Document:

Exhibit 10.5

 

FORM OF PHANTOM UNIT AGREEMENT
 PURSUANT TO THE
 ARES MANAGEMENT, L.P. 2014 EQUITY INCENTIVE PLAN

 

THIS AGREEMENT (the “Agreement”) is entered into as of              (the “Grant Date”), by and between Ares Management, L.P., a Delaware limited partnership (the “Partnership”), and                 (the “Participant”).  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Ares Management, L.P. 2014 Equity Incentive Plan (the “Plan”).

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, the Partnership has adopted the Plan, a copy of which has been delivered to the Participant, which is administered by the Committee; and

 

WHEREAS, pursuant to Article VII of the Plan, the Committee may grant Other Unit-Based Awards to Service Providers under the Plan, including phantom units settled in cash; and

 

WHEREAS, the Participant is a Service Provider under the Plan.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      Grant of Phantom Units.  Subject to the restrictions and other conditions set forth herein, the Committee hereby grants to the Participant             phantom units (the “Phantom Units”) as of the Grant Date.  Each Phantom Unit is an Other Unit-Based Award under the Plan that represents an unfunded, unsecured right of the Participant to receive an amount in cash (the “Settlement Amount”) per Phantom Unit equal to the Average Closing Price of a Common Unit on the Vesting Dates specified in Section 2 herein.

 

“Average Closing Price” with respect to any Vesting Date means, an average of the Closing Prices for the 15 trading days immediately prior to, and the 15 trading days immediately following, such Vesting Date.

 

“Closing Price” means, on any trading day, the closing sale price per Common Unit as reported on the principal national securities exchange in the United Stated on which Common Units are then traded, as determined by the Committee.

 

2.                                      Vesting and Payment.

 

(a)                                 The Phantom Units granted herein shall vest in five equal installments on each of the first five anniversaries of the Grant Date (the “Vesting Dates”); provided that the Participant has not had a Termination prior to such Vesting Date.  There shall be no proportionate or partial vesting in the periods prior to each Vesting Date.  All unvested Phantom Units will be forfeited without compensation on the Participant’s Termination.

 

(b)                                 The Partnership shall, within 45 days following a Vesting Date, pay (or cause to be paid) to the Participant, the Settlement Amount with respect to each Phantom Unit vesting on such Vesting Date, as settlement of such Phantom Unit and each such Phantom Unit shall thereafter be cancelled.

 

 

3.                                      No Distribution Equivalents.  The Participant shall not receive distributions or distribution equivalents with respect to Phantom Units.

 

4.                                      Phantom Unit Transfer Restrictions.  Unless otherwise determined by the Committee, Phantom Units may not be Transferred by the Participant other than by will or by the laws of descent and distribution, and any other purported Transfer shall be void and unenforceable against the Partnership and its Affiliates.

 

5.                                      Change in Control.  

 

The Phantom Units shall not accelerate and vest upon a Change in Control unless otherwise determined by the Committee.  The provisions in the Plan regarding Change in Control shall apply to the Phantom Units.

 

6.                                      Rights as a Unitholder.  The Participant shall have no rights as a unitholder with respect to Phantom Units.

 

7.                                      Provisions of Plan Control.  This Agreement is subject to all the terms, conditions and provisions of the Plan, including the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time.  The Plan is incorporated herein by reference. If and to the extent that this Agreement conflicts or is inconsistent with the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly.

 

8.                                      Notices.  All notices, demands or requests made pursuant to, under or by virtue of this Agreement must be in writing and sent to the party to which the notice, demand or request is being made:

 

(a)                                 unless otherwise specified by the Partnership in a notice delivered by the Partnership in accordance with this section, any notice required to be delivered to the Partnership shall be properly delivered if delivered to:

 

Ares Management, L.P.
 2000 Avenue of the Stars, 12th Floor
 Los Angeles, CA 90067
 Attention: General Counsel

 

(b)                                 If to the Participant, to the address on file with the Partnership.

