Document:

ex10-1.htm

Exhibit 10.1

 

Execution Version

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

BANK OF AMERICA, N.A.

One Bryant Park

New York, NY  10036

CONFIDENTIAL

 

January 11, 2015

 

AmerisourceBergen Corporation

1300 Morris Drive

Chesterbrook, PA 19087

Attention: J.F. Quinn

Project Roscoe

Bridge Facility Commitment Letter

 

Ladies and Gentlemen:

You (“you” or the “Borrower”) have advised Bank of America, N.A. (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (together with its designated affiliates, “MLPFS” and, together with Bank of America, the “Commitment Parties”, “we” or “us”) that you intend to acquire (the “Acquisition”) a company previously identified to us as “Roscoe” (the “Target”) and to consummate the other Transactions (as defined in the Term Sheet (as defined below)).  The Acquisition will be effected through (i) the purchase of shares of common stock of the Target by a wholly-owned subsidiary of the Borrower (“Merger Sub”) in the Offer (as defined in the Acquisition Agreement (as defined in the Term Sheet)) and (ii) promptly following the closing of the Offer, the merger (the “Merger”) of Merger Sub with and into the Target pursuant to Section 251(h) of the Delaware General Corporation Law, with the Target surviving such Merger as your direct or indirect wholly-owned subsidiary.  In connection therewith, the Borrower intends to obtain a 364-day senior unsecured bridge term loan credit facility (the “Bridge Facility”) in an aggregate principal amount of $2,150,000,000 (as such amount may be reduced as set forth in the Term Sheet) and having the terms and conditions set forth in the Term Sheet.  The date of consummation of the Offer is referred to herein as the “Closing Date.”

1.        Commitments.  In connection with the foregoing, Bank of America is pleased to advise you of its commitment to provide the full aggregate principal amount of the Bridge Facility (in such capacity, the “Initial Bridge Lender”) and its willingness to act as the sole and exclusive administrative agent (in such capacity, the “Administrative Agent”) for the Bridge Facility, all upon and subject to the terms set forth in this letter agreement and in Exhibits A and B hereto (collectively, the “Term Sheet” and, together with this letter agreement, the “Commitment Letter”) and subject only to the express conditions set forth in Section 5 of this Commitment Letter and on Exhibit B hereto.  MLPFS is also pleased to advise you of its willingness, and you hereby engage MLPFS, to act as sole and exclusive lead arranger and sole and exclusive bookrunner (in such capacity, the “Lead Arranger”) for the Bridge Facility, and in connection therewith to form a syndicate of lenders (including Bank of America) for the Bridge Facility (collectively, the “Lenders”) in consultation with, and reasonably acceptable to, you (it being understood that the Permitted Assignees (as defined below) shall be deemed to be reasonably acceptable to you).  You agree that no other titles will be awarded and no compensation (other than that expressly contemplated by this Commitment Letter and the Fee Letter referred to below) will be paid in order to obtain commitments in connection with the Bridge Facility unless you and we shall so agree; provided that you may, in consultation with us, appoint up to two financial institutions as documentation agents for the Bridge Facility.  The commitments of the Initial Bridge Lender in respect of the Bridge Facility and the undertaking of the Lead Arranger to provide the services described herein are subject solely to the satisfaction of each of the conditions precedent set forth in Section 5 of this Commitment Letter and in Exhibit B hereto.  All capitalized terms used and not otherwise defined herein shall have the same meanings as specified therefor in the Term Sheet.

 

 

 

 

 

 

2.        Syndication.  The Lead Arranger intends to commence syndication of the Bridge Facility promptly after your acceptance of the terms of this Commitment Letter and the Fee Letter (but in no event prior to the public announcement of the Acquisition) and you agree to provide us with a period of at least 30 consecutive days following the date hereof and prior to the Closing Date to syndicate the Bridge Facility.  Notwithstanding the Lead Arranger’s right to syndicate the Bridge Facility and receive commitments with respect thereto, except as provided for in Section 8, (a) no assignment or novation shall become effective with respect to all or any portion of the Initial Bridge Lender’s commitment in respect of the Bridge Facility until after the initial funding of the Bridge Facility on the Closing Date and (b) unless you otherwise agree in writing, the Initial Bridge Lender shall retain exclusive control over all rights and obligations with respect to its commitment and other obligations hereunder, including all rights with respect to consents, modifications, supplements, waivers and amendments of this Commitment Letter and of the Fee Letter, until the initial funding of the Bridge Facility on the Closing Date.  Without limiting your obligations to assist with syndication efforts as set forth herein, the Initial Bridge Lender agrees that neither the commencement nor the completion of such syndication of, nor the receipt of commitments or participations in respect of, all or any portion of its commitment hereunder prior to the initial funding of the Bridge Facility is a condition to its commitment hereunder.

 Until the earlier of 60 days following the Closing Date and the completion of a Successful Syndication (as defined in the Fee Letter) (such earlier date, the “Syndication Date”), you agree to actively assist the Lead Arranger in achieving a Successful Syndication (as defined in the Fee Letter).  Such assistance shall include (a) your providing, and your using commercially reasonable efforts to cause your advisors to provide, the Lead Arranger and the Initial Bridge Lender upon reasonable request with all information reasonably deemed necessary by the Lead Arranger to complete such syndication, including, but not limited to, information and evaluations prepared by you and your advisors, or on your behalf, relating to the Transactions (including the Projections (as hereinafter defined)) (subject to, in the case of your advisors, the delivery of customary non-disclosure and non-reliance agreements reasonably acceptable to the Lead Arranger and such advisors), (b) your assistance in the preparation of an information memorandum with respect to the Bridge Facility in form and substance customary for transactions of this type (each, an “Information Memorandum”) and other customary materials to be used in connection with the syndication of the Bridge Facility (collectively with the Term Sheet and any additional summary of terms prepared for distribution to Public Lenders (as hereinafter defined), the “Information Materials”), (c) your using your commercially reasonable efforts to ensure that the syndication efforts of the Lead Arranger benefit from your existing lending relationships, (d) your using commercially reasonable efforts to obtain, prior to the launch of the syndication, updates to, or confirmations of, the Public Debt Ratings of the Borrower (giving effect to the Transactions) from Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Financial Services LLC (“S&P”) and Fitch, Inc. (“Fitch”), (e) subject to the provisions of Section 8 hereof, your using commercially reasonable efforts to execute and deliver the Credit Documentation (as hereinafter defined) or, if applicable, one or more Joinder Agreements (as hereinafter defined), in each case as soon as reasonably practicable following commencement of syndication of the Bridge Facility and (f) your otherwise assisting the Lead Arranger in its syndication efforts, including by making your officers and non-legal advisors available from time to time to attend and make presentations at one or more meetings of prospective Lenders at times and places to be mutually agreed.

 

 

 

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 Notwithstanding anything to the contrary contained in this Commitment Letter, the Fee Letter or any other letter agreement or undertaking concerning the financing of the Transactions to the contrary, but without limiting the conditions precedent in Section 5 hereof or Exhibit B hereto, and without limiting your obligations to assist with syndication in this Section 2, compliance with any of the provisions set forth in this Section 2 shall not constitute a condition to the commitments hereunder or the funding of the Bridge Facility on the Closing Date.

 In order to facilitate an orderly and successful syndication of the Bridge Facility, you agree that from the date hereof until the Syndication Date, the Borrower will not issue, announce, offer, place or arrange debt securities or any syndicated credit facilities of the Borrower or its subsidiaries (other than (i) the Senior Notes, (ii) the Term Loan Facility, (iii) amendments or refinancings of the Existing Credit Facility that do not increase the aggregate committed amount thereof (plus accrued and unpaid interest and premium thereon and underwriting discounts, fees, commissions and expenses), (iv) any commercial paper issued in the ordinary course of business, (v) capital leases or other debt issued or incurred to finance the acquisition of fixed or capital assets and (vi) any other financing agreed by the Lead Arranger), in each case if such issuance, announcement, offering, placement or arrangement could reasonably be expected to materially impair the primary syndication of the Bridge Facility.

It is understood and agreed that the Lead Arranger will manage and control all aspects of the syndication of the Bridge Facility in consultation with you, including decisions as to the selection of prospective Lenders and any titles offered to proposed Lenders, when commitments will be accepted and the final allocations of the commitments among the Lenders.  It is understood that no Lender participating in the Bridge Facility will receive compensation from you in order to obtain its commitment, except on the terms contained herein and in the Term Sheet and Fee Letter, unless you and the Lead Arranger shall otherwise agree.  It is also understood and agreed that the amount and distribution of the fees among the Lenders will be at the sole and absolute discretion of the Lead Arranger.

3.        Information Requirements.  You hereby represent and warrant that (a) all written information, other than Projections, forward-looking information and other information of a general economic or industry specific nature, that has been or is hereafter made available to the Lead Arranger or any of the Commitment Parties by or on behalf of you or any of your representatives in connection with the Transactions (which representation and warranty shall be to your knowledge to the extent it relates to the Target or its subsidiaries), taken as a whole after giving effect to all supplements and updates provided thereto (the “Information”), as and when furnished, is and will be correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which such statements were or are made, not materially misleading (giving effect to supplements thereto from time to time) and (b) all financial projections concerning the Borrower, the Target and their subsidiaries that have been or are hereafter made available to the Lead Arranger or any of the Commitment Parties by or on behalf of you or any of your representatives in connection with the Transactions (the “Projections”) have been or will be prepared in good faith based upon assumptions believed by you to be reasonable at the time such Projections are furnished to the Lead Arranger or any Commitment Party (it being understood that the Projections are subject to significant uncertainties and contingencies, many of which are beyond your control, the Projections, by their nature, are inherently uncertain and no assurances are being given that the results reflected in the Projections will be achieved and actual results may differ from the Projections and such differences may be material).  You agree that if at any time from the date hereof until the later of the Closing Date and the Syndication Date, you become aware that any of the representations in the preceding sentence would be incorrect in any material respect if the Information and Projections were being furnished, and such representations were being made, at such time, then you will promptly supplement, or cause to be supplemented, the Information and Projections so that such representations will be correct at such time.  In issuing this commitment and in arranging and syndicating the Bridge Facility, the Commitment Parties are and will be using and relying on the Information and the Projections without independent verification thereof.

 

 

 

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 You acknowledge that (a) the Lead Arranger on your behalf will make available Information Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks or another similar electronic system and (b) certain prospective Lenders (such Lenders, “Public Lenders”; all other Lenders, “Private Lenders”) may have personnel that do not wish to receive material non-public information (within the meaning of the United States federal securities laws, “MNPI”) with respect to the Borrower, the Target, or your or their affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such entities’ securities.  If requested, you will use your commercially reasonable efforts to assist us in preparing an additional version of the Information Materials not containing MNPI (the “Public Information Materials”) to be distributed to prospective Public Lenders.

 Before distribution of any Information Materials (a) to prospective Private Lenders, you shall provide us with a customary letter authorizing the dissemination of the Information Materials and (b) to prospective Public Lenders, you shall provide us with a customary letter authorizing the dissemination of the Public Information Materials and confirming the absence of MNPI therefrom.  In addition, at our request, you shall identify Public Information Materials by clearly and conspicuously marking the same as “PUBLIC”.

 

You agree that the Lead Arranger on your behalf may distribute the following documents to all prospective Lenders, unless you advise the Lead Arranger in writing (including by email) within a reasonable time after your receipt of such materials and prior to their intended distributions that such material should only be distributed to prospective Private Lenders:  (a) administrative materials for prospective Lenders such as lender meeting invitations and funding and closing memoranda, (b) notifications of changes to the terms of the Bridge Facility and (c) drafts and final versions of definitive documents with respect to the Bridge Facility.  If you advise us that any of the foregoing items should be distributed only to Private Lenders, then the Lead Arranger will not distribute such materials to Public Lenders without further discussions with you.  You agree that Information Materials made available to prospective Public Lenders in accordance with this Commitment Letter shall not contain MNPI.

