Document:

Exhibit 10.2

 

AUXILIUM PHARMACEUTICALS, INC.

 

BOARD COMPENSATION PROGRAM

 

(Amended and Restated Effective as of June 21, 2012)

 

This Board Compensation Program (this “Program”), as amended and restated effective as of June 21, 2012, sets forth the principal features of the compensation program approved by the Board of Directors (the “Board”) of Auxilium Pharmaceuticals, Inc. (the “Company”) for new and continuing non-employee members of the Board (each, a “Non-Employee Director”), and supersedes and replaces the Board Compensation Plan approved by the Board of Directors on August 6, 2009.  This Program is governed by the provisions of Delaware law (without regard to conflicts of law principles), and the Board may restate, amend or terminate this Program at any time.  Shares of Company Stock (as defined in the Plan), nonqualified stock options and deferred stock units granted pursuant to the terms of this Program will be granted under the Auxilium Pharmaceuticals, Inc. 2004 Equity Compensation Plan, as amended (or a successor thereto) (the “Plan”), and will be subject in all respects to the terms of the Plan and the respective award agreement.  All capitalized terms not otherwise defined in this Program shall have the meaning ascribed in the Plan.

 

Initial Grant.  Upon initial appointment or election to the Board, each newly-appointed or elected Non-Employee Director will be granted a nonqualified stock option to purchase 22,500 shares of Company Stock.  The nonqualified stock option will be granted on the date of such appointment, have an exercise price equal to the closing price on the date of grant and vest and become exercisable in equal annual installments on each of the first three anniversaries of the date of grant.

 

Annual Grants.  If a Non-Employee Director has served as a Non-Employee Director for at least 12 continuous months, then upon such Non-Employee Director’s reelection to the Board, as of the date of the annual meeting of stockholders at which such reelection occurs, each such Non-Employee Director that has served as a Non-Employee Director for at least 12 continuous months will be granted 5,000 shares of Company Stock (the “Stock Grant”) and a nonqualified stock option to purchase 5,000 shares of Company Stock (the “Option Grant”).  The Option Grant will have an exercise price equal to the closing price of a share of Company Stock on the date of grant.  The Stock Grant and the Option Grant will vest (and, as to the Option Grant, become exercisable) on the date of the annual meeting of stockholders next following the date of grant; provided that if a Change of Control (as defined in the Plan) occurs prior to the vesting date, while the Non-Employee Director is “employed by, or providing service to, the Employer” (as defined in the Plan), the vesting (and, as to the Option Grant, the exercisability) will automatically accelerate and the Stock Grant and the Option Grant will become fully vested (and, as to the Option Grant, exercisable).

 

Notwithstanding the foregoing, beginning in December 2012, each Non-Employee Director shall be permitted to irrevocably elect to defer the Stock Grant that would otherwise be issued to the Non-Employee Director as of the date of the annual meeting of stockholders in the next following calendar year if such Non-Employee Director is reelected to the Board.  Such election must be made not later than December 31 of the calendar year prior to the calendar year in which the next immediate Stock Grant would be made if the Non-Employee

 

 

Director is reelected to the Board.  If a Non-Employee Director irrevocably elects to defer the Stock Grant, then the Stock

 

Grant that would otherwise be made as of the date of the next immediate annual meeting of stockholders if such Non-Employee Director is reelected, shall be converted into deferred stock units (“DSUs”), which will vest on the same terms as the Stock Grant would otherwise have vested and be paid on the earliest to occur of the Non-Employee Director’s “separation from service” (within the meaning of such term under section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)), death, Disability (within the meaning of such term under section 409A of the Code) or a change in control event (within the meaning of such term under section 409A of the Code).  All DSU grants shall be subject to the requirements of section 409A of the Code and shall be administered in accordance with the applicable requirements of section 409A of the Code.

 

Annual Retainer.  Effective June 21, 2012, for each year of service as a Non-Employee Director on or after June 21, 2012, each Non-Employee Director either newly elected or appointed, or continuing in service, will receive an annual retainer of $50,000 (the Chairman will receive an additional retainer in the amount of $50,000, for a total of $100,000) (the “Retainer Amount”), paid in 4 quarterly installments over the calendar year as of the last day of each calendar quarter beginning with September 30, 2012 so long as the Non-Employee Director is “employed by, or providing service to, the Employer” (as defined in the Plan) as of the last day of the applicable calendar quarter.