 

Any notice, demand or request, if made in accordance with this section shall be deemed to have been duly given:  (i) when delivered in person; (ii) three days after being sent by United States mail, or foreign equivalent; or (iii) on the first business day following the date of deposit if delivered by a nationally or internationally recognized overnight delivery service.

 

9.                                      No Right to Employment or Services.  This Agreement is not an agreement of employment or services.  None of this Agreement, the Plan or the grant of Phantom Units shall (a) obligate the Partnership to employ or otherwise retain, or to continue to employ or otherwise retain, the Participant for any specific time period or (b) modify or limit in any respect the Partnership’s or its Affiliates’ right to terminate or modify the Participant’s employment, services or compensation.

 

10.                               Transfer of Personal Data.  The Participant authorizes, agrees and unambiguously consents to the transmission by the Partnership of any personal data information related to the 

 

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Phantom Units awarded under this Agreement, for legitimate business purposes (including, without limitation, the administration of the Plan) out of the Participant’s home country and including to countries with less data protection than the data protection provided by the Participant’s home country.  This authorization/consent is freely given by the Participant.

 

11.                               Withholding.

 

The Partnership or any Affiliate shall have the right and is hereby authorized to withhold from the Settlement Amount and any compensation or other amount owing to the Participant, applicable income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), with respect to any taxable event under this Agreement or the Plan and to take such action as may be necessary in the opinion of the Partnership or the applicable Affiliate to satisfy all obligations for the payment of such Tax-Related Items.  The Participant acknowledges that, regardless of any action taken by the Partnership or any of its Affiliates the ultimate liability for all Tax-Related Items, is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Partnership or any of its Affiliates.

 

12.                               Dispute Resolution.

 

(a)                                 The exclusive remedy for determining any and all disputes, claims or causes of action, in law or equity, arising out of or related to this Agreement, or the breach, termination, enforcement, interpretation or validity thereof will, to the fullest extent permitted by law, be determined by: (i) the dispute resolution provisions in any employment, consulting agreement, or similar agreement, between the Partnership or any of its Affiliates and the Participant or, if none, (ii) the Partnership’s or any of its Affiliates’ mandatory dispute resolution procedures as may be in effect from time to time with respect to matters arising out of or relating to Participant’s employment or service with the Partnership or, if none, (iii) by final, binding and confidential arbitration in [Los Angeles, California][New York, New York], before one arbitrator, conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successor.  If disputes are settled pursuant to prong (iii) of this Section 12, Section 12(b) shall apply.

 

(b)                                 Disputes shall be resolved in accordance with the Federal Arbitration Act, 9 U.S.C. §§1—16, and JAMS’ Employment Arbitration Rules and Procedures then in effect.  The arbitrator will have the same, but no greater, remedial authority than would a court of law and shall issue a written decision including the arbitrator’s essential findings and conclusions and a statement of the award.  Judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof.  This agreement to resolve any disputes by binding arbitration extends to claims by or against any of the Partnership or any of its Affiliates or any of their respective past or present representatives and applies to claims arising out of federal, state and local laws, including claims of alleged discrimination on any basis, as well as to claims arising under the common law.  The prevailing party in any such arbitration proceeding, as determined by the arbitrator, or in any proceeding to enforce the arbitration award, will be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including the arbitrator’s compensation), expenses and attorneys’ fees.  If no party entirely prevails in such arbitration or proceeding, the arbitrator or court shall apportion an award of such fees based on the relative success of each party.  In the event of a 

 

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conflict between this provision and any provision in the applicable rules of JAMS, the provisions of this Agreement will prevail.

 

13.                               Section 409A.  The Phantom Units are intended to be exempt from the applicable requirements of Section 409A and shall be limited, construed and interpreted in accordance with such intent; provided, that the Partnership does not guarantee to the Participant any particular tax treatment of the Phantom Units.  In no event whatsoever shall the Partnership be liable for any additional tax, interest or penalties that may be imposed on the Participant by Section 409A or any damages for failing to comply with Section 409A.