 4.           Fees and Indemnities.

(a)            You agree to pay the fees set forth in the separate fee letter addressed to you dated the date hereof from the Commitment Parties (the “Fee Letter”).  You also agree to reimburse the Commitment Parties from time to time promptly after demand for all reasonable documented or invoiced out-of-pocket fees and expenses (including, but not limited to, (i) the reasonable fees, disbursements and other charges of counsel which shall be limited to the reasonable and documented or invoiced out-of-pocket fees, disbursements and other charges of a single counsel, as counsel to the Commitment Parties and the Administrative Agent and, if necessary, of one regulatory counsel and one local counsel to the Lenders retained by the Lead Arranger or the Administrative Agent in each relevant regulatory field and each relevant jurisdiction, respectively, and (ii) due diligence expenses) incurred in connection with the Bridge Facility, the syndication thereof, the preparation of the Credit Documentation therefor and the other transactions contemplated hereby, in the case of legal of fees and expenses, whether or not the Closing Date occurs or any Credit Documentation is executed and delivered or any extensions of credit are made under the Bridge Facility and in all other cases, if the Closing Date occurs.  You acknowledge that we may receive a benefit, including without limitation, a discount, credit or other accommodation, from any of such counsel based on the fees such counsel may receive on account of their relationship with us including, without limitation, fees paid pursuant hereto.

 

 

 

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(b)            You also agree to indemnify and hold harmless each of the Commitment Parties and each of their affiliates and controlling persons, successors and assigns and their respective officers, directors, employees, agents, advisors and other representatives (each, an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (including, without limitation, the reasonable fees, disbursements and other charges of counsel (but limited, in the case of legal fees and expenses, to the reasonable and documented or invoiced out-of-pocket fees and expenses of one counsel, representing all of the Indemnified Parties, taken as a whole, and, if necessary, of a single local counsel in each relevant regulatory field and in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnified Parties, taken as a whole (and, in the case of an actual or perceived conflict of interest where the Indemnified Party affected by such conflict notifies you of the existence of such conflict and thereafter retains its own counsel, of another firm of counsel for each such affected Indemnified Party in each relevant jurisdiction))) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any aspect of the Transactions or the other transactions contemplated hereby or (b) the Bridge Facility, or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from (x) such Indemnified Party’s material breach of this Commitment Letter, the Fee Letter or any of the Credit Documentation, (y) such Indemnified Party’s gross negligence, bad faith or willful misconduct or (z) disputes solely among Indemnified Parties not arising from or in connection with any act or omission by the Borrower or any of its affiliates (other than any Proceeding (as hereinafter defined) against a Commitment Party in its capacity or in fulfilling its role as an administrative agent, arranger or similar role with respect to the Bridge Facility).  In the case of any litigation, investigation or proceeding to which the indemnity in this paragraph applies (any of the foregoing, a “Proceeding”), such indemnity shall be effective whether or not such Proceeding is brought by you, your equity holders or creditors, the Target or their subsidiaries, affiliates or equity holders, or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not any aspect of the Transactions is consummated.  It is further agreed that the Commitment Parties shall only have liability to you (as opposed to any other person), and that the Commitment Parties shall be severally liable solely in respect of their respective commitments to the Bridge Facility, on a several, and not joint, basis with any other Lender.  Notwithstanding any other provision of this Commitment Letter, no party hereto shall be liable for any indirect, special, punitive or consequential damages in connection with the Bridge Facility; provided that nothing contained in this sentence shall limit your indemnification obligations to the extent such special, indirect, consequential or punitive damages are included in a claim for which an Indemnified Party is entitled to indemnification hereunder.  Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems, other than for direct, actual damages resulting from the gross negligence or willful misconduct of such Indemnified Party as determined by a final, non-appealable judgment of a court of competent jurisdiction.  You shall not be liable for any settlement of any Proceeding effected without your prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with your prior written consent or if there is a final judgment in any such Proceeding, you agree to indemnify and hold harmless each Indemnified Party to the extent and in the manner set forth above.  You shall not, without the prior written consent of an Indemnified Party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened Proceeding against such Indemnified Party in respect of which indemnity could have been sought hereunder by such Indemnified Party unless such settlement (i) includes an unconditional release of such Indemnified Party from all liability or claims that are the subject matter of such Proceeding and (ii) does not include any statement as to any admission of fault by or on behalf of such Indemnified Party.

 

 

 

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5.           Conditions to Financing.  The Initial Bridge Lender’s commitment hereunder, and each of our agreements to perform the services described herein, are subject to (a) since the date hereof, no change, event or occurrence shall have occurred that has had, or would reasonably be expected to have, a Target Material Adverse Effect (as defined below), (b) the execution and delivery of definitive documentation with respect to the Bridge Facility subject to the Funds Certain Provision and consistent with this Commitment Letter and the Fee Letter (or as otherwise reasonably satisfactory to the Lead Arranger and you) (the “Credit Documentation”) and (c) the satisfaction of the other conditions set forth on Exhibit B hereto, it being understood and agreed that there are no conditions (implied or otherwise) to the commitments hereunder with respect to the Bridge Facility or the Lead Arranger’s agreement to perform the services described herein other than those expressly stated or referred to in this paragraph.

 

For the purposes hereof, “Target Material Adverse Effect” means any fact, circumstance, change, event, occurrence or effect that, individually or in the aggregate, (x) has a material adverse effect on the financial condition, business, properties, assets, liabilities or results of operations of the Company and its Subsidiaries taken as a whole or (y) would, individually or in the aggregate, materially impair, prevent or delay consummation by the Company of the Transactions; provided that none of the following, and no fact, circumstance, change, event, occurrence or effect arising out of or relating to the following, shall constitute a “Target Material Adverse Effect” or be taken into account in determining whether a “Target Material Adverse Effect” has occurred or would reasonably be expected to occur: (a) any facts, circumstances, changes, events, occurrences or effects generally affecting (i) any of the industries in which the Company and its Subsidiaries operate or (ii) the economy, credit or financial or capital markets in the United States or elsewhere in the world, including changes in interest or exchange rates, or (b) any facts, circumstances, changes, events, occurrences or effects, arising out of, resulting from or attributable to (i) changes or prospective changes in Law, applicable regulations of any Governmental Entity, generally accepted accounting principles or accounting standards, or any changes or prospective changes in, or issuance of any administrative or judicial notice, decision or other guidance with respect to, the interpretation or enforcement of any of the foregoing, (ii) the announcement of this Agreement or the consummation of the Merger or the other transactions contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, employees or regulators, or any change to the extent resulting or arising from the identity of Parent, Merger Sub or their respective Affiliates, (iii) acts of war (whether or not declared), sabotage or terrorism, or any escalation or worsening of any such acts of war (whether or not declared), sabotage or terrorism, (iv) pandemics, earthquakes, hurricanes, tornados, drought or other natural disasters, (v) any change or announcement of a potential change in the Company’s credit ratings (it being understood that the facts or occurrences giving rise or contributing to such event may be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Target Material Adverse Effect to the extent such facts or occurrences are not otherwise excluded from the definition of Target Material Adverse Effect), (vi) any litigation brought by stockholders of the Company alleging breach of fiduciary duty or inadequate disclosure in connection with this Agreement or any of the transactions contemplated hereby, (vii) any decline in the market price, or change in trading volume, of any capital stock of the Company (it being understood that the facts or occurrences giving rise or contributing to such decline or change may be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Target Material Adverse Effect to the extent such facts or occurrences are not otherwise excluded from the definition of Target Material Adverse Effect) or (viii) any failure to meet any internal or public projections, forecasts or estimates of revenue, earnings, cash flow or cash position (it being understood that the facts or occurrences giving rise or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Target Material Adverse Effect to the extent such facts or occurrences are not otherwise excluded from the definition of Target Material Adverse Effect); provided, that in the case of clauses (a)(i), (a)(ii), (b)(i), (b)(iii) and (b)(iv) above, such facts, circumstances, changes, events, occurrences or effects may be taken into consideration in determining whether there has been or would reasonably expected to be a Target Material Adverse Effect if they disproportionately affect the Company and its Subsidiaries taken as a whole as compared to other participants in the businesses and industries in which the Company and its Subsidiaries operate (it being understood and agreed that capitalized terms used in this definition have the meanings specified therefor in the Acquisition Agreement in effect on the date hereof).

 

 

 

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Notwithstanding anything in this Commitment Letter, the Fee Letter, the Credit Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (a) the only representations and warranties the accuracy of which shall be a condition to the availability of the Bridge Facility on the Closing Date shall be (i) such representations and warranties made by or with respect to the Target and its subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that you have (or a subsidiary of yours has) the right to terminate your obligations under the Acquisition Agreement, or to decline to consummate the Acquisition pursuant to the Acquisition Agreement, as a result of a breach of such representations in the Acquisition Agreement (the “Acquisition Agreement Representations”) and (ii) the Specified Representations (as hereinafter defined) and (b) the terms of the Credit Documentation shall be in a form such that they do not impair the availability of the Bridge Facility on the Closing Date if the conditions set forth in the second preceding paragraph of this Section 5 are satisfied or waived.  For purposes hereof, “Specified Representations” means the representations and warranties of the Borrower relating to corporate status; corporate power and authority to enter into the Credit Documentation; due authorization, execution, delivery and enforceability of the Credit Documentation; no conflicts of the Credit Documentation with charter documents or the Existing Debt Documents of the Borrower (with respect to the Existing Credit Facility (as defined in the Term Sheet), other than the financial covenant); solvency of the Borrower and its subsidiaries on the Closing Date on a consolidated basis after giving effect to the Transactions (with solvency to be defined in a manner consistent with the form of solvency certificate attached as Annex I to Exhibit B hereto); Federal Reserve margin regulations; the U.S.A. Patriot Act; use of proceeds not violating laws against sanctioned persons and anti-corruption laws; and the Investment Company Act and the absence any continuing event of default (limited to (a) violation of the following negative covenants: debt, liens, fundamental changes, investments, sales of assets (but only to the extent any such sale would constitute a sale of all or substantially all of the assets of the Borrower and its subsidiaries), (b) bankruptcy defaults, (c) payment defaults, (d) change of control and (e) cross-acceleration to and cross-payment default under the Existing Debt Documents and under documents governing indebtedness for borrowed money of the Borrower in an aggregate principal amount greater than $100,000,000).  This paragraph is referred to as the “Funds Certain Provision”.  “Existing Debt Documents” means (i) the Existing Credit Facility, as amended from time to time, (ii) each indenture and supplemental indenture governing the notes issued by the Borrower and outstanding on the date hereof, (iii) the Revolving Credit Note dated as of March 8, 2013 executed by the Borrower in favor of Citizens Bank of Pennsylvania (as amended, amended and restated, supplemented or otherwise modified from time to time) and (iv) the Amended and Restated Receivables Purchase Agreement, dated as of April 29, 2010, among Amerisource Receivables Financial Corporation, as seller, AmerisourceBergen Drug Corporation, as initial servicer, the various purchaser groups from time to time party thereto and Bank of America, National Association, as administrator (as amended, amended and restated, supplemented or otherwise modified from time to time) and any related documentation.

6.           Confidentiality and Other Obligations.  This Commitment Letter and the Fee Letter and the contents hereof and thereof are confidential and may not be disclosed by you in whole or in part to any person or entity without our prior written consent except (i) on a confidential basis to your board of directors, officers or employees and the accountants, attorneys and other professional advisors of each of the foregoing in connection with the Transactions, (ii) pursuant to the order of any court or administrative agency in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law or compulsory legal process or to the extent requested or required by governmental and/or regulatory authorities (in which case you agree, to the extent practicable and not prohibited by applicable law, to inform us promptly thereof), (iii) in the case of the Commitment Letter and the contents hereof (but not the Fee Letter and the contents thereof) as you may determine is reasonably advisable to comply with your obligations under securities and other applicable laws and regulations, (iv) this Commitment Letter (including the Term Sheet) and, solely with respect to clause (A), the Fee Letter (redacted in a manner reasonably satisfactory to us) may be disclosed on a confidential basis to (A) the Target and the board of directors, officers, employees, accountants, attorneys and other advisors of any of the foregoing in connection with their consideration of the Transactions and (B) to rating agencies and (v) you may disclose the aggregate amount of the fees payable under the Fee Letter as part of generic disclosure regarding sources and uses (but without disclosing any specific fees set forth therein) in connection with any syndication of the Bridge Facility.