 

At the individual’s election, the Retainer Amount will be paid in cash or shares of Company Stock.  The election may be made in 1% increments (ranging from 0% to 100%) and the increments may vary from year to year.  If a Non-Employee Director fails to make an election, such Non-Employee Director’s Retainer Amount shall be paid in cash.  Each Non-Employee Director will generally be given the opportunity to elect the form of his or her Retainer Amount on or before December 31 of the calendar year preceding the calendar year in which the Retainer Amount is earned.  To the extent a Non-Employee Director elects to receive all or a portion of his Retainer Amount in the form of shares of Company Stock, the shares of Company Stock will be awarded under the Plan as of the last day of each calendar quarter beginning with September 30, 2012 so long as the Non-Employee Director is “employed by, or providing service to, the Employer” (as defined in the Plan) as of the last day of the applicable calendar quarter.  The number of shares to be issued to a Non-Employee Director who has elected to receive a portion of his or her fees in shares of Company Stock is determined by calculating the total fees owed for a given calendar quarter and dividing that amount by the closing price of a share of Company Stock on the last trading day of the quarter in which the fees are earned.

 

Notwithstanding the foregoing, for calendar year 2012, each Non-Employee Director will be given the opportunity to modify elections made in December 2011 with respect to Retainer Amounts to be paid for the calendar quarters ending September 30, 2012 and December 31, 2012; provided the Non-Employee Director submits his or her election prior to July 1, 2012. If a Non-Employee Director fails to submit a new election by July 1, 2012, the election made in December 2011 shall apply to the Retainer Amounts paid for the calendar quarters ending September 30, 2012 and December 31, 2012.

 

 

Committee Chairperson Retainer.  Non-Employee Directors serving as chairpersons of the Audit and Compliance Committee, Compensation Committee and Nominating and Corporate Governance Committee after June 21, 2012 will receive additional annual cash compensation (the “Committee Chairperson Retainer”) as follows:

 

Audit and Compliance Committee Chair: $30,000

Compensation Committee Chair: $25,000

Nominating and Corporate Governance Committee Chair: $10,000

 

The Committee Chairperson Retainer shall be paid in the same manner as the Retainer Amount and each Non-Employee Director may irrevocably elect to receive his or her Committee Chairperson Retainer in the form of cash or shares of Company Stock, upon the same terms and subject to the same conditions as his or her election with respect to his or her Retainer Amount described above.

 

Committee Member Retainer.  Non-Employee Directors serving as members of the Audit and Compliance Committee, Compensation Committee and Nominating and Corporate Governance Committee after June 21, 2012 will receive additional annual cash compensation (the “Committee Member Retainer”) as follows:

 

Audit and Compliance Committee Member: $15,000

Compensation Committee Member: $10,000

Nominating and Corporate Governance Committee Member: $5,000

 

The Committee Member Retainer shall be paid in the same manner as the Retainer Amount and each Non-Employee Director may irrevocably elect to receive his or her Committee Member Retainer in the form of cash or shares of Company Stock, upon the same terms and subject to the same conditions as his or her election with respect to his or her Retainer Amount described above.

 

Stock Ownership Requirement for Non-Employee Directors. Effective June 21, 2012, each Non-Employee Director will be required to hold a number of shares of Company Stock equal to three times the Retainer Amount for directors until he or she ceases to be a director.  The stock ownership requirement described in the preceding sentence must be satisfied by June 21, 2015 by Non-Employee Directors elected to the Board at the annual meeting of stockholders on June 21, 2012.  For Non-Employee Directors newly elected or appointed after June 21, 2012, such Non-Employee Directors will have three years from the date of their election or appointment to satisfy this stock ownership requirement. Company Stock owned by a Non-Employee Director’s Immediate Family (as defined below), members of his or her personal household (other than a tenant or employee) or any other person or entity whose ownership of Company securities is attributable to such director as the “beneficial owner” of such security for purposes of determining such director’s reporting obligations with respect to such securities under Section 16 of the Exchange Act of 1934 shall be deemed to be owned by the Non-Employee Director for purposes of satisfying this ownership requirement. As used herein, “Immediate Family” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships. In

 

 

addition, Company Stock held in estate planning vehicles shall be deemed to be owned by the Non-Employee Director for purposes of satisfying this ownership requirement. To the extent a Non-Employee Director is employed by a fund, such Non-Employee Director shall not be deemed to own shares owned by the fund for purposes of satisfying this ownership requirement.

