicable Law.  The validity, construction, interpretation and effect of
this Agreement shall be governed by and construed in accordance with the laws of
the State of New Jersey, without giving effect to the conflict of laws
provisions thereof. 

15. Notice.  Any notice to the Company provided for in this Agreement shall be
addressed to the Company in care of the Committee, and any notice to the Grantee
shall be addressed to such Grantee at the current address shown on the payroll
of the Company, or to such other address as the Grantee may designate to the
Company in writing.  Any notice shall be delivered by hand, sent by telecopy or
enclosed in a properly sealed envelope addressed as stated above, deposited,
postage prepaid, in a post office regularly maintained by the United States
Postal Service.

16. Section 409A.  This Agreement and the Performance Shares granted hereunder
are intended to fit within the “short-term deferral” exemption from Section 409A
of the Code, as set

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Form of PSU Award - US

 

forth in Treasury Regulation Section 1.409A-1(b)(4) or any successor provision,
or to comply with, or otherwise be exempt from, Section 409A of the Code.  This
Agreement and the Performance Shares shall be administered, interpreted and
construed in a manner consistent with Section 409A of the Code.  Each amount
payable under this Agreement is designated as a separate identified payment for
purposes of Section 409A of the Code.  The payment of dividend equivalents under
Section 3 of this Agreement shall be construed as earnings and the time and form
of payment of such dividend equivalents shall be treated separately from the
time and form of payment of the underlying Performance Shares for purposes of
Section 409A of the Code.

17. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.  Facsimile or other electronic transmission of any signed original
document or retransmission of any signed facsimile or other electronic
transmission will be deemed the same as delivery of an original.

18. Complete Agreement.  Except as otherwise provided for herein, this Agreement
and those agreements and documents expressly referred to herein embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.  The terms of this Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Grantee.

19. Committee Authority.  By entering into this Agreement the Grantee agrees and
acknowledges that all decisions and determinations of the Committee shall be
final and binding on the Grantee, his or her beneficiaries and any other person
having or claiming an interest in the Award. 

 

 

 

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Form of PSU Award - US

 

EXHIBIT A

 

 

 

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Form of PSU Award - US

 

Exhibit A

Performance Share Award Performance Goals

 

Performance Period: March 1, 2016 through December 31, 2018.

Performance Goals: Performance over the Performance Period measured relative to
the index/peer group (“Peer Group”) with the payout percentage determined based
on the Aralez Pharmaceuticals Inc. (the “Company”) total shareholder return
(“TSR”) rank against the Peer Group.

 

 

 

Goal

Rank

Performance Shares Earned

Maximum

90th Percentile

200%

Above Target

75th Percentile

150%

Target

50th Percentile

100%

Threshold

25th Percentile

50%

Payout percentages interpolated on a straight-line basis between band points.

Peer Group: NASD biotechnology with 2015 revenue between $50 million and $500
million.

·

Bankruptcies remain in the Peer Group with -100% TSR

·

Acquisition/taken private companies will be removed when announced

 

Calculation of TSR: At the start of the Performance Period, a 20-day trading
average stock price will be used to set the baseline. A 20-day average stock
price at the end of the Performance Period will be used to determine the final
performance. This will be applied consistently against the Peer Group.

If Aralez or a Peer Company is paying dividends, they are assumed to be
reinvested for purposes of TSR calculation.

In the event of a Change in Control where the Performance Shares are not
continued or assumed by the surviving or successor entity or parent thereof, the
final measurement will be a 5-day trading average prior to the Change in
Control.

 

 

 

 

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