 

 

 

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The Commitment Parties shall use all confidential information provided to them by or on behalf of you hereunder solely for the purpose of providing the services which are the subject of this Commitment Letter agreement and otherwise in connection with the Transactions and shall treat confidentially all such information; provided, however, that nothing herein shall prevent the Commitment Parties from disclosing any such information (i) pursuant to the order of any court or administrative agency or in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in which case the Commitment Parties agree to inform you promptly thereof prior to such disclosure to the extent not prohibited by law, rule or regulation), (ii) upon the request or demand of any regulatory authority having jurisdiction over the Commitment Parties or any of their respective affiliates, (iii) to the extent that such information becomes publicly available other than by reason of disclosure in violation of this Commitment Letter by the Commitment Parties, (iv) to the Commitment Parties’ affiliates, employees, legal counsel, independent auditors and other experts or agents who need to know such information in connection with the Transactions and are informed of the confidential nature of such information, provided that the Commitment Parties shall be responsible for such affiliates’, employees’, legal counsel’s, independent auditors’ and other experts’ or agents’ compliance with this paragraph to the extent any such person is not otherwise bound in writing by the terms of this paragraph (or language substantially similar to this paragraph), (v) for purposes of establishing a “due diligence” defense, (vi) to the extent that such information is received by the Commitment Parties from a third party that is not to the Commitment Parties’ knowledge subject to confidentiality obligations to you, (vii) to the extent that such information is independently developed by the Commitment Parties, (viii) to actual or prospective, direct or indirect  counterparties (or their advisors) to any swap or derivative transaction relating to the Borrower, the Target or any of their respective subsidiaries or any of their respective obligations; provided that the disclosure of any such information to any actual or prospective, direct or indirect counterparty (or their advisors) to any such swap or derivative transaction shall be made subject to the acknowledgment and acceptance by such counterparty (and their advisors, as applicable) that such information is being disseminated on a confidential basis (on substantially the terms set forth in this paragraph or as is otherwise reasonably acceptable to you and each Commitment Party) in accordance with customary market standards for dissemination of such type of information or (ix) to potential Lenders, participants or assignees who agree to be bound by the terms of this paragraph (or language substantially similar to this paragraph or as otherwise reasonably acceptable to you and each Commitment Party, including as may be agreed in any confidential information memorandum or other marketing material).  This paragraph shall terminate on the second anniversary of the date hereof.

 

 

 

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You acknowledge that the Commitment Parties or their affiliates may be providing financing or other services to parties whose interests may conflict with yours.  The Commitment Parties agree that they will not furnish confidential information obtained from you to any of their other customers and will treat confidential information relating to the Borrower, the Target and their respective affiliates with the same degree of care as they treat their own confidential information.  The Commitment Parties further advise you that they will not make available to you confidential information that they have obtained or may obtain from any other customer.  In connection with the services and transactions contemplated hereby, you agree that the Commitment Parties, subject to the immediately preceding paragraph, are permitted to access, use and share with any of their bank or non-bank affiliates, agents, advisors (legal or otherwise) or representatives any information concerning the Borrower, the Target or any of their respective affiliates that is or may come into the possession of the Commitment Parties or any of such affiliates.

 

In connection with all aspects of each transaction contemplated by this Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’ understanding, that: (i) the Bridge Facility and any related arranging or other services described in this Commitment Letter is an arm’s-length commercial transaction between you and your affiliates, on the one hand, and the Commitment Parties, on the other hand, (ii) the Commitment Parties have not provided any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby and you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, (iii) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby, (iv) in connection with each financing transaction contemplated hereby and the process leading to such financing transaction, each of the Commitment Parties has been, is, and will be acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary, for you or any of your affiliates, stockholders, creditors or employees or any other party, (v) the Commitment Parties have not assumed and will not assume an advisory, agency or fiduciary responsibility in your or your affiliates’ favor with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether any of the Commitment Parties has advised or is currently advising you or your affiliates on other matters) and the Commitment Parties have no obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth in this Commitment Letter and (vi) the Commitment Parties and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and those of your affiliates, and the Commitment Parties have no obligation to disclose any of such interests to you or your affiliates.  To the fullest extent permitted by law, you hereby waive and release any claims that you may have against the Commitment Parties with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by this Commitment Letter.

The Commitment Parties hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “U.S.A. Patriot Act”), each of them is required to obtain, verify and record information that identifies you, which information includes your name and address and other information that will allow the Commitment Parties, as applicable, to identify you in accordance with the U.S.A. Patriot Act, and that such information may be shared with Lenders.

                      7.           Survival of Obligations.  The provisions of Sections 2, 3, 4, 6 and 8 of this Commitment Letter shall remain in full force and effect regardless of whether any Credit Documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or any commitment or undertaking of the Commitment Parties hereunder, except that the provisions of Sections 2 and 3 shall not survive if the commitments and undertakings of the Commitment Parties are terminated prior to the effectiveness of the Bridge Facility.

 

 

 

-9-

 

 

8.           Miscellaneous.  This Commitment Letter and the Fee Letter may be executed in multiple counterparts and by different parties hereto in separate counterparts, all of which, taken together, shall constitute an original.  Delivery of an executed counterpart of a signature page to this Commitment Letter or the Fee Letter by telecopier, facsimile or other electronic transmission (e.g., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.  Headings are for convenience of reference only and shall not affect the construction of, or be taken into consideration when interpreting, this Commitment Letter or the Fee Letter.

This Commitment Letter and the Fee Letter shall be governed by, and construed in accordance with, the laws of the State of New York; provided, however, that (a) the interpretation of the definition of “Target Material Adverse Effect” (and whether or not a “Target Material Adverse Effect” has occurred), (b) the determination of the accuracy of any Acquisition Agreement Representations and whether as a result of any inaccuracy of any Acquisition Agreement Representation there has been a failure of a condition precedent to your obligation to consummate the Acquisition or such failure gives you the right to terminate your obligations (or to refuse to consummate the Acquisition) under the Acquisition Agreement and (c) the determination of whether the Acquisition has been consummated in accordance with the terms of the Acquisition Agreement shall, in each case, be governed by, and construed and interpreted in accordance with, the internal laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.  Each party hereto hereby irrevocably waives any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter, the Fee Letter, the Transactions and the other transactions contemplated hereby and thereby or the actions of the Commitment Parties in the negotiation, performance or enforcement hereof.  Each party hereto hereby irrevocably and unconditionally submits to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in the Borough of Manhattan in New York City in respect of any suit, action or proceeding arising out of or relating to the provisions of this Commitment Letter, the Fee Letter, the Transactions and the other transactions contemplated hereby and thereby and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court.  The parties hereto agree that service of any process, summons, notice or document by registered mail addressed to you shall be effective service of process against you for any suit, action or proceeding relating to any such dispute.  Each party hereto waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceedings brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whose jurisdiction you are or may be subject by suit upon judgment.

This Commitment Letter, together with the Fee Letter, embodies the entire agreement and understanding among the parties hereto and your affiliates with respect to the Bridge Facility and supersedes all prior agreements and understandings relating to the subject matter hereof.  No party has been authorized by the Commitment Parties to make any oral or written statements that are inconsistent with this Commitment Letter.  Neither this Commitment Letter (including the attachments hereto) nor the Fee Letter may be amended or any term or provision hereof or thereof waived or modified except by an instrument in writing signed by each of the parties hereto.

Except as set forth in the immediately succeeding sentence, this Commitment Letter may not be assigned by any party hereto without the prior written consent of each other party hereto (and any purported assignment without such consent will be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto (and the Indemnified Parties).  The Initial Bridge Lender may assign all or a portion of its commitment hereunder to one or more prospective Lenders (i) that are approved by you in writing as to the identity of the assignee and the amount of such assignment (such approval not be unreasonably withheld or delayed), or (ii) that are lenders under the Existing Credit Facility or have otherwise been expressly identified to us in writing on or prior to the date hereof (each, a “Permitted Assignee”); provided that the amount of any such assignment to a Permitted Assignee described in clause (ii) above shall also be subject to the approval of the Borrower (such approval not be unreasonably withheld or delayed) (it being understood that Borrower shall be deemed to have approved the amount of any such assignment that does not exceed such Permitted Assignee’s invitation level as agreed by you and us prior to the date hereof), whereupon the Initial Bridge Lender shall be released from the portion of its commitment hereunder so assigned; provided that no such assignment shall relieve the Initial Bridge Lender of its obligations hereunder, except to the extent such assignment is evidenced by, as we shall reasonably agree, (i) a customary joinder agreement (a “Joinder Agreement”) pursuant to which such lender agrees to become party to this Commitment Letter and extend commitments directly to you on the terms set forth herein, and which shall not add any conditions to the availability of the Bridge Facility or change the terms of the Bridge Facility or increase compensation payable by you in connection therewith except as set forth in the Commitment Letter and the Fee Letter and which shall otherwise be reasonably satisfactory to you and us, or (ii) the Credit Facility Documentation.

 

 

 

-10-

 

 

Any and all obligations of, and services to be provided by Bank of America hereunder (including, without limitation, the Initial Bridge Lender’s commitment) may be performed and any and all rights of Bank of America hereunder may be exercised by or through any of its respective affiliates or branches and, in connection with such performance or exercise, Bank of America may, subject to Section 6 hereof, exchange with such affiliates or branches information concerning you and your affiliates that may be the subject of the transactions contemplated hereby and, to the extent so employed, such affiliates and branches shall be entitled to the benefits afforded to Bank of America hereunder.

Please indicate your acceptance of the terms of the Bridge Facility set forth in this Commitment Letter and the Fee Letter by returning to us executed counterparts of this Commitment Letter and the Fee Letter not later than 5:00 p.m. (New York City time) on January 11, 2015, whereupon the undertakings of the parties with respect to the Bridge Facility shall become effective to the extent and in the manner provided hereby (it being understood and agreed that the fees specified in the Fee Letter to be payable upon acceptance of this Commitment Letter with respect to the Bridge Facility shall be paid by wire transfer of immediately available funds to the account specified by us not later than 5:00 p.m. (New York City time) on January 12, 2015).  This offer shall terminate with respect to the Bridge Facility if not so accepted by you at or prior to that time.  Thereafter, all commitments and undertakings of each Commitment Party hereunder (or under the Credit Documentation, as applicable) will expire on the earliest of (a) the Termination Date (as defined in the Acquisition Agreement as in effect on the date hereof), (b) the consummation of the Offer, (c) the execution of the Credit Documentation, (d) the date that the Acquisition Agreement is terminated or expires in accordance with its terms without the closing of the Acquisition and (e) receipt by Bank of America of written notice from the Borrower of its election to terminate all commitments under the Bridge Facility in full.

[The remainder of this page intentionally left blank.]

 

 

 

-11-

 

 

We are pleased to have the opportunity to work with you in connection with this important financing.

 

 

	 	Very truly yours,	 
	 	 	 
	 	BANK OF AMERICA, N.A.	 
	 	 	 	 
	
 

	
By: 

	/s/ Joseph L. Corah	 
	 	 	Name:    	Joseph L. Corah	 
	 	 	Title:      	Director	 

 

 

 

 

 

Signature Page to Bridge Facility Commitment Letter

 

 

  

  

  

 

	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED	 
	 	 	 	 
	
 

	
By: 

	/s/ Matthew Walters	 
	 	 	Name:    	Matthew Walters	 
	 	 	Title:      	Vice President	 
	 	 	 	 

 

 

 

 

Signature Page to Bridge Facility Commitment Letter

 

 

 

 

 

Accepted and agreed to as of the date first

written above:

 

	AMERISOURCEBERGEN CORPORATION	 
	 	 	 
	
By: 

	 /s/ Tim G. Guttman	 
	 	Name:     	Tim G. Guttman	 
	 	Title:      	Executive Vice President & Chief Financial Officer	 
	 	 	 

 

 

 

 

 

Signature Page to Bridge Facility Commitment Letter

 

 

 

 

 

 

EXHIBIT A

SUMMARY OF TERMS AND CONDITIONS

BRIDGE FACILITY

                      Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Exhibit A is attached.