 

Restriction on Sale of Company Stock by Non-Employee Directors. No sale of Company Stock shall be made by a Non-Employee Director or any member of his or her Immediate Family, any member of his or her personal household (other than a tenant or employee) or any other person or entity whose ownership of Company securities may be attributable to such director under the “beneficial ownership” rules of the Securities and Exchange Commission, except, in each case, sales made pursuant to the terms of a valid 1ObS-1 plan approved by the Compensation Committee (not to be unreasonably withheld) or in connection with a broker assisted exercise of a stock option where shares of Company Stock are sold to satisfy payment of the exercise price. The foregoing sale restrictions shall not apply to sales of shares of Company Stock acquired in open market transactions or as payment of retainer amounts from the Company, although Non-Employee Directors must comply with all applicable Company policies and securities law rules and regulations with respect to any such dispositions.  To the extent a Non-Employee Director is employed by a fund and such Non-Employee Director’s equity compensation from the Company is treated as the fund’s compensation (or otherwise as an economic right of the fund) pursuant to the terms of the arrangement in  place between the Non-Employee Director and the fund, the foregoing restrictions will not apply.  Equity awards issued under the Plan may be transferred in accordance with the applicable provisions of the Plan, subject to Board approval, if applicable. If shares or equity awards are transferred (subject to any required approval) for estate planning or gift purposes, such transfers will not be deemed to violate this requirement.Exhibit 10.3

 

AUXILIUM PHARMACEUTICALS, INC.

 

2004 EQUITY COMPENSATION PLAN

 

RESTRICTED STOCK GRANT AGREEMENT

 

This RESTRICTED STOCK GRANT AGREEMENT (this “Agreement”), dated as of the Date of Grant set forth in the Summary of Grant, is delivered by Auxilium Pharmaceuticals, Inc. (the “Company”), to the individual named in the Summary of Grant (the “Grantee”).

 

RECITALS

 

A.              The Auxilium Pharmaceuticals, Inc. 2004 Equity Compensation Plan, as amended (the “Plan”), provides for the grant of restricted stock in accordance with the terms and conditions of the Plan.

 

B.               The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of the Company has decided to make a restricted stock grant as an inducement for the Grantee to promote the best interests of the Company and its stockholders.

 

C.               The Plan and the Plan prospectus are available on our intranet under “Human Resources” at http://auxlink.auxilium.com/portal/page/portal/Login.  Paper copies of the Plan and the Plan prospectus are also available upon request by contacting Human Resources Department at jlarmstrong@auxilium.com or 1-484-321-2172.

 

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

 

Restricted Stock Grant.  Subject to the terms, restrictions and conditions set forth in the Summary of Grant, this Agreement and the Plan, the Company hereby grants to the Grantee shares of Company Stock in the amount and on the terms set forth in the Summary of Grant, subject to the restrictions set forth below, in the Summary of Grant, and in the Plan (the “Restricted Stock”).  Shares of Restricted Stock may not be transferred by the Grantee or subjected to any security interest until the shares have become vested pursuant to this Agreement and the Plan.

 

Vesting and Nonassignability of Restricted Stock.

 

The shares of Restricted Stock shall become vested, and the restrictions described in Sections 2(b) and 2(c) shall lapse, upon the Grantee’s satisfaction of the requirements of the Vesting Schedule set forth in the Summary of Grant.  If the Vesting Schedule set forth in the Summary of Grant would result in the Grantee vesting in a fractional share of Restricted Stock, the number of shares in which the Grantee becomes vested shall be rounded down to the nearest whole share of Restricted Stock.

 

Except as otherwise provided in the Summary of Grant, if the Grantee ceases to be employed by, or provide service to, the Employer for any reason before the Restricted Stock fully vests, the shares of Restricted Stock that are not then vested shall be forfeited and must be immediately returned to the Company.

