Document:

Document

Exhibit 10.36

REPUBLIC SERVICES, INC.
EMPLOYEE RESTRICTED STOCK UNIT AGREEMENT

			
	Recipient Name : /$ParticipantName$/

	Grant Date : /$GrantDate$/

	Grant Type : /$GrantType$/

	RSUs Granted : /$AwardsGranted$/

	Plan Name : /$PlanName$/

THIS RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”), dated as of the Grant Date shown above, between Republic Services, Inc., a Delaware corporation (the “Company”) and Recipient (the “Recipient”), is made pursuant and subject to the provisions of the Republic Services, Inc. 2021 Stock Incentive Plan, and any future amendments thereto (the “Plan”).  The Plan, as it may be amended from time to time, is incorporated herein by reference.
1.Definitions.  All capitalized terms used herein but not expressly defined shall have the meaning ascribed to them in the Plan, a copy of which is being provided as part of the grant acceptance materials and is incorporated herein by reference.  All references to the Company in this Agreement shall also be deemed to include references to any and all entities directly or indirectly controlled by the Company and which are consolidated with the Company for financial accounting purposes.
2.Award of Restricted Stock Units.  Subject to the terms and conditions of the Plan and to the terms and conditions herein set forth in this Agreement, the Company on this date awards to the Recipient the number of Restricted Stock Units shown in the box above as RSUs Granted (referred to as the “Restricted Stock Units”).
3.Vesting
a.Vesting Schedule.  Subject to the terms and conditions of this Agreement, the Restricted Stock Units shall vest and become nonforfeitable on the dates (each a “Vesting Date”) and in the percentages set forth in accordance with the following schedule, provided that the Recipient’s continuous service with the Company continues until the applicable Vesting Date:
						
	Vesting Date	Vesting Percentage
		(Percentage of Total Award

		Vested as of Applicable Date)

	1st Annual Anniversary of the Grant Date	25%
	2nd Annual Anniversary of the Grant Date	50%
	3rd Annual Anniversary of the Grant Date	75%
	4th Annual Anniversary of the Grant Date	100%