	
Borrower:

	
AmerisourceBergen Corporation, a Delaware corporation, (the “Borrower”).

	  	  
	
Guarantors:

	
None.

	  	  
	
Transactions:

	
The Borrower intends to acquire (the “Acquisition”) a company previously identified as “Roscoe” (the “Target”) pursuant to an acquisition agreement (together with the schedules and exhibits thereto, the “Acquisition Agreement” ) dated as of January 11, 2015 between the Borrower, a wholly-owned subsidiary of the Borrower (“Merger Sub”) and the Target for an aggregate cash consideration set forth in the Acquisition Agreement as in effect on the date hereof (“Acquisition Consideration”).  The Acquisition will be effected through (i) the purchase of shares of common stock of the Target by Merger Sub in the Offer (as defined in the Acquisition Agreement) and (ii) promptly following the closing of the Offer, the merger (the “Merger”) of Merger Sub with and into the Target pursuant to Section 251(h) of the Delaware General Corporation Law, with the Target surviving such Merger as a direct or indirect wholly-owned subsidiary of the Borrower.  In connection with the Acquisition, the Borrower intends to (a) obtain a 364-day senior unsecured bridge term loan credit facility described below under the caption “Bridge Facility” and (b) pay the fees and expenses incurred in connection with the foregoing (the “Transaction Costs”).  It is anticipated that some or all of the Bridge Facility will be replaced or refinanced by (i) the issuance of senior unsecured notes by the Borrower through a public offering or in a private placement (the “Senior Notes”) and (ii) the proceeds of a senior unsecured term loan credit facility (the “Term Loan Facility” and, together with the Senior Notes, the “Permanent Financing”).  The transactions described in this paragraph are collectively referred to herein as the “Transactions”.

	  	  
	
Administrative

Agent:

	
Bank of America, N.A. (“Bank of America”) will act as sole and exclusive administrative agent for the Lenders (the “Administrative Agent”).

	  	  
	
Lead Arranger

and Bookrunner:

	
Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”) will act as sole and exclusive lead arranger and sole and exclusive bookrunner for the Bridge Facility (the “Lead Arranger”).

	  	  

 

 

 

A-1

 

 

 

	
Lenders:

	
Bank of America and other banks, financial institutions and institutional lenders selected in accordance with the Commitment Letter.

	  	  
	
Bridge Facility:

	
A 364-day senior unsecured bridge term loan credit facility in an aggregate principal amount in U.S. dollars of up to $2,150,000,000 (the “Bridge Facility”).

	  	  
	
Purpose:

	
The proceeds shall be used by the Borrower (i) to pay the Acquisition Consideration and (ii) to pay the Transaction Costs.

	  	  
	
Availability:

	
The Bridge Facility shall be available in a single draw on the Closing Date.

	  	  
	
Interest Rates and Fees:

	
As set forth in Annex I hereto.

	  	  
	
Calculation of Interest

and Fees:

	
Other than calculations in respect of interest at the Base Rate (which shall be made on the basis of actual number of days elapsed in a 365/366 day year), all calculations of interest and fees shall be made on the basis of actual number of days elapsed in a 360-day year.

	  	  
	
Cost and Yield Protection:

	
Customary for transactions and facilities of this type, including, without limitation, in respect of breakage or redeployment costs, changes in capital adequacy, liquidity and capital requirements or their interpretation (including pursuant to Dodd-Frank or Basel III), illegality, unavailability and clear of withholding or other taxes.

	  	  
	
Maturity:

	
The Bridge Facility will mature on the date that is 364 days after the Closing Date (the “Maturity Date”).

	  	  
	
Scheduled Amortization:

	
None.

	  	  
	
Mandatory Prepayments

and Commitment

Reductions:

	
On or prior to the Closing Date, the aggregate commitments in respect of the Bridge Facility under the Commitment Letter or under the Credit Documentation (as applicable) shall be permanently reduced, and after the Closing Date, the aggregate loans under the Bridge Facility shall be prepaid at par plus accrued and unpaid interest, in each case, dollar-for-dollar, by the following amounts (in each case subject to exceptions to be agreed):

	  	  
	  	
(a) 100% of the net cash proceeds in excess of $25,000,000 of all non-ordinary course asset sales or other dispositions of property by the Borrower and its subsidiaries (including proceeds from the sale of stock of any subsidiary of the Borrower and insurance and condemnation proceeds), subject to exceptions to be agreed upon and subject to reinvestment rights to be agreed and subject to any restrictions set forth in any indebtedness agreement of the Borrower or its subsidiaries;

	  	  

 

 

 

A-2

 

 

 

	 	
(b) 100% of the committed amount of any term loan facility (including, without limitation, the Term Loan Facility) entered into for the purpose of financing the Transactions (such reduction to occur automatically upon, but in no event prior to, the effectiveness of definitive credit agreement for such term loan credit facility);

	  	  
	  	
(c) without duplication of clause (b) above, 100% of the net cash proceeds in excess of $25,000,000 received from any incurrence of debt for borrowed money (including, without limitation, any Senior Notes and any proceeds of any term loan facility) other than (i) any intercompany debt of the Borrower or any of its subsidiaries, (ii) to the extent the proceeds are not used to consummate the Acquisition, any debt of the Borrower or any of its subsidiaries incurred under the Fourth Amended and Restated Credit Agreement dated as of August 13, 2014 among the Borrower, JPMorgan Chase, N.A., as Administrative Agent, and the lenders from time to time party thereto (the “Existing Credit Facility”), (iii) any working capital facilities (including receivables securitization facilities) of the Borrower or any of its subsidiaries, (iv) any commercial paper issued in the ordinary course of business, (v) capital leases or other debt issued or incurred to finance the acquisition of fixed or capital assets and (vi) other debt for borrowed money to be agreed upon; and

	  	  
	  	
(d) 100% of the net cash proceeds in excess of $25,000,000 received from any issuance of equity or equity-linked securities (in a public offering or private placement) by the Borrower or any of its subsidiaries, subject to exceptions to be agreed upon including (i) equity interests or such other securities issued pursuant to employee stock plans or employee compensation plans or contributed to pension funds, (ii) equity interests or such other securities issued or transferred as consideration in connection with any acquisition, divestiture or joint venture arrangement and (iii) equity interests or such other securities issued to the Borrower or any of its subsidiaries.

	  	  
	  	
In addition, the commitments shall terminate on the earliest of (x) the Termination Date (as defined in the Acquisition Agreement as in effect on the date hereof), (y) the consummation of the Offer and (z) the date that the Acquisition Agreement is terminated or expires in accordance with its terms without the closing of the Acquisition.

	  	  
	
Optional Prepayments and

Commitment Reductions:

	
The Bridge Facility may be prepaid at any time in whole or in part without premium or penalty, upon written notice, at the option of the Borrower, except that any prepayment of LIBOR advances other than at the end of the applicable interest periods therefor shall be made with reimbursement for any funding losses and redeployment costs of the Lenders resulting therefrom.  The commitment under the Bridge Facility may be reduced permanently or terminated by the Borrower at any time without penalty.

	  	  
	  	  

 

 

 

A-3

 

 

 

	
Conditions Precedent

to Borrowing on the

Closing Date:

	
The borrowing under the Bridge Facility on the Closing Date will be subject solely to the conditions precedent set forth in Section 5 of the Commitment Letter and Exhibit B to the Commitment Letter.

	  	  
	
Representations and

Warranties:

	
Substantially similar to the Existing Credit Facility and limited to: (i) organization; power; (ii) authorization; enforceability; (iii) governmental approvals; no conflicts; (iv) financial condition; no material adverse change; (v) properties; (vi) litigation and environmental matters; (vii) compliance with laws and agreements; (viii) investment company status; (ix) taxes; (x) ERISA; (xi) disclosure; (xii) subsidiaries; (xiii) insurance; (xiv) labor matters; (xv) anti-corruption laws and sanctions; (xvi) the U.S.A. Patriot Act and (xvii) solvency as of the Closing Date.

	  	  
	
Covenants:

	
Substantially similar to the Existing Credit Facility and limited to:

	  	  
	  	
(a)

	
Affirmative Covenants:  (i) financial statements and other information; (ii) notices of material events; (iii) existence; conduct of business; (iv) payment of obligations; (v) maintenance of properties; insurance; (vi) books and records; inspection and audit rights; (vii) compliance with laws; (viii) use of proceeds and letters of credit; and (ix) senior debt status.

	  	  	  
	  	
(b)

	
Negative Covenants:  Restrictions on (i) subsidiary indebtedness; (ii) liens (with an exception for liens securing the Existing Credit Facility without any requirement for equal and ratable treatment of the Bridge Facility to the extent the failure to include such exception would violate the Existing Credit Facility); (iii) fundamental changes, (iv) investments, loans, advances, guarantees and acquisitions; (v) asset sales; (vi) hedging agreements; (vii) restricted payments; certain payments of indebtedness; (viii) transaction with affiliates; (ix) restrictive agreements; (x) modification to material documents; and (xi) change to fiscal quarters.

	  	  	  
	  	
(c)

	
Financial Covenant:

	  	  	  
	  	  	
●

	
Maximum Consolidated Leverage Ratio of 3.00 to 1.00 calculated in a manner substantially similar to the Existing Credit Facility as in effect on the date hereof, except that Consolidated EBITDA shall include an addback for non-cash expenses and charges associated with derivatives transactions, including such non-cash expenses and charges attributed to warrants issued and any associated hedging transactions.

	  	  
	
Events of Default:

	
Substantially similar to the Existing Credit Facility and limited to: (i) nonpayment of principal, interest, fees or other amounts; (ii) any representation or warranty proving to have been inaccurate in any material respect when made or confirmed; (iii) failure to perform or observe covenants set forth in the Credit Documentation; (iv) cross-defaults to other material indebtedness; (v) bankruptcy and insolvency defaults; (vi) monetary judgment defaults; (vii) actual or asserted impairment of Credit Documentation; (viii) change of control; and (ix) customary ERISA defaults.

	  	  

 

 

 

A-4

 

 

 

	
Assignments and

Participations:

	
Prior to the Closing Date, the Lenders will be permitted to assign commitments under the Bridge Facility in the same manner (and subject to the same consent rights of the Borrower) as assignments by the Initial Bridge Lender as set forth in Section 8 of the Commitment Letter.  From and after the Closing Date, the Lenders will be permitted to assign loans under the Bridge Facility with the consent of the Borrower (not to be unreasonably withheld, and such consent not to be required (x) during the continuance of an Event of Default or (y) in connection with an assignment to a Lender, an affiliate of a Lender or an approved fund).  Each assignment will be in minimum amounts to be agreed.  The Borrower shall be deemed to have consented to any assignment if it shall have failed to respond to a request for consent within five business days.  All assignments shall require the consent of the Administrative Agent. The Lenders will be permitted to sell participations in loans and commitments without restriction.  Voting rights of participants shall be limited to significant matters such as changes in amount, rate and maturity date. An assignment fee in the amount of $3,500 will be charged with respect to each assignment unless waived by the Administrative Agent.

	  	  
	
Waivers and Amendments:

	
Amendments and waivers of the provisions of the Credit Documentation will require the approval of Lenders holding advances and commitments representing more than 50% of the aggregate advances and commitments under the Bridge Facility (the “Required Lenders”), except that the consent of each Lender will be required with respect to, among other things, (i) increases in commitment amount of such Lender, (ii) reductions of principal, interest, or fees payable to such Lender and (iii) extensions of scheduled maturities or times for payment of the loans or commitments of such Lender.