 

14.                               Miscellaneous.

 

(a)                                 Successors.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

 

(b)                                 Governing Law.  All matters arising out of or relating to this Agreement and the transactions contemplated hereby, including its validity, interpretation, construction, performance and enforcement, shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflict of laws.

 

(c)                                  Counterparts; Electronic Acceptance.  This Agreement may be executed in one or more counterparts (including by facsimile or electronic transmission), all of which taken together shall constitute one contract.  Alternatively, this Agreement may be granted to and accepted by the Participant electronically.

 

(d)                                 Interpretation.  Unless a clear contrary intention appears: (i) the defined terms herein shall apply equally to both the singular and plural forms of such terms; (ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by the Plan or the Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually; (iii) any pronoun shall include the corresponding masculine, feminine and neuter forms; (iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof; (v) reference to any law, rule or regulation means such law, rule or regulation as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any law, rule or regulation means that provision of such law, rule or regulation from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision; (vi) “hereunder,” “hereof,” “hereto,”  and words of similar import shall be deemed references to the Agreement as a whole and not to any particular article, section or other provision hereof; (vii) numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of the Agreement; (viii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (ix) “or” is used in the inclusive sense of “and/or”; (x) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; and (xi) reference to dollars or $ shall be deemed to refer to U.S. dollars.

 

(e)                                  No Strict Construction.  This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

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(f)                                   Waiver.  The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.

 

15.                               Language.

 

If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

16.                               NO ACQUIRED RIGHTS.  THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT: (A) THE PARTNERSHIP MAY TERMINATE OR AMEND THE PLAN AT ANY TIME; (B) THE AWARD OF PHANTOM UNITS MADE UNDER THIS AGREEMENT IS COMPLETELY INDEPENDENT OF ANY OTHER AWARD OR GRANT AND IS MADE AT THE SOLE DISCRETION OF THE PARTNERSHIP; (C) NO PAST GRANTS OR AWARDS (INCLUDING THE PHANTOM UNITS AWARDED HEREUNDER) GIVE THE PARTICIPANT ANY RIGHT TO ANY GRANTS OR AWARDS IN THE FUTURE WHATSOEVER; (D) THE PLAN AND THE AGREEMENT DO NOT FORM PART OF THE TERMS OF THE PARTICIPANT’S EMPLOYMENT; AND (E) BY PARTICIPATING IN THE PLAN AND RECEIVING AN AWARD PURSUANT TO THIS AGREEMENT, THE PARTICIPANT WAIVES ALL RIGHTS TO COMPENSATION FOR ANY LOSS IN RELATION TO THE PLAN OR THIS AGREEMENT, INCLUDING ANY LOSS OF RIGHTS IN ANY CIRCUMSTANCES INCLUDING TERMINATION OF EMPLOYMENT.

 

[Remainder of This Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

 

 

	
 
    	
ARES   MANAGEMENT, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Participant   Name:
    	
 
    	
 
    

 

6Exhibit 10.34

 

 

Plan:  FY14 Executive Incentive Plan

 

I.                                        Objective

 

Thoratec’s Executive Incentive Plan, hereinafter referred to as EIP is intended to reward executive personnel who significantly impact and influence Thoratec’s productivity in proportion to their accomplishment of specified objectives.

 

The purpose of the plan is to ensure maximum return to Thoratec by encouraging greater initiative, resourcefulness, teamwork and efficiency on the part of senior management whose performance and responsibilities directly affect company profits.

 

Awarding of the bonus will be based on accomplishing a set of annual personal objectives, determined by the Chief Executive Officer (“CEO”) and the Board of Directors, typically at the beginning of the year.  Bonus determinations and payouts will take place after the financial statements have been prepared for the fiscal year.

 

II.                                   Determination Of The Fund

 

The availability of, and participants in, the fund will be set by the CEO and approved by the Board of Directors as part of the annual budgeting process.

 

III.                              Effective Date

 

The effective date of this program is December 29, 2013, the beginning of the plan year, and will continue in effect until January 3, 2015, or until terminated or amended by the Board of Directors. This plan supersedes all prior EIP plans.