Except as otherwise specifically provided herein, there shall be no proportionate or partial vesting in the periods prior to each Vesting Date, and all vesting shall occur only on the applicable Vesting Date.
b.Acceleration of Vesting on Account of Death, Disability, Retirement, Termination of Employment, or for Other Reasons.
i.Death or Disability.  The Restricted Stock Units not yet vested and that have not previously been forfeited shall become 100% vested and transferable in the event that the Recipient’s continuous service with the Company terminates by reason of the Recipient’s death or Disability.
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ii.Retirement.  The Restricted Stock Units not yet vested and that have not previously been forfeited shall become 100% vested and transferable in the event that (1) the Recipient’s continuous service with the Company terminates by reason of the Recipient’s retirement on or after the one year anniversary of the Grant Date and (2) at the time of such retirement:
1.the Recipient is at least fifty-five (55) years old and has completed twenty (20) years of continuous service with the Company; is at least fifty-six (56) years old and has completed ten (10) years of continuous service with the Company; is at least sixty (60) years old and has completed at least five (5) years of continuous service with the Company; or is at least sixty-five (65) years old (without regard to years of service), and in any of these cases has provided the Company not less than ninety (90) days prior written notice of Recipient’s intent to retire; and
2.the Company does not provide the Recipient with written notice on or before the anticipated retirement date that the Company intends or has grounds to terminate the Recipient’s continuous service for Cause.
For purposes of determining years of continuous service, service shall include service in any capacity as an employee or a director with any entity whose financial statements are required to be consolidated with the financial statements of the Company, including service with any such entity prior to the date on which the entity’s financial statements were required to be so consolidated.
iii.Employment Agreement.  In the event that the Recipient has entered into any employment agreement between the Recipient and the Company that is in effect on the date on which the Recipient’s continuous service with the Company is terminated and such employment agreement provides benefits upon the Recipient’s retirement and/or termination of employment, the applicable provisions within such employment agreement relating to the Recipient’s retirement and/or termination of employment shall apply, notwithstanding any provision in Section 3(b)(ii) of this Agreement to the contrary.  In addition, to the extent the Restricted Stock Units have not yet vested and have not previously been forfeited, such Restricted Stock Units shall become partially or fully vested and transferable at such times and in such amounts as may be required under the Company’s Executive Separation Policy, as amended from time to time and as applicable.
4.Terms and Conditions.  This award of Restricted Stock Units is subject to the following terms and conditions:
a.Payment for Restricted Stock Units; Forfeiture of Unvested Units; Deferral of Restricted Stock Units. 
i.Except as otherwise provided in paragraph (ii) of this Section 4(a), Section 4(d) or Section 14 hereof, the Recipient shall receive one share of Common Stock for each vested Restricted Stock Unit awarded hereunder, free and clear of the restrictions set forth in this Agreement, except for any restrictions necessary to comply with federal and state securities laws.  Certificates (or other indicia of ownership) representing such shares shall be delivered to the Recipient as promptly as practical (but in no event more than 30 days) following the date on which the portion of the Restricted Stock Units to which the distribution relates becomes vested.  Any Restricted Stock Units that are not vested as of the Recipient’s separation from service, within the meaning of Section 409A of the Code and applicable Treasury Regulations (the “Separation from Service”), and that will not become vested pursuant to Section 3(b) hereof, shall automatically and immediately be forfeited on the date of the Recipient’s Separation from Service.
ii.The Recipient may elect to defer the Restricted Stock Units pursuant to the Republic Services, Inc. Deferred Compensation Plan, as may be amended from time to time (the “Deferred Compensation Plan”), and if the Recipient properly and timely does so, the Restricted Stock Units shall be automatically converted into a corresponding number of units under the Republic Services Stock Unit Fund (the “Units”), and shall be credited to the Recipient’s Account Balance (as defined in the Deferred Compensation Plan) in accordance with Section 3.9(c) of the Deferred Compensation Plan.  The Units shall remain subject to the vesting and forfeiture provisions set forth in Sections 3, 4(h) and 4(k) of this Agreement.  The Units shall be payable in actual shares of Common Stock at the times provided for under the Deferred Compensation Plan as may be amended from time to time.
b.Hypothetical Nature of Restricted Stock Units.  The Restricted Stock Units awarded herein do not represent an equity security of the Company and do not carry any voting or dividend rights, except the right to receive Dividend Equivalents in accordance with Section 4(c) hereof.
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c.Dividend Equivalents.  Provided that the Recipient’s continuous service has not terminated prior to the dividend record date, or the Recipient’s continuous service terminated prior to the dividend record date but the Recipient has not been paid for the Recipient’s vested Restricted Stock Units as of the dividend record date solely on account of the Recipient being a “specified employee” (as defined under Section 14(d) hereof) subject to the six-month delay for payment of the Recipient’s vested Restricted Stock Units, as required under Section 14(d) hereof, the Recipient shall receive Dividend Equivalents in the form of additional Restricted Stock Units or fractional Restricted Stock Units each time a dividend or other distribution is paid on the Company's Common Stock.  The number of Restricted Stock Units awarded for a cash dividend or non-cash dividend other than a stock dividend shall be determined by (i) multiplying the number of Restricted Stock Units held by the Recipient pursuant to this Agreement as of the dividend record date by the amount of the dividend per share of Common Stock and (ii) dividing the product so determined by the Fair Market Value of the Common Stock on the dividend payment date.  The number of Restricted Stock Units awarded for a stock dividend shall be determined by multiplying the number of Restricted Stock Units held by the Recipient pursuant to this Agreement as of the dividend record date by the number of additional shares of Common Stock actually paid as a dividend per share of Common Stock.  Any additional Restricted Stock Units awarded pursuant to this Section 4(c) shall be awarded effective as of the date the dividend was paid, and shall have the same status, and shall be subject to the same terms and conditions (including without limitation the vesting and forfeiture provisions), under this Agreement as the Restricted Stock Units to which they relate, and shall be distributed on the same payment date referred to in Section 4(a) herein as the Restricted Stock Units to which they relate (or if later, as of the applicable dividend payment date), or alternatively, at the times provided for under the Deferred Compensation Plan to the extent the Recipient elected to defer some or all of the Restricted Stock Units to which the Dividend Equivalents relate under the Deferred Compensation Plan.
d.Unforeseeable Financial Emergency.  If the Recipient experiences an Unforeseeable Financial Emergency, the Recipient may petition the Committee to receive the payment of shares of Common Stock for all or part of his vested Restricted Stock Units prior to his Separation from Service.  If the Committee, in its sole discretion, grants the Recipient’s petition, then the Recipient shall only receive shares of Common Stock as necessary to satisfy the Unforeseeable Financial Emergency to the extent deemed necessary by the Committee.  “Unforeseeable Financial Emergency” shall mean a severe financial hardship to the Recipient resulting from (i) an illness or accident of the Recipient, the Recipient’s spouse, or the Recipient’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2), or (d)(1)(B) of the Code), (ii) a loss of the Recipient’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance), or (iii) similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Recipient, all as determined in the sole discretion of the Committee.
e.Tax Withholding.
i.The Recipient shall pay to the Company, or make arrangements satisfactory to the Committee for payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to the grant of Restricted Stock Units (including without limitation the vesting thereof) and any Dividend Equivalents or other distributions made by the Company to the Recipient with respect to the Restricted Stock Units as and when the Company determines those amounts to be due, and the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to Recipient any federal, state, or local taxes of any kind required by law to be withheld with respect to the Restricted Stock Units or any Dividend Equivalents or other distributions made by the Company to the Recipient with respect to any Restricted Stock Units.
ii.The Recipient agrees that his or her minimum withholding tax obligation with respect to the granting or vesting of the Restricted Stock Units and any Dividend Equivalents or other distributions made by the Company to the Recipient with respect to the Restricted Stock Units will be satisfied (provided that the Recipient has enough vesting or vested shares available) by the Company’s withholding a portion of the shares of Common Stock otherwise deliverable to the Recipient, such shares being valued at their fair market value as of the date on which the taxable event that gives rise to the withholding requirement occurs.  The Recipient further agrees that each time the Company withholds shares to satisfy his or her minimum withholding tax obligation, the Company will round up to the nearest whole number of shares (with any over withholding applied to federal income tax).  For example, if 9.6 shares are required to satisfy the minimum withholding tax obligation, the 
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Company will round up to 10 shares.  By accepting this Agreement, the Recipient consents to this method of tax withholding, including the Company rounding up to the nearest whole number of shares.
f.No Right to Continued Employment or Service.  This Agreement does not confer upon the Recipient any right with respect to continuance of employment or service by the Company, nor shall it interfere in any way with the right of the Company to terminate the Recipient’s employment at any time.
g.Transferability of Awards.
i.Restrictions on Transfer.  No Restricted Stock Units shall be transferable or assignable by the Recipient, other than by will or the laws of descent and distribution or pursuant to a domestic relations order within the meaning of Section 414(p)(1)(B) of the Code.
ii.Notice.  No transfer permitted under Section 4(g)(i) of any Restricted Stock Units shall be effective to bind the Company unless the Committee shall have been furnished with (1) a Notice of Restricted Stock Unit Transfer in the form required by the Committee executed and dated by the Recipient (or the executor or personal representative of the deceased Recipient’s estate) and a copy of the will, assignment or transfer document and/or such evidence as the Committee may deem necessary to establish the validity of the transfer, and (2) the Statement of Acknowledgement in the form required by the Committee executed and dated by the transferee which states that the transferee will comply with all the terms and conditions of the Plan and the Agreement relating to the Restricted Stock Units that are or would have been applicable to the Recipient.
h.Forfeiture by Reason of Detrimental Activity.  The Restricted Stock Units shall be subject to Section 17(n) of the Plan.  Notwithstanding any other provision of this Agreement to the contrary, if the Recipient engages in any Detrimental Activity at any time prior to or during the one year period after the latest date on which any portion of the Restricted Stock Units become vested but prior to a Change in Control, the Company shall, upon the recommendation of the Committee in its sole and absolute discretion, be entitled to (i) immediately terminate and cancel any portion of the Restricted Stock Units that have not previously been settled with shares of Common Stock, and/or (ii) require within two (2) years after the latest date on which any portion of the Restricted Stock Units are settled but prior to a Change in Control that the Recipient (1) return to the Company any shares of Common Stock that were distributed to the Recipient in settlement of the Restricted Stock Units, or if such shares of Common Stock are not still owned by the Recipient, that the Recipient pay to the Company an amount equal to the Fair Market Value of such shares of Common Stock on the date they were issued, and (2) return to the Company any cash or other property (other than Common Stock) received by the Recipient from the Company pursuant to this Agreement.
i.Right to Set Off.  By accepting this Agreement, the Recipient consents to a deduction from any amounts the Company owes the Recipient from time to time (including amounts owed to the Recipient as wages or other compensation, for any benefits, or vacation pay, as well as any other amounts owed to the Recipient by the Company), up to the dollar amount the Recipient owes the Company under Section 4(h) or 4(k) hereof.  Whether or not the Company elects to make any set off in whole or in part, if the Company does not recover by means of set off the full amount the Recipient owes the Company calculated as set forth in Section 4(h) hereof, the Recipient agrees to pay immediately the unpaid balance to the Company.
j.Board of Director Discretion.  The Recipient may be released from his or her obligations under Sections 4(h) and 4(i) hereof only if the Board, or a duly authorized committee thereof, determines, in its sole and absolute discretion, that such action is not adverse to the interests of the Company.
k.Clawback Policy.  Notwithstanding anything to the contrary contained herein, in consideration of the grant of this award, the Recipient agrees that the Restricted Stock Units will be subject to forfeiture or repayment to the extent provided for in the Republic Clawback Policy, as in effect from time to time, if it is determined in accordance with such policy that a Restatement (as defined in such policy) has occurred.
5.Change of Control or Capital Structure.  
a.Change in Capital Structure.  Subject to any required action by the shareholders of the Company, the number of Restricted Stock Units covered by this award shall be proportionately adjusted and the terms of the restrictions on such Restricted Stock Units shall be adjusted as the Committee shall determine to be equitably required for any increase or decrease in the number of issued and outstanding shares of Common Stock of the Company resulting from any stock dividend (but only on the Common Stock), stock split, subdivision, combination, reclassification, recapitalization or general issuance to the holders of Common Stock of rights to 
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purchase Common Stock at substantially below Fair Market Value or any change in the number of such shares outstanding effected without receipt of cash or property or labor or services by the Company or for any spin-off, spin-out, split-up, split-off or other distribution of assets to shareholders.
b.Change in Control.  The award of Restricted Stock Units shall not become immediately vested in the event that a Change in Control occurs, except to the extent required in any employment agreement or consulting agreement between the Company and the Recipient or under the Company’s Executive Separation Policy, as amended from time to time and as applicable.  In the event of a change in the Common Stock as presently constituted, which is limited to a change in all of its authorized shares without par value into the same number of shares with par value, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan.
c.Other Adjustments.  The award of Restricted Stock Units pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.
6.Governing Law and Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflict of laws.  The parties agree that any action, suit or proceeding arising out of or related to this Agreement or the relationship of the Recipient and the Company, shall be instituted only in the state or federal courts located in Maricopa County in the State of Arizona, and each party waives any objection which such party may now or hereafter have to such venue or jurisdictional court in any action, suit, or proceeding.  Any and all services of process and any other notice in any such action, suit or proceeding shall be effective against any party if given by mail (registered or certified where possible, return receipt requested), postage prepaid, mailed to such party at the address set forth herein.
7.Severability.  The invalidity or enforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.  In the event that a court of competent jurisdiction should determine that any time period provided for in Section 4(h) or 4(k) is unenforceable, then such period shall be reduced to the longest period of time which such court shall deem enforceable, taking into consideration the purpose and intent of the Plan to serve the interests of the Company and its shareholders.
8.Notices.  All notices or other communications with respect to the Restricted Stock Units shall be deemed given and delivered in person or mailed by registered or certified mail (return receipt requested, postage prepaid) to the Company’s Stock Administrator at the following address (or such other address, as shall be specified by like notice of a change of address) and shall be effective upon receipt:
                    Stock Administrator
                    Republic Services, Inc.
                    18500 N. Allied Way
                    Phoenix, AZ  85054
9.Waiver.  The failure of any party at any time to require strict performance of any condition, promise, agreement or understanding set forth in this Agreement shall not be construed as a waiver or relinquishment of the right to require strict performance of the same condition, promise, agreement or understanding at a subsequent time.
10.Interpretation/Provisions of Plan Control.  In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern.  The Recipient hereby accepts as final, conclusive and binding, any decisions by the Committee with respect to the interpretation or administration of the Plan and this Agreement.
11.Recipient Bound by Plan.  The Recipient hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms, conditions and provisions thereof.
12.Binding Effect.  Subject to the limitations stated in this Agreement and in the Plan, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company and the Recipient’s heirs, legatees, distributees and personal representatives.
13.Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  The facsimile or email 
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transmission of a signed signature page or an electronic acceptance of the Agreement, by any party to the other(s), shall constitute valid execution and acceptance of this Agreement by the signing/transmitting party.
14.Section 409A.
a.General.  It is the intention of both the Company and the Recipient that the benefits and rights to which the Recipient could be entitled pursuant to this Agreement comply with Section 409A of the Code and the Treasury Regulations and other guidance promulgated or issued thereunder (“Section 409A”), to the extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.  If the Recipient or the Company believes, at any time, that any such benefit or right that is subject to Section 409A does not so comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Recipient and on the Company).
b.No Representations as to Section 409A Compliance.  Notwithstanding the foregoing, the Company does not make any representation to the Recipient that the Restricted Stock Units awarded pursuant to this Agreement are exempt from, or satisfy, the requirements of Section 409A, and the Company shall have no liability or other obligation to indemnify or hold harmless the Recipient or any Beneficiary for any tax, additional tax, interest or penalties that the Recipient or any Beneficiary may incur in the event that any provision of this Agreement, or any amendment or modification thereof or any other action taken with respect thereto is deemed to violate any of the requirements of Section 409A.
c.Separation from Service.  If and to the extent permitted by Treasury Regulations Section 1.409A-1(h)(5) or other applicable law, the Recipient provides services both as an employee of the Company and as a member of the Board, the services provided as a member of the Board shall not be taken into account in determining whether the Recipient has incurred a Separation from Service for purposes of Section 4(a) hereof.
d.6 Month Delay for Specified Employees. 
i.If the Recipient is a “Specified Employee,” then no payment or benefit that is payable on account of the Recipient’s “Separation from Service” shall be made before the date that is six months after the Recipient’s “Separation from Service” (or, if earlier, the date of the Recipient’s death) if and to the extent that such payment or benefit constitutes deferred compensation (or may be nonqualified deferred compensation) under Section 409A and such deferral is required to comply with the requirements of Section 409A.  Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.
ii.For purposes of this provision, the Recipient shall be considered to be a “Specified Employee” if, at the time of his or her Separation from Service, the Recipient is a “key employee,” within the meaning of Section 416(i) of the Code, of the Company (or any person or entity with whom the Company would be considered a single employer under Section 414(b) or Section 414(c) of the Code) any stock in which is publicly traded on an established securities market or otherwise.
e.No Acceleration of Payments.  Neither the Company nor the Recipient, individually or in combination, may accelerate any payment or benefit that is subject to Section 409A, except in compliance with Section 409A and the provisions of this Agreement, and no amount that is subject to Section 409A shall be paid prior to the earliest date on which it may be paid without violating Section 409A.
15.Fractional Restricted Stock Units.  Notwithstanding any provisions in this Agreement to the contrary, fractional Restricted Stock Units shall not vest until the date on which the Restricted Stock Units become 100% vested under Sections 3(a) or 3(b) hereof, and no share of Common Stock will be issued for the fractional Restricted Stock Unit unless the fractional Restricted Stock Unit is for at least one-half of a Restricted Stock Unit.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Recipient has affixed his or her signature hereto.
                            