	  	  
	
Indemnification:

	
The Borrower will indemnify and hold harmless the Administrative Agent, the Lead Arranger, each Lender and each of their affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against all losses, liabilities, claims, damages or expenses arising out of or relating to the Transactions, the Bridge Facility, the Borrower’s use of loan proceeds or the commitments, including, but not limited to, reasonable attorneys’ fees (but limited, in the case of legal fees and expenses, to the reasonable and documented or invoiced out-of-pocket fees and expenses of one counsel, representing all of the Indemnified Parties, taken as a whole, and, if necessary, of a single local counsel in each relevant regulatory field and in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnified Parties, taken as a whole (and, in the case of an actual or perceived conflict of interest where the Indemnified Party affected by such conflict notifies you of the existence of such conflict and thereafter retains its own counsel, of another firm of counsel for each such affected Indemnified Party in each relevant jurisdiction)), except, in each case, to the extent such losses, liabilities, claims, damages or expenses resulted from (x) such Indemnified Party’s material breach of the Credit Documentation, (y) such Indemnified Party’s gross negligence, bad faith or willful misconduct or (z) disputes solely among Indemnified Parties not arising from or in connection with any act or omission by the Borrower or any of its affiliates (other than any proceeding against the Administrative Agent or any Lead Arranger in its capacity or in fulfilling its role as an administrative agent or arranger under the Bridge Facility).  This indemnification shall survive and continue for the benefit of all such persons or entities, notwithstanding any failure of the Bridge Facility to close.

	  	  

 

 

 

A-5

 

 

 

	
Governing Law:

	
New York.

	  	  
	
Expenses:

	
The Borrower will pay all reasonable costs and expenses associated with the preparation, due diligence, administration, syndication and enforcement of all Credit Documentation, including, without limitation, the legal fees and expenses of the Administrative Agent’s counsel, in the case of legal fees and expenses of the Administrative Agent’s counsel, regardless of whether or not the Bridge Facility is closed and in all other cases, if the Bridge Facility is closed.  The Borrower will also pay the expenses of each Lender in connection with the enforcement of any of the Credit Documentation related to the Bridge Facility.

	  	  
	
Counsel to the

Administrative Agent:

	
Davis Polk & Wardwell LLP.

	  	  
	
Miscellaneous:

	
Each of the parties shall (i) waive its right to a trial by jury and (ii) submit to New York jurisdiction.

	
  

	 

 

 

 

A-6

 

 

ANNEX I

TO EXHIBIT A

	
Interest Rates:

	
The interest rates per annum applicable to the Bridge Facility will be, at the option of the Borrower (i) LIBOR (calculated on a 360-day basis) plus the Applicable LIBOR Margin (as hereinafter defined) or (ii) the Base Rate (calculated on a 365/366-day basis) plus the Applicable Base Rate Margin (as hereinafter defined).

	  	  
	  	
The Borrower may select interest periods of one, two, three or six months for LIBOR advances.  Interest shall be payable at the end of the selected interest period, but no less frequently than quarterly.

	  	  
	  	
“LIBOR” and “Base Rate” will have meanings customary and appropriate for financings of this type and consistent with the Existing Credit Facility (and in any event shall not be less than 0%).

	  	  
	
Default Interest:

	
During the continuance of a payment event of default, (i) with respect to overdue principal each loan shall bear interest for the remainder of the applicable interest period at the rate otherwise applicable to such loan plus 2% and (ii) with respect to any other overdue amount, each loan shall bear interest at the Base Rate plus the Applicable Base Rate Margin plus 2%.

	  	  
	
Applicable LIBOR Margin:

	  

 

	  	
Pricing

Level I

	
Pricing

Level II

	
Pricing Level

III

	
Pricing Level IV

	
Pricing Level V

	
Public Debt Rating

	
≥A+/A1/A+

	
A/A2/A

	
A-/A3/A-

	
BBB+/Baa1/BBB+

	
≤BBB/Baa2/BBB

	
Closing Date through 89 days following the Closing Date

	
75 bps

	
87.5 bps

	
100.0 bps

	
112.5 bps

	
125 bps

	
90th day following the Closing Date through 179th day following the Closing Date

	
100 bps

	
112.5 bps

	
125.0 bps

	
137.5 bps

	
150 bps

	
180th day following the Closing Date through 269th day following the Closing Date

	
125 bps

	
137.5 bps

	
150.0 bps

	
162.5 bps

	
175 bps

	
From the 270th day following the Closing Date

	
150 bps

	
162.5 bps

	
175.0 bps

	
187.5 bps

	
200 bps

 

The foregoing pricing shall be based on the senior, unsecured non-credit enhanced long-term indebtedness for borrowed money of the Borrower issued by Standard & Poor’s Financial Services LLC (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”) and Fitch, Inc. (“Fitch”) (the “Public Debt Rating”).  If any of Moody’s, S&P or Fitch shall not have in effect a Public Debt Rating (other than by reason of (i) a change to the rating system of such agency or (ii) such agency ceasing to be in the business of rating corporate debt obligations), then such rating agency shall be deemed to have established a Public Debt Rating under Pricing Level V.  In the case of split ratings, if two Public Debt Ratings fall within the same category, the pricing level shall be determined by reference to such category; in all other cases the pricing level shall be based on the category in which the second highest Public Debt Rating falls.

 

 

 

B-1

 

 

	
Applicable Base Rate Margin:

	
The greater of (i) 0% and (ii) the Applicable LIBOR Margin minus 1.0%. (the “Applicable Base Rate Margin”).

	  	  
	
Duration Fees:

	
The Borrower will pay a fee (the “Duration Fee”), for the ratable benefit of the Lenders, in an amount equal to (i) 0.50% of the aggregate principal amount of the loans under the Bridge Facility outstanding on the date which is 90 days after the Closing Date, due and payable in cash on such 90th day (or if such day is not a business day, the next business day); (ii) 0.75% of the aggregate principal amount of the loans under the Bridge Facility outstanding on the date which is 180 days after the Closing Date, due and payable in cash on such 180th day (or if such day is not a business day, the next business day); and (iii) 1.00% of the aggregate principal amount of the loans under the Bridge Facility outstanding on the date which is 270 days after the Closing Date, due and payable in cash on such 270th day (or if such day is not a business day, the next business day).

	  	  
	
Undrawn Commitment Fees:

	
The Borrower will pay a fee (the “Undrawn Commitment Fee”), for the ratable benefit of the Lenders, in an amount equal to 0.125% of the undrawn portion of the commitments in respect of the Bridge Facility, which such fee shall accrue from and including the later of (x) the date that is thirty days following the date hereof and (y) the date of execution of the Credit Documentation to but excluding the earlier of (i) termination or expiration of the commitments under the Bridge Facility and (ii) the Closing Date (such earlier date, the “Fee Payment Date”), such Undrawn Commitment Fee shall by be due and payable on the Fee Payment Date and shall be calculated based on the number of days (if any) elapsed in a 360-day year.

 

 

 

B-2

 

 

 

EXHIBIT B

CONDITIONS PRECEDENT TO CLOSING

                      Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Exhibit B is attached.

                      The initial borrowing under the Bridge Facility will be subject to the following additional conditions precedent:

(i)           The Acquisition Agreement (including all schedules and exhibits thereto) and all other related documentation shall be satisfactory to the Lead Arranger (it being understood that the Acquisition Agreement delivered to the Lead Arranger at 9:04 p.m. on January 10, 2015 is satisfactory).  The Offer and the Merger shall be consummated substantially concurrently with the closing of the Bridge Facility in accordance with the Acquisition Agreement without giving effect to any amendments, modifications, supplements or waivers thereto or consents thereunder (including, for the avoidance of doubt, with respect to the Offer Conditions (as defined in the Acquisition Agreement as in effect on the date hereof)) that are materially adverse to the Lenders or the Lead Arranger without the Lead Arranger’s prior written consent (not to be unreasonably withheld, conditioned or delayed), it being understood and agreed that (i) any increase in the Offer Price (as defined in the Acquisition Agreement as in effect on the date hereof), shall be deemed to be materially adverse to the interests of the Lenders and the Lead Arrangers, unless such increase (x) does not exceed 10% in the aggregate or (y) is funded solely with equity or cash on hand of the Borrower, (ii) any decrease in the Offer Price in excess of 10% in the aggregate shall be deemed to be materially adverse to the interests of the Lenders or the Lead Arrangers, (iii) any decrease in the Offer Price of less than 10% in the aggregate shall be deemed to be materially adverse to the interests of the Lenders or the Lead Arrangers, unless such decrease in the Offer Price shall reduce dollar-for-dollar the commitments in respect of the Bridge Facility and (iv) any waiver or modification of the Minimum Tender Condition (as defined in the Acquisition Agreement as in effect on the date hereof) shall be deemed to be materially adverse to the Lenders.

(ii)           The Lead Arranger shall have received for each of the Borrower and the Target (a) U.S. GAAP audited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows for the three most recent fiscal years ended at least 90 days prior to the Closing Date and (b) U.S. GAAP unaudited consolidated and consolidated balance sheets and related statements of income, stockholders’ equity and cash flows for each subsequent fiscal quarter ended at least 45 days before the Closing Date, which financial statements shall, in all material respects, meet the requirements of Regulation S-X under the Securities Act of 1933, as amended, and all other accounting rules and regulations of the SEC promulgated thereunder applicable to Form 10-K or Form 10-Q, as applicable, and a registration statement under such Act on Form S-3.  The Lead Arranger acknowledges the receipt of the financial statements referred to in clause (a) for each of the Borrower and the Target for the fiscal years ended on September 30, 2012, September 30, 2013, and September 30, 2014.

(iii)           The Lead Arranger shall have received a pro forma consolidated balance sheet and related pro forma consolidated statement of income of the Borrower as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period for which financial statements have been delivered pursuant to paragraph (ii) above, prepared after giving effect to the Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of the income statement).

 

 

 

 

 

 

(iv)           Subject to the Funds Certain Provision, (A) the Administrative Agent shall have received customary legal opinions, corporate organizational documents, good standing certificates, resolutions and other customary closing certificates, and a borrowing notice, (B) the Acquisition Agreement Representations shall be true and correct, except to the extent that failure of such Acquisition Agreement Representations to be true and correct would not give the Borrower (or a subsidiary) the right to terminate its (or its affiliates’) obligations under the Acquisition Agreement or result in a failure to satisfy a condition to the Borrower’s (or the Borrower’s affiliates’) obligations to consummate the Acquisition pursuant to the Acquisition Agreement and (C) the Specified Representations shall be true and correct as of the Closing Date in all material respects; provided that any such Specified Representation that is qualified by materiality or a reference to “Material Adverse Effect” shall be true and correct in all respects.

(v)           The Administrative Agent shall have received a certificate from the chief financial officer of the Borrower in the form attached hereto as Annex I certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the Transactions and the other transactions contemplated hereby, are solvent.

(vi)           The Lead Arranger, the Administrative Agent and the Lenders shall have received all fees and expenses invoiced at least three business days prior to the Closing Date and required to be paid on or prior to the Closing Date pursuant to the Fee Letter or otherwise.

(vii)           The Lead Arranger shall have received, at least three business days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, to the extent requested in writing at least 10 days prior to the Closing Date.