 

 

During the period before the shares of Restricted Stock vest (the “Restriction Period”), the non-vested Restricted Stock may not be assigned, transferred, pledged or otherwise disposed of by the Grantee.  Any attempt to assign, transfer, pledge or otherwise dispose of the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the shares, shall be  null, void and without effect.

 

Issuance of Certificates.

 

Stock certificates representing the Restricted Stock may be issued by the Company and held in escrow by the Company until the Restricted Stock vests, or the Company may hold non-certificated shares until the Restricted Stock vests.  During the Restriction Period, the Grantee shall receive any cash dividends with respect to the shares of Restricted Stock, may vote the shares of Restricted Stock and may participate in any distribution pursuant to a plan of dissolution or complete liquidation of the Company.  In  the event of a dividend or distribution payable in stock or other property or a reclassification, split up or similar event during the Restriction Period, the shares or other property issued or declared with respect to the non-vested shares of Restricted Stock shall be subject to the same terms and conditions relating to vesting as the shares to which they relate.

 

When the Grantee obtains a vested right to shares of Restricted Stock, a certificate representing the vested shares shall be issued to the Grantee, free of the restrictions under Section 2 of this Agreement.

 

The obligation of the Company to deliver shares upon the vesting of the Restricted Stock shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriately to comply with relevant securities laws and regulations.

 

Change of Control. Subject to Section 2(a), the provisions of the Plan applicable to a Change of Control (as defined in the Plan) shall apply to the Restricted Stock, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

 

Grant Subject to Plan Provisions.  This Grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The Grant is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the shares, (c) changes in capitalization of the Company, and (d) other requirements of applicable law. The Board shall have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its Withholding.  The Grantee shall be required to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Employer is required to withhold with respect to the grant or vesting of the Restricted Stock.

 

Section 83(b) Election.  The Grantee hereby acknowledges that the Grantee has been informed that, with respect to the Restricted Stock, the Grantee may file an election with the Internal Revenue Service, within 30 days of the execution of this Agreement, electing pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, (the “Code”) to be taxed currently on any difference between the purchase price of the Restricted Stock and

 

 

their fair market value on the date of purchase.  Absent such an election, taxable income will be measured and recognized by the Grantee at the time or times at which the forfeiture restrictions on the Restricted Stock lapse.  The Grantee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the issuance of the Restricted Stock and the advisability of filing of the election under Section 83(b) of the Code.  A form of Election under Section 83(b) is attached hereto as Exhibit A for reference.

 

THE GRANTEE ACKNOWLEDGES THAT IT IS NOT THE COMPANY’S, BUT RATHER THE GRANTEE’S SOLE RESPONSIBILITY TO TIMELY FILE THE ELECTION UNDER SECTION 83(b).

 

No Employment or Other Rights.  This Grant shall not confer upon the Grantee any right to be retained by or in the employ or service of the Employer and shall not interfere in any way with the right of the Employer to terminate the Grantee’s employment or service at any time. The right of the Employer to terminate at will the Grantee’s employment or service at any time for any reason is specifically reserved.

 

Assignment by Company.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

 

Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof.

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this instrument, and the Grantee has placed his or her signature hereon, effective as of the Date of Grant.

 

	
 
    	
AUXILIUM PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

I hereby accept the grant of Restricted Stock described in this Agreement, and I hereby agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all of the decisions and determinations of the Board shall be final and binding.

 

	
 
    	
Grantee:
    	
 
    

 

 

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

 

The undersigned taxpayer hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder (the “Regulations”), and in connection with this election supplies the following information:

 

Name of taxpayer making election:

Address:

Social Security Number:

Tax Year for which election is being made:

 

The property with respect to which the election is being made consists of                  shares of common stock of Auxilium Pharmaceuticals, Inc. (the “Company”).

 

Date the property was transferred:                               (the “Date of Grant”).

 

The stock is subject to forfeiture to the Company if the taxpayer ceases to be employed by, or provide service to, the Company during the restriction period.  The restriction period lapses according to the following schedule, if the taxpayer is employed by, or providing service to, the Company from the Date of Grant until the applicable vesting date:

 

	
Vesting Date
    	
 
    	
Shares Vested on Vesting Date
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

The fair market value at the time of the transfer of the stock (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $               per share.