REPUBLIC SERVICES, INC.

_____________________________
By: 
                                  Chief Executive Officer
7Exhibit 4.10

 

Fresenius Medical Care AG & Co. KGaA

 

Long Term Incentive Plan 2019

 

 

TABLE OF CONTENTS

 

	
CLAUSE
    	
 
    	
 
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.
    	
 
    	
PREAMBLE AND PURPOSE
    	
 
    	
3
    
	
2.
    	
 
    	
ELIGIBILITY TO RECEIVE PERFORMANCE SHARES
    	
 
    	
3
    
	
3.
    	
 
    	
PERFORMANCE SHARES
    	
 
    	
4
    
	
4.
    	
 
    	
GRANT OF PERFORMANCE SHARES
    	
 
    	
4
    
	
5.
    	
 
    	
PERFORMANCE TARGETS
    	
 
    	
5
    
	
6.
    	
 
    	
GEP-II TARGETS AND FREE CASH FLOW-TARGET
    	
 
    	
11
    
	
7.
    	
 
    	
VESTING OF PERFORMANCE SHARES
    	
 
    	
16
    
	
8.
    	
 
    	
SETTLEMENT OF PERFORMANCE SHARES/CAP ON PAYMENTS
    	
 
    	
16
    
	
9.
    	
 
    	
PERFORMANCE SHARES IN SPECIAL CASES
    	
 
    	
18
    
	
10.
    	
 
    	
NO TRANSFERABILITY / FORFEITURE
    	
 
    	
20
    
	
11.
    	
 
    	
TAXES, CONTRIBUTIONS AND OTHER EXPENSES
    	
 
    	
20
    
	
12.
    	
 
    	
PROCEDURE, ENDING AND ADJUSTMENT OF THE PLAN
    	
 
    	
21
    
	
13.
    	
 
    	
LIABILITY RISKS, EXCHANGE RISKS AND TAX RISKS
    	
 
    	
24
    
	
14.
    	
 
    	
TERM OF THE PLAN
    	
 
    	
24
    
	
15.
    	
 
    	
MISCELLANEOUS PROVISIONS
    	
 
    	
24
    
	
16.
    	
 
    	
DEFINITIONS
    	
 
    	
25
    

 

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1.                                               Preamble and Purpose

 

1.1                                        The management board (the Management Board) of Fresenius Medical Care Management AG (the General Partner), the general partner of Fresenius Medical Care AG & Co. KGaA (the Company), decided to establish the Fresenius Medical Care Long Term Incentive Plan 2019 (the Plan) to enable the granting of virtual performance-based shares of the Company (the Performance Shares) to the members of the management boards of Affiliated Companies and to managerial staff members (Führungskräfte) of the Company and of Affiliated Companies (each a Participant) as a long-term compensation component.

 

1.2                                        The Performance Shares may entitle the Participants to receive a cash payment from the Company subject to the following provisions. The Plan contains the requirements, terms and conditions as well as the procedures for the grant and settlement of Performance Shares (the Plan Conditions) and has been adopted by the Management Board.

 

1.3                                        The purpose of this Plan is to align the interests of the Participants with the interests of the Company and its shareholders in encouraging the long-term and sustainable growth of the Company. This Plan offers the Participants a competitive and transparent compensation component which combines the long-term benefits for the Participants with the sustained success of the Company.

 

1.4                                        Capitalized terms used in this Plan but not defined in the body of the Plan are defined in Clause 16.

 

2.                                               Eligibility to receive Performance Shares

 

2.1                                        The eligibility of Participants to receive Performance Shares will be finally determined by the Management Board, in each case — i.e. for each grant — in accordance with the terms of this Plan.