 

 

 

B-2

 

 

 

(viii)           (i) The Borrower shall have delivered to the Administrative Agent and to one or more investment banks engaged to publicly sell or privately place the Permanent Financing (collectively, the “Investment Bank”), not later than 15 business days prior to the Closing Date, a complete printed preliminary prospectus, preliminary offering memorandum or preliminary private placement memorandum (collectively, an “Offering Document”) suitable for use in a customary offering registered under the Securities Act of 1933, as amended, or pursuant to Rule 144A relating to the Permanent Financing, which contains all financial statements and other data that the Securities and Exchange Commission would require in a registered offering of the applicable Permanent Financing (including all audited financial statements, all unaudited financial statements (which shall have been reviewed by your or Target’s independent accountants as provided in the procedures specified by the Public Company Accounting Oversight Board in AU 722) and all required pro forma financial information prepared in accordance with, or reconciled to, generally accepted accounting principles in the United States and prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended, unless otherwise agreed), and, except as otherwise agreed by the Investment Bank, all other data (including selected financial data) that the Securities and Exchange Commission would require in a registered offering of the applicable Permanent Financing (it being understood that none of such information need include a business description (other than in summary form) or Management’s Discussion and Analysis of Financial Condition and Results of Operations relating to the Target and its consolidated subsidiaries) or that would be necessary for the Investment Bank to receive customary “comfort” (including “negative assurance” comfort) from independent accountants in connection with the applicable Permanent Financing  (and the Borrower shall have made commercially reasonable efforts to arrange for the delivery of such comfort or, if no offering of Senior Notes occurs prior to the Closing Date, a substantially complete draft of the Offering Document) and (ii) the Investment Bank shall have been afforded a period of at least 15 consecutive business days commencing on the date of delivery of the Offering Document and ending on the third business day prior to the Closing Date to seek to place the Senior Notes, during which time the Borrower shall have caused the senior management and other representatives of the Borrower to provide access in connection with due diligence investigations and to participate in a customary “road show” (and at no time during which period the financial information in the Offering Document shall be “stale”).  If the Borrower shall in good faith reasonably believe that it has delivered the Offering Document together with the information and data required to be delivered pursuant to clause (i) of this paragraph (viii), the Borrower may deliver to the Administrative Agent written notice to that effect (stating when it believes it completed any such delivery), in which case the Borrower shall be deemed to have satisfied its requirements under clause (i) of this paragraph (viii) on the date specified in such notice and the 15 business day marketing period shall be deemed to have commenced on the date specified in such notice, in each case unless the Administrative Agent in good faith reasonably believes that the Borrower has not delivered the Offering Document together with the information and data required to be delivered pursuant clause (i) of this paragraph (viii) and, within three business days after their receipt of such notice from the Borrower, the Administrative Agent delivers a written notice to the Borrower to that effect (stating with specificity which information is required to satisfy the Borrower’s requirements under clause (i) of this paragraph (viii) for purposes of compliance with this condition only).

 

 

 

 

B-3

 

 

ANNEX I

FORM OF SOLVENCY CERTIFICATE

Reference is made to the Credit Agreement, dated as of [●] (the “Credit Agreement”), among [●]; unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.

I, the undersigned, solely in my capacity as the Chief Financial Officer of the Borrower, and not in my individual capacity, do hereby certify that, on the Closing Date after giving effect to the Transactions:

(a) the fair value of the property of the Borrower and its Subsidiaries (taken as a whole) is greater than the total amount of liabilities, including contingent liabilities, of the Borrower and its Subsidiaries (taken as a whole) (it being understood that the amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability);

(b) the present fair salable value of the assets of the Borrower and its Subsidiaries (taken as a whole) is not less than the amount that will be required to pay the probable liability of the Borrower and its Subsidiaries (taken as a whole) on their debts as they become absolute and matured;

(c) the Borrower and its Subsidiaries do not intend to, and do not believe that they will, incur debts or liabilities beyond their ability to pay such debts and liabilities as they become absolute and matured; and

(d) the Borrower and its Subsidiaries are not engaged in any business, as conducted on the Closing Date and as proposed to be conducted following the Closing Date, for which the property of the Borrower and its Subsidiaries (taken as a whole) would constitute an unreasonably small capital.

 

 

 

IN WITNESS WHEREOF, I have delivered this certificate this _____ day of [     ].

	 	
AMERISOURCEBERGEN CORPORATION

	 
	 	 	 	 
	
 

	
By

	 	 
	 	 	Name:	 	 
	 	 	Title:      	Chief Financial OfficerExhibit 10.1

 

NPS PHARMACEUTICALS, INC.

 

CHANGE IN CONTROL SEVERANCE PAY PLAN

 

AS AMENDED THROUGH

 

JANUARY 11, 2015

 

 

1.                                      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 (the “Company”) when there has been a “change in control” of the Company followed by the eligible employee’s termination of employment without “cause” or the resignation of the eligible employee following 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 following a “change in control” (including, without limitation, the prior version of this Plan and the NPS Pharmaceuticals, Inc. Change in Control Severance Pay Plan for Employees in Grades 8 through 10 Hired After August 31, 2012); provided, however, that to the extent that a Non-U.S. Covered Employee is entitled under applicable law or an agreement with the Company to severance payments or benefits that are more favorable to the employee, the employee will be entitled to such greater payments or benefits.  This document constitutes both the written instrument under which the Plan is maintained and the summary plan description for the Plan.

 

2.                                      Effective Date.  The original effective date of the Plan was January 1, 2005.  The effective date of the Plan as set forth herein is January 11, 2015.

 

3.                                      Term.  The Plan shall be in effect until terminated by the Company in accordance with Section 11 hereof.

 

4.                                      ERISA.  For Covered Employees in the United States, this Plan is intended to be a “welfare benefit plan” within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, Section 2510.2(b).

 

5.                                      Definitions.  The following words and phrases shall have the following respective meanings:

 

5.1                               “Administrator” means the Senior Vice President of Human Resources of the Company or his/her designee.

 

5.2                               “Base Pay” means the Covered Employee’s annual regular straight-time salary or annualized regular rate of compensation as in effect on the date of termination of employment or, if greater, as in effect immediately prior to the Change in Control.  For Non-U.S. Covered Employees who are part-time employees and who participate in the Plan pursuant to clause (ii) of Section 5.10, such amount shall be determined based upon the individual’s typical work schedule as in effect immediately prior to the termination of the employee’s employment (or, if greater, immediately prior to the Change in Control).

 

5.3                               “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

5.4                               “Board” means the Board of Directors of the Company.

 

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5.5                               “Cash Compensation Target” means, for a Covered Employee, the amount yielded by the formula set forth on Exhibit A.

 

5.6                               “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 (or an equivalent offense in a jurisdiction outside of the United States), (iii) the Covered Employee’s gross misconduct in connection with the Covered Employee’s responsibilities as an employee, (iv) the Covered Employee’s material violation of the Company’s or a subsidiaries’ written policies and procedures; or (v) the Covered Employee’s material and continued failure to perform his or her responsibilities as an employee after the Covered Employee has received a written demand for such performance. Notwithstanding the forgoing, for Non-U.S. Covered Employees, the definition of “Cause” shall be deemed to be modified to the extent that the definition (or an element thereof) is impermissible under applicable law, to the minimum extent required to comply with any such law.

 

5.7                               “Change in Control” means (i) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale; (ii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its “Affiliates” (as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act) representing 25% or more of the combined voting power of the Company’s then outstanding securities; (iii) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in sub-clause (A) of clause (ii) above; or (iv) a transaction which the Board determines in its sole discretion to constitute a Change in Control.  A Change in Control does not include the occurrence of an event described above where the sole parties to the event are the Company and one of its subsidiaries.

 

5.8                               “Code” means the Internal Revenue Code of 1986, as amended.

 

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5.9                               “Company” means NPS Pharmaceuticals, Inc., a Delaware corporation, and, except as the context otherwise requires, 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.

 

5.10                        “Covered Employee” means (i) each Full-Time Employee of the Company and (ii) each employee of the Company primarily providing services outside of the United States.  An individual who is providing services as a probationary or fixed-term employee (or pursuant to any similar initial employment evaluation arrangement) shall, notwithstanding such probationary status, be eligible to participate in the Plan, if such individual is described in the preceding sentence.

 

5.11                        “Determination Period” means the time period, not to exceed twenty-four (24) months, beginning on the date of the Change in Control, which time period is set forth for such Covered Employee’s position or grade on Exhibit A hereto.

 

5.12                        “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

5.13                        “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Covered Employee with respect to such excise tax

 

5.14                        “Full-Time Employee” means those employees employed by the Company in the United States who are regularly scheduled to perform 30 or more hours of work per week, without giving effect to any decrease in such regular work schedule following a Change in Control.

 

5.15                        “Involuntary Termination” means (i) the Company’s or an Affiliate’s termination of employment of the Covered Employee after a Change in Control other than for Cause or (ii) to the extent permitted by applicable local law, death or permanent disability.

 

5.16                        “Materially Altered” or “Material Alteration” means except as otherwise provided pursuant to Exhibit A hereto, 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 or target incentive opportunity, where such reduction was imposed without Cause, or (iii) a material change in the geographical location at which the Covered Employee must perform his or her duties as an employee of the Company; provided that a change to such location which increases the Covered Employee’s commuting distance by more than 35 miles from that in effect immediately prior to the change shall be deemed to be a material change for purposes of this clause (iii).  Notwithstanding the forgoing, for Non-U.S. Covered Employees, the definition of “Materially Altered” shall be deemed to be modified to the extent that the definition (or an element thereof) is impermissible under applicable law, to the minimum extent required to comply with any such law.

 

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5.17                        “Non-U.S. Covered Employee” means each Covered Employee primarily providing services outside of the United States.

 

5.18                        “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company 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 stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

5.19                        “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.

 

5.20                        “Release Period” means the forty-five (45) day period (or, for Non-US Employees, such other period required by applicable law), 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.

 

5.21                        “Section 409A” means Section 409A of the Code.

 

5.22                        “Separation from Service” means the Covered Employee’s termination of employment with the Company and its Affiliates (which shall be interpreted in accordance with the requirements of Section 409A to the extent required).

 

5.23                        “Severance Benefits” means the compensation and other benefits the Covered Employee will be provided with pursuant to Section 7 and Exhibit A.

 

5.24                        “Severance Period” means the time period set forth on Exhibit A with respect to the Covered Employee’s position or job classification 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.

 

5.25                        “Short Term Incentive” means an amount equal to the target percentage of the Covered Employee’s Base Pay which the Covered Employee is eligible to earn under the Company’s annual incentive guideline approved by the Board in effect on the date of termination of employment or, if higher, such target percentage as was in effect immediately prior to the occurrence of a Change in Control.

 

6.                                      Eligibility for Severance Benefit.  An individual is eligible for the Severance Benefit under the Plan, in the amount 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 and on such date is in a position or pay grade included on Exhibit A.

 

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7.                                      Severance Payments and Benefits.

 

7.1                               Severance Benefit.

 

7.1.1                     Termination Following a Change in Control.  If 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 7.1.1, or (ii) the Covered Employee’s employment is Involuntarily Terminated then the Covered Employee shall be entitled to his or her Severance Benefits, subject to the terms of the Plan.

 

In the instance of the Involuntarily Termination of the Covered Employee, the Covered Employee shall be entitled to receive the Severance Benefit described on Exhibit A from the Company, provided the Covered Employee signs the Release in a timely manner as provided in Section 7.2. Any adverse change in the Covered Employee’s position or job grade after a Change in Control shall be disregarded for purposes of determining the Covered Employee’s entitlement to Severance Benefits pursuant to Exhibit A.

 

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 (which such notice shall also constitute notice of termination of employment, to the extent such notice is required by applicable law or the terms of any employment contract), upon the notice of which the Company will have 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.  Unless the Company remedies such Material Alternation within such thirty (30) day period (in which case, the Covered Employee’s notice of termination of employment shall be deemed to be withdrawn if it has not already expired), the Covered Employee’s employment with the Company shall terminate immediately following the expiration of such thirty (30) day cure period following which the Covered Employee signs the Release in a timely manner as provided in Section 7.2, the Covered Employee will be entitled to receive the applicable Severance Benefit from the Company.

 

To the extent permitted by applicable law, any cash Severance Benefit payable under the Plan shall, except to the extent otherwise provided on Exhibit A, be reduced by (i) any Base Pay paid to the Covered Employee for any statutory or contractual notice period (including any payment in lieu of notice or payment made in any such notice period during which the Covered Employee is not providing active services) and (ii) any statutory severance amounts paid to the Covered Employee (the aggregate amount of any such reduction being referred to hereinafter as, the “Offset”).  The Administrator may modify, in good faith, the notice and cure procedure set forth in this Section 7.1.1 for Non-U.S. Covered Employees to the minimum extent necessary to comply with applicable local law; provided that such modifications shall, to the maximum extent permissible under applicable local law, be no less favorable to such Non-U.S. Covered Employee than those set forth herein.