 

IV.                               Eligibility

 

Participation in the plan is limited to Officers and others in comparable levels of responsibility who have a direct and significant influence on Thoratec’s growth and profitability. Employees must be regular and not eligible for any other Thoratec commission, bonus or incentive plan in order to be eligible to participate in the EIP.

 

Participating employees will be determined at the beginning of the fiscal year, or at such time during the Fiscal Year that an employee achieves an eligible position.  Employees will be notified of their eligibility and plan objectives, as soon as possible after the determination by the CEO or Board of Directors.

 

Individuals must be employed by Thoratec at the close of the fiscal year and the date of payment in order to be eligible for an award under the EIP except participants who are involuntarily terminated due to a divestiture, plant closing, reorganization or reduction in force during the plan year may receive an award on the prorated basis described in Section IX, Plan Administration, Prorated Awards, [subject to approval by the CEO].  These monies will be paid out at the usual and customary time of payment of all bonuses.  For purposes of this plan, termination shall mean the day the employee leaves the job, which may not necessarily be the last day on the payroll.

 

V.                                    Incentive Objectives

 

The award received under this plan will have an 80% financial and 20% personal objective mix.

 

Financial Objectives (make up 80% of total bonus payout) - The financial component will have two equally weighted objectives as follows:

 

1.              Achieve the revenue goal for 2014 as described in Section VII below. (Weighted at 50% of financial component, equivalent to 40% of overall bonus payout.)

2.              Achieve the non-GAAP income before tax goal for 2014 as described in Section VII below. (Weighted at 50% of financial component, equivalent to 40% of overall bonus payout.)

 

FY14 — Executive Incentive Plan

 

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Personal Objectives (make up 20% of total bonus payout) - Each personal objective will be weighted according to its importance. The weight will determine the percentage of the bonus awarded for completion of that objective.  (See Section VI below.)  As a guideline, employees should set 3-5 personal objectives.

 

VI.                               Bonus Opportunity and Award

 

The award opportunity will be expressed as a percentage of the participant’s base salary at the close of the fiscal year.  The award will be approved by the Board of Directors or the CEO, and will be consistent with the participant’s peers within the company.

 

The amount that a participant actually receives for the full fiscal year will be based upon the extent to which the set objectives have been achieved.  The participant will receive a percentage of the total award opportunity corresponding to the percentage of each objective accomplished and the weight assigned to the objective.  Evaluations of performance against management and business plan objectives are made for the full year prior to fiscal year-end payment.

 

VII.                          Financial Performance Goal and Payout

 

In addition to your personal objectives, everyone will have two company-oriented financial objectives that will be achieved according to the following guidelines:

 

	
 
    	
 
    	
 
    	
Revenue
    	
 
    	
(1)
   Non-GAAP Income Before Tax (NGIBT)
    	
 
    
	
 
    	
 
    	
 
    	
Goal
    	
 
    	
Award
    	
 
    	
Goal
    	
 
    	
Award
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Threshold
    	
= to, or >
    	
 
    	
$
    	
*
    	
 
    	
10
    	
%
    	
$
    	
*
    	
 
    	
10
    	
%
    
	
Target
    	
= to, or >
    	
 
    	
$
    	
*
    	
 
    	
100
    	
%
    	
$
    	
*
    	
 
    	
100
    	
%
    

 

Note:  If revenue is less than $*, no payment is earned for that objective.  If consolidated NGIBT earnings is less than $*, no payment is earned for that objective.  If actual results fall between threshold and target, interpolate between them to get actual payout percentage.  This percentage will be multiplied by the weight given the objective in your individual plan to determine the achievement.

 

(1)  NGIBT earnings is defined as consolidated GAAP net income before taxes excluding, as applicable, amortization of intangibles, share-based compensation expense,  transaction costs and certain accounting adjustments associated with business acquisitions or divestitures and other unusual or non-recurring costs.