 

2.2                                        This Plan does not establish and should not be read or construed so as to establish a legal right to receive Performance Shares. Neither the status or possible status of an employee or a member of the management within FME Group as Participant nor the fact that a Participant was granted Performance Shares in previous periods shall be interpreted as an obligation that Performance Shares shall be granted or, if granted,

 

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shall continue to be granted in the future. In particular, granting Performance Shares does not constitute an operational practice (betriebliche Übung), even if Performance Shares have been granted for several successive years.

 

3.                                               Performance Shares

 

3.1                                        Performance Shares issued under the Plan may entitle a Participant to receive a cash payment from the Company or from any Affiliated Company in accordance with the Plan Conditions.

 

3.2                                        A Performance Share is a non-equity, cash-settled virtual compensation instrument. The Performance Shares will not be evidenced by certificates. Without limiting the generality of the foregoing, nothing in this Plan, any grant of Performance Shares, the achievement of any Performance Target for any Performance Shares or the vesting of any Performance Shares shall entitle any Participant to receive shares of the Company or confer upon or be interpreted as conferring upon any Participant any right or interest whatsoever as a shareholder of the Company or of any other member of the FME Group including, but not limited to, the right to vote at, to receive notice of, or to attend any meeting of shareholders of any member of the FME Group or any other proceedings of any such FME Group member, or the right to dividends or other distributions.

 

4.                                               Grant of Performance Shares

 

4.1                                        Subject to final determination by the Management Board the Participants will be granted Performance Shares within a time period of three years starting with 1 January 2019. Performance Share grants may be made twice a year with effect as of the last Monday in July and the first Monday in December (each a Grant Date). The Grant Date can, however, be subject to deviation in case of objective grounds (sachliche Gründe), as may be decided by the Management Board.

 

4.2                                        Each Participant will be awarded an individual Grant Value (the Grant Value) in the currency in which the Participant receives his/her base salary (the Grant Currency) from the Company or an Affiliated Company at the time when the Grant Value is determined by the Company or the General Partner. To determine the number of Performance Shares to be granted to the respective Participant (the Number of Granted Performance Shares) the Grant Value denominated in the Grant Currency will then be converted into Euro based on the average Foreign Currency Exchange

 

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Rates effectively established over a period of 30 (thirty) calendar days prior to each Grant Date (the FX Rates at Grant Date) and divided by the value per Performance Share at Grant Date. The value per Performance Share will be determined in accordance with IFRS 2 on each respective Grant Date, denominated in Euro, and considering the average Stock Exchange Price effectively established over a period of 30 (thirty) calendar days prior to such Grant Date. For the avoidance of doubt, the Number of Granted Performance Shares will be rounded up or down to the next closest integer number (e.g. 124.54 will result in 125). The amount of the individual Grant Value shall be determined on the basis of the Participant’s individual performance and the Participant’s responsibilities within FME Group. This determination will be made for each grant at the Management Board’s discretion.

 

4.3                                        The grant of Performance Shares will be made without any payment by the Participant.

 

4.4                                        The grant shall be communicated to the Participants in text form, i.e. by mail, email or via an online platform. No grant shall be effective unless and until it is communicated to the Participant.

 

5.                                               Performance Targets

 

5.1                                        Based on the degree of attainment of three pre-determined financial targets (the Performance Targets) the Number of Performance Shares to Vest can vary from 0% to 200% of the Number of Granted Performance Shares. The three Performance Targets are:

 

(a)                                          Revenue Growth

(b)                                          Net Income Growth and

(c)                                           Return on Invested Capital.

 

5.2                                        The achievement of the respective Performance Targets in relation to each grant of Performance Shares is measured over a performance period of three years starting from the beginning of the calendar year in which the respective grant was made (the Performance Period). The degree of attainment for the respective Performance Targets is determined as follows:

 

(a)                                          Revenue Growth shall mean the annual growth of revenues of the Company determined following the International Financial Reporting Standards (IFRS) using the Company’s consolidated reported and audited figures in Euro for the

 

5

 

financial statements prepared in accordance with IFRS. The growth rates for the former are determined at Constant Currency.

 

(i)         For Performance Shares granted in fiscal year 2019, a Revenue Growth target achievement of 100% is reached at an average annual Revenue Growth throughout the Performance Period of 7%. For Revenue Growth between 0% to 7% and 7% to 16% the target achievement is linearly interpolated — see Figure 1.

 

	
 
    	
 
    	
Growth
    	
 
    	
Achievement
    	
 
    	
Weight
    
	
Performance
    	
 
    	
<   0%
    	
 
    	
0%
    	
 
    	
 
    
	
Target 1:
    	
 
    	
7%
    	
 
    	
100%
    	
 
    	
1/3
    
	
Revenue Growth
    	
 
    	
>    16%
    	
 
    	
200%
    	
 
    	
 
    

 

Figure 1 —Revenue Growth target values for the 2019 grant

 

(ii)        For Performance Shares granted as from fiscal year 2020, the target values for Revenue Growth, for which a target achievement of 0%, 100% and 200% is reached, will be communicated to the Participants for each fiscal year in text form, i.e. by mail, email or via an online platform. If the Revenue Growth is within a range of the target values, in which the target achievement is between 0% and 100% or between 100% and 200%, the target achievement is interpolated linearly.

 

(iii)       The following applies to all Performance Shares: In case of changes to IFRS accounting principles in the first year in which such policies become effective the relevant figures of the respective prior year as restated according to such policies should form the basis for the determination of the growth in revenues. If such restatements will not be made, pro forma figures for the relevant year in which such changes become effective for the first time shall be calculated under the old regime with reasonable effort to determine the Revenue Growth.

 

(b)                                          Net Income Growth shall mean the annual growth of net income attributable to the shareholders of the Company determined in accordance with IFRS using

 

6

 

the consolidated reported and audited figures in Euro for the financial statements prepared in accordance with IFRS. The growth rates for the former are determined at Constant Currency.

 

(i)         For Performance Shares granted in fiscal year 2019, a Net Income Growth target achievement of 100% is reached at an average annual Net Income Growth throughout the Performance Period of 7%. For a Net Income Growth between 0% to 7% and 7% to 14% the target achievement is linearly interpolated — see Figure 2.

 

	
 
    	
 
    	
Growth
    	
 
    	
Achievement
    	
 
    	
Weight
    
	
Performance
    	
 
    	
<   0%
    	
 
    	
0%
    	
 
    	
 
    
	
Target 2:
    	
 
    	
7%
    	
 
    	
100%
    	
 
    	
1/3
    
	
Net Income Growth
    	
 
    	
>    14%
    	
 
    	
200%
    	
 
    	
 
    

 

Figure 2 - Net Income Growth target values for the 2019 grant

 

(ii)        For Performance Shares granted as of fiscal year 2020, the target values for Net Income Growth, for which a target achievement of 0%, 100% and 200% is reached, will be communicated to the Participants for each fiscal year in text form, i.e. by mail, email or via an online platform. If the Net Income Growth is within a range of the target values, in which the target achievement is between 0% and 100% or between 100% and 200%, the target achievement is interpolated linearly.

 

(iii)       The following applies to all Performance Shares: In case of changes to IFRS accounting principles in the first year in which such policies become effective the relevant restated figures of the prior year should form the basis for the determination of the Net Income Growth. If such restatements will not be made, pro forma figures for the relevant year in which such changes become effective for the first time shall be calculated under the old regime with reasonable effort to determine the Net Income Growth.

 

7

 

(c)              Return on Invested Capital (ROIC) shall mean the ROIC level based on the Company’s consolidated, reported and audited financial statements determined in accordance with IFRS.

 

The ROIC is measured against a target ROIC (the Target ROIC) defined for each year throughout the Performance Period. The Target ROIC is defined as the ROIC level at which a target achievement of 100% will be reached.