 

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7.1.2                     Cash Compensation Target.  Sixty (60) days following the Covered Employee’s Separation from Service, if the Covered Employee has become eligible for benefits hereunder pursuant to the first paragraph of Section 7.1.1 and has executed and not revoked the Release as required by Section 7.2 herein (if permitted by applicable law in the case of a Non-U.S. Covered Employee), the Covered Employee will be paid a lump sum single payment equal to his or her Cash 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 Cash Compensation Target is determined to be nonqualified deferred compensation subject to Section 409A, then, to the extent required to comply with Section 409A, such payment (or the applicable portion thereof) 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.

 

7.1.3                     Continued Medical Benefits for Employees.  If the Covered Employee has become eligible for benefits hereunder pursuant to the first paragraph of Section 7.1.1 and is employed in the United States and such Covered Employee or any spouse and/or dependents of the Covered Employee (“Family Members”) has medical or dental coverage on the date of Covered Employee’s termination of employment under a group health plan sponsored by the Company, the Company will pay the total applicable premium and related administrative fee costs 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 the 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 pay the premium and fee costs of COBRA coverage on and after the date Covered Employee and his applicable Family Members first become eligible to obtain comparable benefits from a subsequent employer.  Notwithstanding the foregoing, the Company reserves the right to restructure the foregoing continued coverage arrangement in any manner reasonably necessary or appropriate to avoid penalties or negative tax consequences to the Company or the Covered Employee, as determined by the Company in its good faith discretion.  For Non-U.S. Covered Employees who become eligible for benefits hereunder pursuant to the first paragraph of Section 7.1.1, benefits coverage will be provided during the Severance Period (or a longer period that is expressly required by applicable statute) at the level provided to the Non-U.S. Covered Employee by the Company prior to termination (or, if greater, at the level required by statute).

 

7.1.4                     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 equity compensation plans and in awards previously granted thereunder.  Those plans and options granted thereunder may also provide for an extended time for exercise of such options in certain circumstances.  The terms of such plans and grants made thereunder remain in full force and effect and govern such equity awards.

 

7.1.5                     Short Term Incentive For Year of Termination.  If the Covered Employee has become eligible for benefits hereunder pursuant to the first paragraph of Section 7.1.1 and the

 

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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 the year of termination is paid, the Covered Employee will be entitled to receive (subject to Section 7.2), in addition to the Cash Compensation Target, a pro rata share of his or her short term incentive target for such year.  For example, if the Covered Employee’s date of termination is July 1, he or she will be entitled to receive 50% of the Short-Term Incentive for the Covered Employee.  Such pro rata short term incentive payment will be paid at the same time as the payment described in Section 7.1.2.

 

7.1.6                     Outplacement Counseling Services.  If the Covered Employee has become eligible for benefits hereunder pursuant to the first paragraph of Section 7.1.1 hereof, the Covered Employee shall be entitled to outplacement counseling services at a frequency and cost as determined by the Plan Administrator in his or her sole discretion for a period of time as set forth on Exhibit A.  A Covered Employee may begin utilizing outplacement counseling services upon termination of employment (subject to the effectiveness of the Release, if applicable), and in no event may begin utilizing such services more than eight (8) weeks after the termination date (or the effectiveness of the Release, if applicable).  If a Covered Employee does not use all or any portion of the outplacement counseling services made available, the Covered Employee shall not be entitled to receive cash or other consideration in lieu of such services.  Notwithstanding the foregoing and the provisions of Exhibit A, the period of time during which outplacement services are provided to Non-U.S. Covered Employees may be shortened by the Plan Administrator to the extent the Plan Administrator determines, in its good faith discretion, that a shorter period would be consistent with market practice in the applicable jurisdiction, subject to compliance with applicable law.

 

7.1.7                     Additional Limitation.  Anything in this Plan to the contrary notwithstanding,  in the event that any payment or benefit received or to be received by the Covered Employee (including any payment or benefit received in connection with a Change in Control or the termination of the Covered Employee’s employment, whether pursuant to the terms of the Plan or any other plan, arrangement or agreement) (all such payments and benefits, including the Severance Benefits, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the Severance Benefits shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Covered Employee would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).  In such event, the Total Payments shall be reduced in the following order:  (1) cash payments not subject to Section 409A; (2) cash payments subject to Section 409A; (3)

 

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equity-based payments and acceleration; and (4) non-cash forms of benefits.  To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.  The preceding provisions of this Section 7.1.7 shall not apply in the case of a Covered Employee who is a party to an agreement with the Company that provides for a different treatment in the event that payments to the Covered Employee are subject to the Excise Tax.

 

The calculations contemplated by this Section 7.1.7 shall be done by such accounting or tax experts as may be designated by the Company prior to a Change in Control and shall be binding on the Company and the Covered Employee.

 

7.2                               Release.  As a condition to receiving Severance Benefits under this Plan, each Covered Employee will be required to sign, within the Release Period, a waiver and release of all claims arising out of the termination of the Covered Employee’s employment with the Company and its subsidiaries and affiliates in the form set forth on Exhibit B (the “Release”).  Notwithstanding the foregoing, a Non-U.S. Covered Employee shall not be required to execute a Release as a condition to receiving Severance Benefits to the extent such a condition is prohibited by applicable law.  The Administrator may modify, in good faith, the form of Release for Non-U.S. Covered Employees to the minimum extent necessary to comply with applicable local law and preserve the intent of the Release.

 

7.3                               Accrued Benefits and Compensation; PTO Days.  The Company shall pay or cause to be paid to each Covered Employee covered under the Plan such Covered Employee’s Base Pay through the date of termination, together with all compensation and benefits payable to the Covered Employee through the date of termination (including any short term incentives which have been accrued but not paid for any year completed prior to such termination, which amounts shall be paid without any discretionary reduction) in accordance with applicable laws. Any unused paid time off (“PTO”) pay accrued as of a Covered Employee’s date of Involuntary Termination will be paid at or before the time the Covered Employee receives his or her Cash Compensation Target payment and otherwise in accordance with applicable law.

 

8.                                      Withholding.  The Company will withhold from any Severance Benefit all federal, state, local and other taxes required to be withheld therefrom and any other required payroll deductions.

 

9.                                      Administration.  The Plan will be administered and interpreted by the Administrator (in the Administrator’s reasonable, good faith discretion). The Administrator has the authority to act for the Company (in a non-fiduciary capacity) as to any matter pertaining to the Plan; provided, however, that this authority does not apply with respect to (a) the Company’s power to amend or terminate the Plan or (b) any action that could reasonably be expected to increase significantly the cost of the Plan, the authority to take such actions is subject to the prior approval of the Board.  For Covered Employees providing services in the United States, the Administrator is the “named fiduciary” of the Plan for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity.

 

9

 

10.                               Eligibility to Participate.  An employee acting as the Administrator will not be excluded from participating in the Plan if otherwise eligible, but he or she is not entitled to act or pass upon any matters pertaining specifically to his or her own benefit or eligibility under the Plan.  The chief executive officer of the Company will act upon any matters pertaining specifically to the benefit or eligibility of the Administrator under the Plan.

 

11.                               Amendment or Termination.  The Plan (and its exhibits) may not be terminated or adversely amended (1) at any time when the Company is party to an agreement, the consummation of which will result in a Change in Control, (2) within the two (2) year period immediately following a Change in Control, and (3) with respect to Non-U.S. Covered Employees, to the extent otherwise restricted by applicable law.  In addition, if at the time of any proposed termination of or amendment of or to the Plan there are any outstanding Determination Periods or Severance Periods, then the Plan will remain in effect without adverse amendment with respect to each Covered Employee for whom there is an outstanding Determination Period or Severance Period in effect until all Severance Benefits have been paid with respect to such Determination Period and/or Severance Period.  Except as set forth above in this Section 11 (which provisions are not subject to amendment), the Company reserves the right to terminate or amend the Plan at any time, including amending its exhibits; provided, however, that any amendment or termination of the Plan shall require three months’ advance notice of each individual who is a Covered Employee.

 

12.                               Claims Procedure.  Any employee or other person who believes he or she is entitled to any payment under the Plan may submit a claim in writing to the Administrator or his or her designee.  If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Plan on which the denial is based.  The notice will also describe any additional information needed to perfect the claim, an explanation as to why such information is necessary and an explanation of the Plan’s claims procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on appeal, if applicable.  The denial notice will be provided within 90 days after the claim is received.  If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90-day period.

 

13.                               Appeal Procedure.  If the claimant’s claim is denied, the claimant (or his or her authorized representative) may apply in writing to the Administrator for a review of the decision denying the claim.  Review must be requested within 60 days following the date the claimant received the written notice of their claim denial or else the claimant loses the right to review.  The claimant (or representative) then has the right to review pertinent documents and to submit issues and comments in writing.  The Administrator will provide written notice of his or her decision on review within 60 days after it receives a review request.  If additional time (up to 60 days) is needed to review the request, the claimant (or representative) will be given written notice of the reason for the delay.  If the claimant’s appeal is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Plan on which the denial is based.  The notice will also describe the claimant’s right to

 

10

 

receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits.  The notice will also include a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA, if applicable.  No person may bring an action for any alleged wrongful denial of Plan benefits in a court of law unless the claims procedures set forth above are exhausted and a final determination is made by the Administrator.  If a Covered Employee or another interested person challenges a decision of the Administrator, a review by the court of law will be limited to the facts, evidence and issues presented to the Administrator during the claims procedure set forth above.  Facts and evidence that become known to a Covered Employee or the other interested person after having exhausted the claims procedure must be brought to the attention of the Administrator for reconsideration of the claims determination.  Issues not raised with the Administrator will be deemed waived.  Notwithstanding the forgoing, Sections 12 and 13 shall be deemed to be modified to the extent necessary to comply with laws governing claim procedures applicable to Non-U.S. Covered Employees.

 

14.                               Source of Payments.  All Severance Benefits will be paid in cash from the general funds of the Company; no separate fund will be established under the Plan; and the Plan will have no assets.  No right of any person to receive any payment under the Plan will be any greater than the right of any other general unsecured creditor of the Company.

 

15.                               Inalienability.  In no event may any current or former employee of the Company or any of its subsidiaries or affiliates sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan.  At no time will any such right or interest be subject to the claims of creditors nor liable to attachment, execution or other legal process.

 

16.                               No Enlargement of Employment Rights.  Neither the establishment nor maintenance of the Plan, any amendment of the Plan, nor the making of any benefit payment hereunder, will be construed to confer upon any individual any right to be continued as an employee of the Company.  The Company expressly reserves the right to discharge any of its employees, including Covered Employees, at any time, with or without cause, in accordance with the employee’s contract of employment, if any, and any applicable laws.

 

17.                               Section 409A Compliance.  This Plan is intended to comply with or be exempt from all of the requirements of Section 409A and any regulatory, administrative or judicial guidance thereunder and shall be administered and interpreted in accordance with that intention.  This Plan is intended to meet the requirements of the short term deferral or separation pay plan exemptions under Section 409A.  Any payment from the Plan that is subject to the requirements of Section 409A may only be made in a manner and upon an event permitted by Section 409A, including the requirement that deferred compensation payable to a “specified employee” of a publicly traded company be postponed for six months after separation from service.  Payments upon termination of employment subject to the requirements of Section 409A may only be made upon a Separation from Service.  Each payment under the Plan shall be treated as a separate payment for purposes of Section 409A and a series of installment payments shall be treated as a series of separate payments.  In no event may an employee, directly or indirectly, designate the calendar year of any payment to be made under the Plan.  If the maximum period during which an

 

11

 

employee has the ability to consider and revoke the Release hereunder would span two taxable years of the employee, then, regardless of when the employee signs the Release and the revocation period expires, payment of severance benefits hereunder will be made or commence in the second of such taxable years.

 

18.                               Applicable Law and Choice of Forum.  The provisions of the Plan will be construed, administered and enforced in accordance with ERISA and, to the extent applicable, the laws of the State of New Jersey and any action brought under the Plan will be brought in the State of New Jersey, in each case, except as otherwise required by the laws or mandatory rules of a jurisdiction outside the United States in which a Non-U.S. Covered Employee is employed (in which such case the applicable law and choice of forum required in such jurisdiction shall apply).