 

The amount paid for the stock is $         per share ($         aggregate contribution).

 

A copy of this statement has been furnished to the Company (and to the transferee of the Stock, if different from the taxpayer) as required by §1.83-2(d) of the Regulations.

 

This statement is executed as of                                           .

 

 

	
 
    	
 
    

Taxpayer

 

 

INSTRUCTIONS FOR FILING SECTION 83(B) ELECTION

 

Attached is a form of election under section 83(b) of the Internal Revenue Code.  If you wish to make such an election, you should complete, sign and date the election and then proceed as follows:

 

1.             Execute three counterparts of your completed election (plus one extra counterpart for each person other than you, if any who receives property that is the subject of your election), retaining at least one photocopy for your records.

 

2.              Send one counterpart to the Internal Revenue Service Center with which you will file your Federal income tax return for the current year (e.g., Kansas City, Missouri for Pennsylvania residents) via certified mail, return receipt requested.  THE ELECTION SHOULD BE SENT IMMEDIATELY, AS YOU ONLY HAVE 30 DAYS FROM THE ISSUANCE/PURCHASE/GRANT DATE WITHIN WHICH TO MAKE THE ELECTION - NO WAIVERS, LATE FILINGS OR EXTENSIONS ARE PERMITTED.

 

3.              Deliver one counterpart of the completed election to the Company for its files.

 

4.              If anyone other than you (e.g., one of your family members) will receive property that is the subject of your election, deliver one counterpart of the completed election to each such person.

 

5.              Attach one counterpart of the completed election to your Federal income tax return for this year when you file that return next year.

 

 

AUXILIUM PHARMACEUTICALS, INC.

2004 EQIDTY COMPENSATION PLAN

 

RESTRICTED STOCK GRANT AGREEMENT

 

Auxilium Pharmaceuticals, Inc. (the “Company”) has granted you restricted stock under the Auxilium Pharmaceuticals, Inc. 2004 Equity Compensation Plan, as amended (the “Plan”).  The terms of the grant are set forth in this Summary of Grant, the Restricted Stock Grant Agreement (the “Agreement”) attached hereto and the Plan.  You should read this Summary of Grant, the Agreement, and the Plan, to fully understand the grant.

 

SUMMARY OF GRANT

 

	
Grantee:
    	
[                    ]
    
	
 
    	
 
    
	
Date   of Grant:
    	
[                    ]
    
	
 
    	
 
    
	
Number   of Shares
    	
 
    
	
Subject   to Grant:
    	
[                    ]   shares of Restricted Stock
    
	
 
    	
 
    
	
Vesting   Schedule:
    	
The   shares of Restricted Stock shall vest on the date of the annual meeting of   the Company’s stockholders next following the Date of Grant (the “Vesting   Date”)*; provided that if a Change of Control (as defined in the Plan) occurs   prior to the Vesting Date while the Grantee is employed by, or providing   service to, the Employer, the Option shall automatically accelerate and   become fully vested and exercisable as of the date of the Change of Control.
    

 

*              The Grantee must be employed by, or providing service to, the Employer (as defined in the Plan) on the applicable Vesting Date.

 

 

Grantee Acceptance:

 

By signing the acknowledgement below, the Grantee hereby agrees to be bound by the terms and conditions of the Plan, the Agreement and this Summary of Grant and hereby accepts the shares of Restricted Stock in accordance with the terms of this Summary of Grant, the Agreement and the Plan.  The Grantee hereby accepts as binding, conclusive and final all decisions or interpretations of the Compensation Committee of the Company’s Board of Directors (the “Committee”) upon any questions arising under the Plan, this Summary of Grant or the Agreement.

 

The Grantee acknowledges that the Plan and the Plan prospectus are available on our intranet under “Human Resources” at http://auxlink.auxilium.com/portal/page/portal/Login; provided that paper copies of the Plan and the Plan prospectus are available upon request by contacting the Human Resources Department at jlarmstrong@auxilium.com or 1-484-321-2172.

 

 

	
 
    	
Agreed   and accepted:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Grantee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date

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