 

(i)         For Performance Shares granted in fiscal year 2019, the Target ROIC for 2019 is 7.9%; for the two consecutive years of the Performance Period, the Target ROIC is 8.1% in each case. The target achievement will be 0% in case the ROIC of the respective year will be 0.2%-points below the Target ROIC for such year. Accordingly, a ROIC target achievement of 200% will apply in case the ROIC for a respective year will be 0.2%-points above the Target ROIC for such year. For ROIC levels between 0.2%-points below the Target ROIC, the Target ROIC and 0.2%-points above the Target ROIC, the respective ROIC target achievement will be calculated by means of linear interpolation — see Figure 3.

 

	
 
    	
 
    	
Level
    	
 
    	
Achievement
    	
 
    	
Weight
    
	
Performance Target 3:
    	
 
    	
0.2%-points below TR
    	
 
    	
0%
    	
 
    	
 
    
	
ROIC level against Target
    	
 
    	
TR
    	
 
    	
100%
    	
 
    	
1/3
    
	
ROIC (TR)
    	
 
    	
0.2%-points above TR
    	
 
    	
200%
    	
 
    	
 
    

 

Figure 3 - ROIC level against the Target ROIC for the 2019 grant

 

The following applies only to Performance Shares granted in 2019: In case that the annual ROIC target achievement in the third year of a respective Performance Period is equal or higher than each annual ROIC target achievement of such respective Performance Period, the annual ROIC target achievement of the third year shall be applied for the determination of the Yearly Target Achievements, as defined in Clause

 

8

 

5.3, for the first and the second year of such respective Performance Period.

 

(ii)           For Performance Shares granted as of fiscal year 2020, the Target ROIC as well as the ROIC-values for which a target achievement of 0%, 100% and 200% is reached, will be communicated to the Participants for each fiscal year in text form, i.e. by mail, email or via an online platform. If the ROIC level is within a range of the target values, in which the target achievement is between 0% and 100% or between 100% and 200%, the target achievement is interpolated linearly.

 

(iii)          The following applies to all Performance Shares: In case of changes to IFRS accounting principles first effective on or after 1 January of the year of the respective grant, the ROIC determining the respective ROIC target achievement for the relevant year in which such changes become effective for the first time as well as for the relevant consecutive years shall be calculated under the old regime with reasonable effort to determine the ROIC level.

 

5.3                                        The achievement of the Performance Targets is determined annually, as described in Clause 5.2, and for each year of the Performance Period and as soon as the Company’s audited figures for such respective year are available (the Yearly Target Achievement); for this purpose, the three Performance Targets are weighted equally (i.e. 1/3, 1/3, 1/3). The target achievement for each Performance Target is capped at 200% for each year of the Performance Period.

 

9

 

Example:

 

 

5.4                                        Subject to potential modifications in accordance Clause 6, the overall target achievement for each respective grant of Performance Shares is calculated by taking the average of the Yearly Target Achievements of the respective Performance Period (the Overall Target Achievement); for this purpose, each Yearly Target Achievement is weighted equally (i.e. 1/3, 1/3, 1/3).

 

Example:

 

 

10

 

5.5                               The total number of Performance Shares attributable to each Participant pursuant to Clauses 4.2 and 5.1 to vest (the Number of Performance Shares to Vest) is calculated by multiplying the Number of Granted Performance Shares with the Overall Target Achievement (which is potentially increased in accordance with Clause 6).

 

Example:

 

 

5.6                               The individual figures for each Performance Target shall be rounded using commercial rounding to the second decimal place of the percentage figure (e.g. 8.1523% will result in 8.15%); this applies mutatis mutandis to all further calculations concerning the achievement of targets, unless expressly provided otherwise in this Plan. The Yearly Target Achievement and the Overall Target Achievement shall be rounded using commercial rounding to the next integer in percentage points (e.g. 129.93% will result in 130%); in case the Overall Target Achievement determined in accordance with Clause 5.4 is increased in accordance with Clause 6, such Overall Target Achievement as increased in accordance with Clause 6 shall be rounded instead of the Overall Target Achievement determined in accordance with Clause 5.4. The Number of Performance Shares to Vest shall also be commercially rounded to the next integer number (e.g. 162.5 will result in 163).

 

6.                                      GEP-II Targets and Free Cash Flow-Target

 

6.1                               The following applies to Performance Shares granted in 2019: The Overall Target Achievement as determined in accordance with Clause 5.4 sentence 1 may be subject to an increase if certain targets in relation to the Company’s Global Efficiency Program II (the GEP-II Targets) and/or certain targets in relation to the Free Cash Flow (the Free Cash Flow-Target) are achieved.

 

11

 

6.2                               The GEP-II Targets are (a) the GEP-II EBIT Improvement and (b) the GEP-II Cash Release.

 

(a)                                 GEP-II EBIT Improvement means the aggregate of the annual incremental sustainable cost savings in Euro at Constant Currency under the Company’s Global Efficiency Program II for the period from 1 January 2018 until 31 December 2021 before tax effect and net of implementation cost for generation of such savings.

 

The target achievement for GEP-II EBIT Improvement will be 0% in case the GEP-II EBIT Improvement will be EUR 150 million or below. A target achievement of 100% will apply in case the GEP-II EBIT Improvement will be EUR 250 million and above. In case the GEP-II EBIT Improvement will be between EUR 150 million and EUR 250 million, the respective target achievement will be calculated by means of linear interpolation — see Figure 4.

 

	
 
    	
 
    	
Value in EUR
    	
 
    	
Achievement
    	
 
    
	
GEP-II Target:
    	
 
    	
<    150 Million
    	
 
    	
0%
    	
 
    
	
GEP-II   EBIT Improvement
    	
 
    	
200 Million
    	
 
    	
50%
    	
 
    
	
 
    	
 
    	
>    250 Million
    	
 
    	
100%
    	
 
    

 

Figure 4 - GEP-II EBIT Improvement

 

In any case, the degree of the target achievement for GEP-II EBIT Improvement is 0% if the aggregate of the annual incremental sustainable cost savings in Euro at Constant Currency under the Company’s Global Efficiency Program II for the period from 1 January 2018 until 31 December 2020 before tax effect and net of implementation cost for generation of such savings amounts to less than EUR 150 million.

 

(b)                                 GEP-II Cash Release means the aggregate of the annual sums of released cash in Euro at Constant Currency under the Company’s Global Efficiency Program II for the period from 1 January 2018 until 31 December 2021.

 

The target achievement for GEP-II Cash Release will be 0% in case the GEP-II Cash Release will be EUR 500 million or below. A target achievement of

 

12

 

100% will apply in case the GEP-II Cash Release will be EUR 1 billion and above. In case the GEP-II Cash Release will be between EUR 500 million and EUR 1 billion, the respective target achievement will be calculated by means of linear interpolation — see Figure 5.

 

	
 
    	
 
    	
Value in EUR
    	
 
    	
Achievement
    	
 
    
	
GEP-II Target:
    	
 
    	
<    500 Million
    	
 
    	
0%
    	
 
    
	
GEP-II   Cash Release
    	
 
    	
750 Million
    	
 
    	
50%
    	
 
    
	
 
    	
 
    	
>    1 Billion
    	
 
    	
100%
    	
 
    

 

Figure 5 - GEP-II Cash Release

 

6.3                               For the determination of the overall GEP-II Target achievement, the individual target achievements for GEP-II EBIT Improvement and GEP-II Cash Release are weighted equally (the GEP-II Target Achievement). The achievement of the GEP-II Target GEP-II EBIT Improvement and the GEP-II Target Achievement will be determined by the Management Board. For purposes of the Plan, the Management Board has resolved that the target achievement of the GEP-II Target GEP-II Cash Release is considered to be 100%, regardless of the actual target achievement.

 

Example:

 

 

6.4                               If the GEP-II Target Achievement is 100%, the Overall Target Achievement determined in accordance with Clause 5.4 for Performance Shares granted in fiscal year 2019 shall be increased by 20%-points. In case of a GEP-II Target Achievement

 

13

 

between 0% and 100%, the respective increase of the Overall Target Achievement will be calculated by means of linear interpolation — see Figure 6.