 

19.                               Severability.  If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

 

20.                               Headings.  Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.

 

21.                               Indemnification.  The Company hereby agrees to indemnify and hold harmless the officers and employees of the Company, and the members of its boards of directors, from all losses, claims, costs or other liabilities arising from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law.  This indemnity will cover all such liabilities, including judgments, settlements and costs of defense.  The Company will provide this indemnity from its own funds to the extent that insurance does not cover such liabilities.  This indemnity is in addition to and not in lieu of any other indemnity provided to such person by the Company by written agreement, by-laws, incorporation documents or state law.

 

22.                               Attorneys’ Fees.  The Company shall pay to the Covered Employee all reasonable legal fees and expenses incurred by the Covered Employee in disputing in good faith any issue hereunder relating to the termination of the Covered Employee’s employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Plan or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code.  Such payments shall be made within five (5) business days after delivery of the Covered Employee’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. In order for the Covered Employee to be entitled to reimbursement hereunder, the Covered Employee must submit the written reimbursement request described above within 180 days following the date upon which the applicable fee or expense is incurred.

 

23.                               Representations by the Company.  Except as provided in Section 11 above, no employee, officer, director, or agent of the Company has the authority to alter, vary, modify, or waive the terms and conditions of the Plan.  No verbal or written

 

12

 

representations that are in addition to or contrary to the terms of the Plan and its written amendments shall be binding on the Plan, the Administrator or the Company.

 

24.                               Additional Information.

 

	
Plan Name:
    	
 
    	
NPS Pharmaceuticals, Inc. Change in Control Severance   Pay Plan
    
	
 
    	
 
    	
 
    
	
Plan Sponsor:
    	
 
    	
NPS Pharmaceuticals, Inc.
    
	
 
    	
 
    	
550 Hills Drive, 3rd Floor
    
	
 
    	
 
    	
Bedminster, NJ 07921
    
	
 
    	
 
    	
(908) 450-5300
    
	
 
    	
 
    	
 
    
	
Identification Numbers:
    	
 
    	
EIN: 87-0439579
    
	
 
    	
 
    	
PLAN: 501
    
	
 
    	
 
    	
 
    
	
Plan Year:
    	
 
    	
Calendar year
    
	
 
    	
 
    	
 
    
	
Plan Administrator:
    	
 
    	
NPS Pharmaceuticals, Inc.
    
	
 
    	
 
    	
Attention: General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
550 Hills Drive, 3rd Floor
    
	
 
    	
 
    	
Bedminster, New Jersey 07921
    
	
 
    	
 
    	
(908) 450-5300
    
	
 
    	
 
    	
 
    
	
Agent for Service of Legal Process:
    	
 
    	
NPS Pharmaceuticals, Inc.
    
	
 
    	
 
    	
Attention: General Counsel
    
	
 
    	
 
    	
NPS Pharmaceuticals, Inc.
    
	
 
    	
 
    	
550 Hills Drive, 3rd Floor
    
	
 
    	
 
    	
Bedminster, NJ 07921
    
	
 
    	
 
    	
(908) 450-5300
    

 

13

 

EXHIBIT A

 

	
Employee Level
    	
 
    	
Determination
   Period
    	
 
    	
Severance Period
    	
 
    	
Cash Compensation
   Target
    	
 
    	
Benefit
   Continuation
    	
 
    	
Outplacement
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Grade   1-5
    	
 
    	
12 Months
    	
 
    	
12 weeks minimum + 2 weeks/ for each full or partial   year of service greater than 1(1)
    	
 
    	
Base Pay/52 *Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
3 Month Program
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Grade 6-7 (Includes C6 & C7)
    	
 
    	
12 Months
    	
 
    	
16 weeks minimum + 2 weeks/for each full or partial   year of service greater than 1(2)
    	
 
    	
Base Pay / 52* Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
3 Month Program
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Grade 8-10 Hired before 9/1/12
    	
 
    	
24 months
    	
 
    	
9 Months
    	
 
    	
((Base Pay + Target STI (3))
   /12) * Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
6 Month Program
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Grade 8-10 Hired after 8/31/12
    	
 
    	
24 months
    	
 
    	
9 Months
    	
 
    	
(Base Pay/12) * Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
6 Month Program
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Grade   11-12
    	
 
    	
24 months
    	
 
    	
12 Months
    	
 
    	
((Base Pay + Target STI)/12) * Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
6 Month Program
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Executive Team Members (4)
    	
 
    	
24 months
    	
 
    	
18 Months
    	
 
    	
((Base Pay + Target STI)/12) * Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
12 Month Program
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CEO
    	
 
    	
24 months
    	
 
    	
24 Months
    	
 
    	
((Base Pay + Target STI /12)* Severance Period
    	
 
    	
Equal to the Severance Period
    	
 
    	
12 Month Program
    

 

Clause (i) of the definition of “Materially Altered” will not apply to employees in Grades 1-7.

 

Covered Employees promoted into Grade 8-10 after 8/31/2012 will be eligible for the benefits set forth in the row entitled “Grade 8-10 Hired after 8/31/2012,” regardless of date of hire.

 

(1)         Notwithstanding the provision of Section 7.1.1 of the Plan which provides for the Offset, the minimum Severance Benefit to be paid to Covered Employees in Grades 1-5 shall be 12 weeks Base Pay.  The maximum Severance Benefit to be paid to Covered Employees in Grades 1-5 shall be 52 weeks Base Pay.

 

(2)         Notwithstanding the provision of Section 7.1.1 of the Plan which provides for the Offset, the minimum Severance Benefit to be paid to Covered Employees in Grades 6-7 shall be 16 weeks Base Pay.  The maximum Severance Benefit to be paid to Covered Employees in Grades 6-7 shall be 52 weeks Base Pay.

 

(3)         All references to “STI” are references to “Short Term Incentive” as defined in the Plan.

 

(4)         For purposes of Exhibit A, Executive Team Members consists of the following executives:  Luke M. Beshar, Paul Firuta, Robin D. Friedman, Roger Garceau, M.D., Susan E. Graf, Christine Mikail Cvijic, Eric Pauwels, Joseph J. Rogus.

 

14

 

EXHIBIT B

 

WAIVER AND RELEASE AGREEMENT

 

1.                                      For good and valuable consideration (as provided in paragraph 2 below),                      (hereinafter the “Employee”), with the intention of binding himself or herself and his or her heirs, executors, administrators and assigns, does hereby release NPS Pharmaceuticals, Inc. (the “Company”) and its affiliates and subsidiaries and their affiliated companies, divisions, subsidiaries, successors, predecessors and assigns, and their respective present and former officers, directors, executives, agents, attorneys and employees (collectively the “Released Parties”), of and from any and all claims, actions, causes of action, demands, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, federal or state, which the Employee, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, against any Released Party arising out of or in any way connected with the Employee’s employment relationship with the Released Parties, or the termination thereof, up to the date of this Waiver and Release Agreement (“Release”).  Such claims include without limitation, any claims for severance or paid time off or other benefits, unpaid wages, salary or incentive payment, breach of contract, wrongful discharge, or employment discrimination under any applicable federal, state or local statute, provision, order or regulation including, but not limited to, any claim under the Age Discrimination in Employment Act (“ADEA”).  The Employee specifically waives any and all claims for back pay, front pay, or any other form of compensation, except as set forth herein.

 

Notwithstanding the foregoing, the Employee does not waive (a) rights, if any, the Employee may have to unemployment insurance benefits or workers’ compensation benefits (b) any claims or rights under the ADEA which may arise from events occurring after the date of this Agreement (c) Employee’s rights to accrued and vested benefits (other than severance benefits) as of the date of termination under any other employee benefit plan, policy or arrangement maintained by the Company or its subsidiaries or under Section 4980B of the Internal Revenue Code, (d) any rights of Employee to indemnification in connection with his employment or service with the Company or any subsidiary, (e) any rights of the Employee under an employment agreement with the Company or a subsidiary which are intended to survive termination of the Employee’s employment, (f) any rights of the Employee as a stockholder of the Company and/or (g) any claims or rights that cannot be waived under applicable law.

 

2.                                      In reliance on the releases and agreements set forth herein and pursuant to the NPS Pharmaceuticals, Inc. Change in Control Severance Pay Plan (“Plan”), the Employee

 

15

 

shall receive the gross amount of                                                        ($          ), less applicable federal and state withholding taxes, in accordance with Section 7.1.1 of the Plan, as well as the healthcare continuation and outplacement benefits described in the Plan.  The Employee acknowledges that he or she would not be entitled to the total amount provided herein without signing this Release.

 

3.                                      The Employee acknowledges and agrees that neither the Plan nor this Release is to be construed in any way as an admission of any liability whatsoever by any Released Party under any federal or state statute or the principles of common law, any such liability having been expressly denied.

 

4.                                      The Employee acknowledges and agrees that he or she has not, with respect to any transaction or state of facts existing prior to the date of execution of this Release, filed any complaints, charges or lawsuits against any of the Released Parties with any governmental agency or any court or tribunal, and that he or she will not do so at any time hereafter.  The parties to this Release understand that the Employee does not waive any rights or claims that may arise after the date that this Release is executed.

 

5.                                      The Employee acknowledges and agrees that it continues to be bound by the confidentiality provisions of the Employee Agreement Concerning Invention Assignment, Non-Disclosure and Non-Competition.

 

6.                                      In the event that the Employee breaches this Release, to the fullest extent permitted by law (including the Employment Standards Act), the Company shall be entitled to pursue all legal remedies against the Employee and the Employee shall be liable to the Company for its reasonable attorneys’ fees and costs incurred in pursuing such legal remedies.

 

7.                                      The Employee acknowledges that he or she has forty-five (45) days, commencing on the first day after his or her Separation from Service with the Company, to sign this Release.  In addition, once the Employee has signed this Release, he or she shall have an additional period of seven days during which he or she may revoke the executed Release (the “Revocation Period”), even if this has the effect of extending the seven-day revocation period beyond the 45-day period referenced in the preceding sentence.  If this Release is signed and not subsequently revoked, this Release becomes effective and enforceable on the first business day after the expiration of the Revocation Period.

 

8.                                      The Employee further declares and represents that he or she has carefully read and fully understands the terms of this Release and the Plan, that he or she has been given not less than forty-five (45) days, commencing on the date of the Employee’s Separation from Service, to consider this Release and, if applicable, the statistical data provided to him or her, that he or she has been advised to seek, and has had the opportunity to seek, the advice and assistance of counsel with regard to this Release and the terms of the Plan, and that he or she knowingly and voluntarily, of his or her own free will, without any duress, being fully informed and after due deliberate thought and action, accepts the terms of and signs this Release as his or her own free act.  In addition, the Employee understands that once he or she has signed this Release, he or she shall have an additional

 

16

 

period of seven days during which he or she may revoke the executed Release, even if this has the effect of extending the seven-day revocation period beyond the above-referenced 45-day period.

 

17

 

9.                                      The Employee acknowledges and understands that he or she may revoke a signed Release at any time within the Revocation Period by sending a written notice of revocation to General Counsel, NPS Pharmaceuticals, Inc., 550 Hills Drive, 3rd Floor, Bedminster, NJ 07921 New Jersey 07054.  The Employee further understands that if he or she revokes this Release, it shall not be effective or enforceable and he or she will not receive any payments or other benefits provided for in the Plan.  A signed and unrevoked Release shall not become effective or enforceable until the Revocation Period has expired, but shall be final and binding on the next day after the last day of the Revocation Period.

 

DATED this      day of       , 20  .

 

 

	
 
    	
 
    
	
 
    	
[Employee]
    

 

 

The foregoing instrument was acknowledged before me this      day of      , 20  , by [Employee].

 

 

	
 
    	
 
    
	
 
    	
NOTARY   PUBLIC
    
	
 
    	
 
    
	
 
    	
Residing   at:
    	
 
    

 

18

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