 

VIII.      Over-Achievement Award Opportunity/Performance Accelerator

 

Achievement of the Revenue target makes up 50% of the financial component and achievement of the NGIBT target makes up 50% of the financial component of the bonus. For EIP participants, the financial component comprises 80% of the bonus; 40% Revenue and 40% NGIBT and the personal component comprises 20%. The overachievement calculation factors in overachievement on Revenue and NGIBT earnings.

 

If Thoratec overachieves on Revenue, each EIP participant will receive a 6.67% increase for every 1% increase in Revenue earnings up to 100 points of modified overachievement (see below for sample calculation). If Thoratec overachieves on NGIBT earnings, each EIP participant will receive a 4% increase for every 1% increase in NGIBT earnings up to 100 points of modified overachievement. The Revenue and NGIBT modifiers are averaged to create an overall bonus modifier. The overall modifier applies to the entire bonus amount, including the personal component. Assuming 100% achievement of personal objectives, and maximum achievement of the bonus modifier at 2.0, the total bonus payout will never exceed 200% of bonus target.

 

See the below table for example calculation:

 

* Amounts to be determined by the Compensation Committee of the Board of Directors.

 

FY14 — Executive Incentive Plan

 

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Example:

 

Assumptions

 

	
Base Salary:
    	
 
    	
$100,000
    	
 
    
	
Bonus Target:
    	
 
    	
50%,   Bonus Target Mix: 80% Financial, 20% Personal
    	
 
    
	
Personal Achievement:
    	
 
    	
85%
    	
 
    
	
Revenue:
    	
 
    	
$*;   10% Overachievement
    	
 
    
	
NGIBT:
    	
 
    	
$*;   5% Overachievement
    	
 
    

 

Calculation

Financial Bonus Achievement: 100% x 80% = 80%

Personal Bonus Achievement: 20% x 85% = 17%

Pre-Overachievement Bonus Payout: 97%

 

OA Modifier:

10 points of Revenue OA x 6.67 = 66.70 points of OA modified

5 points of NGIBT OA x 4.0 = 20.00 points of OA modified

Average OA Modifier = 43.35%

 

Total Bonus Modifier = 100% of pre-overachievement financial results + Overachievement Modifier = 1.43

 

Total Bonus Payout:

97% x 1.43 = 139.05% of Bonus Target

 

Payout Calculation:

$100,000 x 50% x 139.05% = $69,525

 

IX.                              Plan Administration

 

Prorated Awards.  Individuals who are promoted to eligible positions during the plan year, new hires into eligible positions and eligible employees who are either on leave or on active written warning for part of the year may be awarded partial bonuses under this program, based on the accomplished objectives and their respective weights, subject to the approval of the CEO.

 

Transfers.  In the event of transfer of an eligible participant to another position or department, the transferring manager will evaluate EIP results for prorated award (see Prorated Awards above) at the end of the year, and forward to the Human Resources Department.  The hiring manager will be responsible for setting the key business plan objectives for the balance of the year, if applicable, and forwarding to Human Resources for approval.  Awards based on these objectives will be prorated (see Prorated Awards above) as well, for end of the year payment.

 

Authority.  The Board of Directors shall have the full power and authority to construe, interpret and administer the plan.  All decisions, actions or interpretations of the Board of Directors shall be final and conclusive and binding on all parties.  This program shall be administered by the Human Resources Department.

 

X.                                   General Provisions

 

The Executive Incentive Plan for 2014 may be reviewed and revised at the Board’s discretion.

 

Nothing in this plan shall be construed to limit in any way the right of Thoratec Corporation to terminate an employee’s employment at any time, with or without cause or notice, nor shall it be evidence of any agreement or understanding, expressed or implied, that Thoratec or any of its subsidiaries will employ an employee in any particular position, for any particular period of time, ensure participation in any incentive programs, or the granting of awards from such programs as they may from time to time exist or be constituted.  Thoratec reserves the right to discontinue or alter the plan at its sole discretion at any time with or without notice.

 

* Amounts to be determined by the Compensation Committee of the Board of Directors.

 

FY14 — Executive Incentive Plan

 

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