 

	
 
    	
 
    	
 
    	
 
    	
Increase of Overall
    	
 
    
	
 
    	
 
    	
Achievement
    	
 
    	
Target Achievement
    	
 
    
	
 
    	
 
    	
0%
    	
 
    	
0%-points
    	
 
    
	
GEP-II   Target Achievement
    	
 
    	
50%
    	
 
    	
10%-points
    	
 
    
	
 
    	
 
    	
100%
    	
 
    	
20%-points
    	
 
    

 

Figure 6 - GEP-II Target Achievement

 

6.5                               Free Cash Flow shall mean the net cash provided by (used in) operating activities after capital expenditures before acquisitions and investments, as determined based on the Company’s consolidated, reported and audited financial statements determined in accordance with IFRS. The Free Cash Flow-Target is the increase in Free Cash Flow over the two fiscal years 2020 and 2021, calculated on the basis of the target values, compared with the respective previous fiscal year.

 

(a)                                 The target values for the Free Cash Flow-Target for fiscal year 2020 are provided in Figure 7 below:

 

	
 
    	
 
    	
Value in EUR
    	
 
    	
Achievement
    	
 
    
	
Free Cash   Flow-Target:
    	
 
    	
<   0 Million
    	
 
    	
0%
    	
 
    
	
Increase   of annual
    	
 
    	
700 Million
    	
 
    	
100%
    	
 
    
	
Free   Cash Flow:
    	
 
    	
>   1.400 Million
    	
 
    	
200%
    	
 
    

 

Figure 7 —Free Cash Flow-Target values for fiscal year 2020

 

(b)                                 The Free Cash Flow-Target values for fiscal year 2021 will be communicated to the Participants for each fiscal year in text form, i.e. by mail, email or via an online platform.

 

14

 

(c)                                  If the increase in Free Cash Flow for a fiscal year is between the target values for the Free Cash Flow-Target for the respective fiscal year, the target achievement is interpolated linearly.

 

(d)                                 In case of changes to IFRS accounting principles in the first year in which such policies become effective the respective Free Cash Flow, on the basis of which the attainment of the Free Cash Flow-Target is calculated, is determined, if possible with reasonable effort, in accordance with the accounting principles that were used as the basis for determining the target values.

 

6.6                               The degrees of attainment of the Free Cash Flow-Target for fiscal years 2020 and 2021 are taken into account at a ratio of 50% each to determine the average target achievement of the Free Cash Flow-Target decisive for the increase of the Overall Target Achievement. In case of an average target achievement of the Free Cash Flow-Target of 200% the Overall Target Achievement as determined in accordance with Clause 5.4 is increased by 20 percentage points for Performance Shares granted in fiscal year 2019.

 

If the average target achievement of the Free Cash Flow-Target is between 0% and 200%, the corresponding increase in Overall Target Achievement is interpolated linearly — see Figure 8.

 

	
 
    	
 
    	
Average target achievement
    	
 
    	
Increase of Overall
    	
 
    
	
 
    	
 
    	
Free Cash Flow-Target
    	
 
    	
Target Achievement
    	
 
    
	
Free    Cash  Flow    target achievement
    	
 
    	
0%
    	
 
    	
0%-points
    	
 
    
	
 
    	
 
    	
100%
    	
 
    	
10%- points
    	
 
    
	
 
    	
 
    	
200%
    	
 
    	
20%- points
    	
 
    

 

Figure 8 — Target achievement Free Cash Flow-Target

 

6.7                               Clause 5.6 sentence 1 applies accordingly to the calculation of the respective degree of target attainment and the calculation of the respective increase in the Overall Target Achievement. The Overall Target Achievement is also capped at 200% if the Overall Target Achievement is increased in accordance with this Clause 6.

 

15

 

7.                                      Vesting of Performance Shares

 

7.1                               Vesting Date

 

Subject to the terms of this Plan, the Performance Shares will vest on the date of the third anniversary of the respective Grant Date (the Vesting Date). Exceptions or modifications may apply in special cases described in Clause 9.

 

7.2                               Additional Vesting Conditions

 

Subject to the terms of this Plan, the Performance Shares furthermore will vest only on the conditions and insofar as

 

(a)                                 the Participant continuously has been in an employment or service relationship with FME Group from the Grant Date to the Vesting Date (the Service Condition). In case the Service Condition has not been fulfilled, the respective Performance Shares are forfeited on the date on which the employment or service relationship of the Participant with FME Group ends. Exceptions or modifications may apply in special cases described in Clause 9 hereinafter; and

 

(b)                                 in relation to or in connection with his/her employment or service relationship with FME Group, the Participant has not committed any violations of legal provisions or other rules, e.g. internal guidelines of FME Group (the Compliance Violations). If, following a corresponding investigation, Compliance Violations have been determined conclusively with respect to a Participant, the Management Board is entitled to declare within its reasonable discretion and in due consideration particularly of the nature and the severity of the Compliance Violation the forfeiture, in whole or in part, of the Performance Shares granted to such Participant. The Participant shall be informed of the extent of the forfeited Performance Shares and of the reasons for the corresponding decision in text form, i.e. by mail, email or via an online platform.

 

8.                                      Settlement of Performance Shares/Cap on Payments

 

8.1                               One Performance Share carries the entitlement to receive a cash equivalent of the average Stock Exchange Price effectively established over a period of 30 (thirty)

 

16

 

calendar days prior to the Vesting Date (the Performance Shares Proceeds). Such cash payment will be made on the Vesting Date, or as soon thereafter as is reasonably practicable. The Participant shall be informed of the Number of Performance Shares to Vest and the corresponding cash payments in text form, i.e. by mail, email or via an online platform.

 

8.2                               Performance Shares Proceeds are paid to the Participant in the currency in which the Participant receives his/her base salary from the Company or an Affiliated Company in the month of the Vesting Date (the Settlement Currency). For this purpose, the respective FX Rates at Grant Date shall be applied. The purpose of applying the FX Rates at Grant Date is to mitigate exposure to exchange rate fluctuations between the Grant Date and the Vesting Date. In cases of Extraordinary Developments, the Management Board is entitled to adjust the FX Rates at Grant Date to the benefit of the Participants.

 

8.3                               Following and based on the determination of the Number of Performance Shares to Vest, each Participant shall receive the Performance Shares Proceeds. The amount of Performance Shares Proceeds paid to the Participant is capped in total at an amount equaling 400% of the Grant Value received by the Participant; any exceeding amounts of Performance Shares Proceeds will be forfeited without substitution. Clause 11 and Clause 12.2 remain unaffected.

 

Example for a Participant to be paid in Euro:

 

 

8.4                               Payment of Performance Shares Proceeds to the Participant is made in each case with the proviso (condition subsequent) that with respect to the Participant a Compliance Violation within the meaning of, and pursuant to, Clause 7.2(b) has not been

 

17

 

determined conclusively within a period of three years from the day of the payment of the Performance Shares Proceeds. Clause 12.6 shall remain unaffected.

 

9.                                      Performance Shares in Special Cases

 

9.1                               Retirement

 

(a)                                 For the purpose of this Plan, retirement is defined as a case in which the Participant has reached the age of 63 years and his/her employment or service relationship with FME Group ends (the Retirement). In case of Retirement, the Participant’s Performance Shares shall vest on the respective Vesting Date (subject to the fulfillment of the additional vesting condition pursuant to Clause 7.2(b)).

 

(b)                                 The legal consequence stipulated in sentence 2 of the preceding Clause 9.1(a) shall apply accordingly if (i) the Mandatory Retirement Age applicable to the Participant is lower than 63 years, (ii) the Participant reaches this Mandatory Retirement Age and (iii) the Participant’s employment or service relationship with FME Group ends.

 

(c)                                  As far as legally permissible, all of those Participant’s Performance Shares which have not yet been settled and paid out according to Clause 8 above are forfeited with immediate effect if the Participant, within twelve months after his/her employment or service relationship with FME Group has ended, engages in activities that, in the reasonable judgment of the Company, are directly or indirectly competitive to FME Group, including entering into any employment or consultation relationship with any entity or person engaged in activities directly or indirectly competitive to FME Group; if the prerequisites for a forfeiture were present, but the Participant’s Performance Shares have already been settled and paid out, the consequences in Clause 12.6 shall apply to the relevant Performance Shares Proceeds.

 

9.2                               Occupational Disability

 

In the event of the Participant’s Occupational Disability, Clause 9.1(a) sentence 2 shall apply mutatis mutandis if (i) the Participant provides the Company, or an institution designated by the Company, with suitable evidence of his/her Occupational Disability within three months of the occurrence of the Occupational Disability and (ii) the

 

18

 

Participant’s employment or service relationship with FME Group is terminated due to the Occupational Disability. If such evidence is not provided within the time limit, the Management Board may declare those Performance Shares to be forfeited, which have not yet been settled and paid out according to Clause 8 above.

 

9.3                               Ordinary Termination / Cancellation of Employment by Agreement

 

If a Participant’s employment or service relationship with FME Group has ended by termination or agreement and the legal consequences of Clause 9.1(a) sentence 2 do not apply in accordance with the provisions of Clause 9.1(a), 9.1(b) or 9.2, all Performance Shares not vested on the effective date of the termination or the agreement are forfeited.

 

9.4                               Death

 

In case of death of a Participant, all Performance Shares granted to the Participant until his/her death shall be deemed to have vested as per the expiration of the date of death. For purposes of calculating the Number of Performance Shares to Vest in the meaning of Clause 5.5, an Overall Target Achievement of 100% applies; in this case, the Overall Target Achievement shall not be increased in accordance with Clause 6. The Heirs of the Participant are entitled to receive the Performance Shares Proceeds if they give evidence of their entitlement to the Company or an office named by the Company within three months after the death of the Participant; otherwise, the Management Board may declare the Performance Shares to be forfeited. The Heirs’ entitlement shall become due immediately upon demonstration of the aforementioned evidence and, if due, shall in any case be paid out before 15 March of the calendar year following the due date. Clause 9.5 (Termination for Cause) remains unaffected.

 

9.5                               Termination for Cause

 

Notwithstanding Clauses 9.1 (Retirement), 9.2 (Occupational Disability), 9.3 (Ordinary Termination / Cancellation of Employment by Agreement) and 9.4 (Death), all Performance Shares shall be forfeited if the Participant’s employment or service relationship is terminated by the employer for cause, or if at the time of leaving, there were grounds which would have entitled the employer to terminate the employment agreement or service relationship for cause.

 

19

 

9.6                               Engagement with Fresenius Group

 

The Performance Shares shall not be affected by the transfer of a Participant’s engagement from the Company or from an Affiliated Company to Fresenius SE & Co. KGaA or to an affiliated company of Fresenius SE & Co. KGaA within the meaning of sections 15 et seqq. of the German Stock Corporation Act (Aktiengesetz), including Fresenius Management SE.

 

9.7                               Effect of Change in Status as Affiliated Company

 

If a Participant is employed by a company which ceases to be or does not qualify as an Affiliated Company or, in the case of a transfer of a Participant’s engagement referred to in Clause 9.6, an affiliated company of Fresenius SE & Co. KGaA, all Performance Shares granted to the Participant shall be forfeited.

 

9.8                               Individual Cases

 

In individual cases, the Management Board can waive or amend the provisions of this Clause 9, taking duly into account the Company’s interests.

 

10.                               No Transferability / Forfeiture

 

Performance Shares granted under this Plan and Performance Shares inherited according to Clause 9.4 are not transferable. With the exception of inheritance, any transfer, assignment or disposal of Performance Shares, such as the granting of sub-participations therein, pledging, granting usufruct rights (Nießbrauch) or the formation of a trust, shall be void and invalid. The same applies to legal transactions which are economically equal to a transfer, assignment or disposal.

 

11.                               Taxes, Contributions and other Expenses

 

11.1                        The following applies to Performance Shares granted in 2019: Performance Shares Proceeds are considered gross. Any entitlements or benefits under this Plan may be subject to income tax, social security taxes and other taxes and contributions. This also depends on the legislation of the country where the Participant stays, resides or is subject to tax for other reasons. All taxes and contributions incurred in connection with the Plan shall be borne by the Participant, excluding taxes and contributions which are by law to be borne by the employer. The Company and any Affiliated Companies, as

 

20

 

the case may be, are entitled to withhold and remit such taxes and contributions in accordance with the respective applicable laws.

 

11.2                                 For Performance Shares granted as of fiscal year 2020, the following applies: Performance Share Proceeds are gross proceeds. To the extent permitted by law and subject to relevant internal tax equalization guidelines and/or provisions agreed with the Participant, all taxes and other duties in connection with the Performance Shares shall be borne exclusively by the Participant or his or her legal successors. Any legal obligation of the General Partner, the Company or an Affiliated Company to pay income tax and other taxes or contributions on behalf of the Participant shall remain unaffected. For this purpose, the General Partner, the Company or an Affiliated Company are entitled to withhold the necessary amounts of the Participants’ compensation until taxes and other contributions have been paid in full. Furthermore, the General Partner, the Company or Affiliated Companies are entitled to request payment from the Participant in the amount of the necessary sum which may have to be withheld with respect to the Plan. The General Partner may make the cash payment to the Participant under the Plan conditional upon, inter alia, of proof of payment of taxes and/or other contributions or upon adequate security provided by the Participant. As an example in this context, reference is made to the provisions of Section 38 (4) of the German Income Tax Act. Participants are responsible for their own tax advice, especially with regard to participation in the Plan. The General Partner, the Company or the Affiliated Companies make no representations or warranties as to the existence of any tax liability or otherwise. The Participant will receive a certificate from the General Partner or the Company confirming the financial benefit received. If the Participant is not subject to German tax liability, the above provisions shall apply in accordance with the applicable foreign tax law and/or double taxation treaties.

 

12.             Procedure, Ending and Adjustment of the Plan

 

12.1                                 Unless otherwise provided in this Plan, the Plan shall be interpreted, waived, adjusted or otherwise administered, and may be amended or modified, by the Management Board and all Performance Shares granted to Participants will be approved by the Management Board. Adjustments to the Plan may also be made with regard to Performance Shares which have already been granted, provided that this does not affect the value of the Performance Shares or that the Participant is fully compensated for any financial loss suffered. For the avoidance of doubt, any such adjustments with regard to Performance Shares which have already been granted should not result in a

 

21

 

retroactive reduction or lowering of relevant performance target levels pursuant to this Plan.

 

12.2                                 In case of Extraordinary Developments, the Management Board is entitled to cap the amount of the Grant Value and/or the Number of Granted Performance Shares and/or the Performance Shares Proceeds to be paid to the Participants under the Plan.

 

12.3                                 Furthermore, the Management Board is entitled to determine in certain cases, based on its respective reasonable discretion, that any extraordinary commercial, tax or similar impacts that may occur during any relevant Performance Period affecting the degree of Yearly Target Achievement and/or Overall Target Achievement in relation to individual grants shall in full or in part be disregarded for purposes of determining Yearly Target Achievement and/or Overall Target Achievement pursuant to this Plan in relation to such grants.

 

12.4                                 The Management Board is entitled to end the Plan with effect for all Participants at any time. In this case, the Performance Shares already granted to the Participants remain unaffected.

 

12.5                                 If the Company is required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the U.S. federal securities laws, the Company shall be entitled, without prejudice to Clause 12.6 hereafter, to recover to the full extent required under then current and applicable law and/or applicable stock exchange listing rules from current and former executive officers of the Company who received any bonus or other incentive-based compensation based on the erroneous data during a period of three years preceding the date the Company is required to prepare the accounting restatement, (i) the amount of such bonus or other incentive-based compensation in excess of what would have been paid to the executive officer under the accounting restatement and (ii) such other amounts, if any, as may be recoverable by applicable law.

 

12.6                                 If the Participants have committed Compliance Violations which have occurred and/or have been determined conclusively only after the settlement of Performance Shares within the meaning of Clause 8 above, the Management Board is entitled within its reasonable discretion to claim back the Performance Shares Proceeds, in whole or in part, from the Participant in the Company’s name, provided that and insofar as the Performance Shares Proceeds have been paid to the Participant at a point in time that is within a period of three years prior to the day on which the Company makes the

 

22

 

repayment claim in writing, stating the reasons for such claim. For the avoidance of doubt, the Company’s rights pursuant to this Clause 12.6 shall not prejudice any other rights the Company may have against the Participant in relation to any Compliance Violations under or in connection with his/her employment or service relationship with FME Group.

 

12.7                                 In general, benefit payments remain subject to a substantial risk of forfeiture until they are paid under Clause 8.1, due to the Service Condition imposed under Clause 7.2(a). In such cases, there is no “deferred compensation” and the constraints imposed by U.S. Internal Revenue Code Section 409A do not apply. However, when a Participant’s Performance Shares vest due to one of the special cases established under Clause 9, Plan benefits may constitute “deferred compensation”. In those cases, the Plan shall pay benefits in accordance with Treasury Regulation Section 409A on the fixed date specified in Clause 8.1 or (in case of death) Clause 9.4, thereby complying with Treasury Regulation Section 1.409A-3(a)(4).

 

The administration of any amounts payable hereunder that constitute “deferred compensation” within the meaning of Section 409A will comply with Section 409A, and this Plan shall be administered, interpreted and construed in a manner intended to avoid the imposition of additional taxes, penalties or interest under Section 409A. The Management Board may exercise its right to adjust the Plan pursuant to Clause 12.1 above in order to preserve the intended tax consequences of the Performance Shares, and avoid the imposition of any tax under Section 409A. Notwithstanding the foregoing, the Participant shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of the Participant or his/her Heirs in connection with this Plan (including any taxes, penalties and interest under Section 409A), and neither the Company nor any Affiliated Company shall have any obligation to indemnify or otherwise hold the Participant (or any Heir) harmless from any or all of such taxes, penalties or interest.

 

In the event that any payment to the Participant is deemed to be an installment payment of nonqualified deferred compensation under Section 409A, each individual installment payment shall be deemed to be a separate “payment” within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(iii).

 

Other than by taking actions specifically permitted under this Plan, the Participant shall not have the right, directly or indirectly, to designate the taxable year during which a payment shall be made under this Plan.

 

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13.             Liability Risks, Exchange Risks and Tax Risks

 

13.1                                 The liability of the Company, its legal representatives, employees and agents for simple negligence and consequential loss and loss of profit is excluded.

 

13.2                                 The Company grants no warranty for the general market development and price of the shares of the Company after granting Performance Shares or for any other point or period in time. Therefore, the acceptance of Performance Shares is at the sole risk of each Participant.

 

13.3                                 The Company grants no warranty that the tax and contributions deducted in accordance with Clause 11 (Taxes, Contributions and other Expenses) or other tax and contributions payable by the Participants will be charged only on the Performance Shares Proceeds. Depending on a Participant’s personal circumstances, double taxation might occur if the Plan is subject to taxation in several countries. The Participants are advised to obtain advice on their personal tax situation.

 

14.             Term of the Plan

 

This Plan will be effective as of 1 January 2019 and is amended with effect as per 1 January 2020. It shall apply to grants of Performance Shares in financial years 2019, 2020 and 2021. The Plan will terminate following the payout of any Performance Shares Proceeds for the last grant made in financial year 2021, or earlier, in the case the Management Board resolves so. Clauses 12.1 and 12.4 remain unaffected.

 

15.             Miscellaneous Provisions

 

15.1                                 This Plan is subject to German law. The German text version of the Plan shall prevail in all cases.

 

15.2                                 No provisions contained in this Plan (or in any documents referring to this Plan) transfer to a Participant or possible Participant any right to request the continuation of his/her employment or service relationship with the Company or any Affiliated Company. No employment or service relationship can be deducted from this Plan (or from any documents referring to this Plan), nor shall it have any effect on the right of the Company or any Affiliated Company to change compensation or other benefits of such Participant or to terminate his/her employment relationship with or without notice. This applies with the proviso that no provision in this Plan or in any document

 

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connected therewith will adversely influence any independent contractual right of these persons.

 

15.3                                 If any provision of this Plan is invalid or unenforceable, the validity or enforceability of the remaining provisions of the Plan shall not be affected. The same applies if it is ascertained that the Plan is subject to an omission. In these cases, the invalid or unenforceable provision shall be substituted or an omission repaired by such provision which most closely corresponds to the intended purpose of this Plan.

 

15.4                                 References and headings attributed to individual Clauses and Sub-clauses of this Plan are solely for the purpose of easier reference. These headings are in no case significant or relevant for the interpretation of the Plan.

 

15.5                                 No provision in this Plan leads to or infers a presumption that the authority of the Management Board to issue Performance Shares or approve other compensation connected or not connected to shares granted by any other share based long-term incentive program or any other authority may in any way be restricted.

 

16.             Definitions

 

16.1                                 Affiliated Company means any company within FME Group with the exception of the Company.

 

16.2           Company is defined in Clause 1.1.

 

16.3           Compliance Violations is defined in Clause 7.2 (b).

 

16.4                                 Constant Currency shall mean that for the purpose of this Plan the calculation of the figures stated under IFRS denominated in Euro shall be adjusted for currency effects. For the ascertainment of the currency adjustment all line items of the profit and loss statements of the companies that are included in the consolidated financial statements and which have a functional currency other than the reporting currency (Euro) are translated with the average exchange rates effectively established in the year of the consolidated financial statements that is the basis for the comparison.

 

16.5                                 Extraordinary Developments shall mean any kind of extraordinary scenarios in which the price of the Company’s shares would have lost any reasonably arguable correlation to the Company’s intrinsic enterprise value (such as hyper-inflation);

 

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however, no such Extraordinary Development shall be applicable in cases in which the price of Company’s shares rises (even substantially) as a result of the performance of the Participants.

 

16.6                                 FME Group stands for the group of entities including the General Partner, the Company and its affiliated companies within the meaning of sections 15 et seqq. of the German Stock Corporation Act, with the exception of Fresenius SE & Co. KGaA and the companies affiliated with Fresenius SE & Co. KGaA within the meaning of sections 15 et seqq. of the German Stock Corporation Act in any manner other than through the Company.

 

16.7                                 Foreign Currency Exchange Rates means the nominal prices of the foreign exchange rates as published by the European Central Bank. If no prices are published by the European Central Bank, the Management Board is entitled to agree on a suitable other form for obtaining the prices.

 

16.8           Free Cash Flow is defined in Clause 6.5.

 

16.9           Free Cash Flow-Target is defined in Clause 6.5.

 

16.10         FX Rates at Grant Date is defined in Clause 4.2.

 

16.11         General Partner is defined in Clause 1.1.

 

16.12         GEP-II Cash Release is defined in Clause 6.2 (b).

 

16.13         GEP-II EBIT Improvement is defined in Clause 6.2 (a).

 

16.14         GEP-II Targets is defined in Clause 6.1.

 

16.15         GEP-II Target Achievement is defined in Clause 6.3.

 

16.16                          Global Efficiency Program II means the Company’s second Global Efficiency Program comprising of projects relating to Supply Chain Transformation, Global Procurement Organization, Product Portfolio Rationalization, Sustainability, Region Specific Projects (North America, Asia Pacific, EMEA, Latin America), Net Working Capital, Capital Expenditures, and Acquisition Value Capture. The Management Board may at its sole discretion add projects and initiatives to, or exclude them from, the scope of the program.

 

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16.17         Grant Currency is defined in Clause 4.2.

 

16.18         Grant Date is defined in Clause 4.1.

 

16.19         Grant Value is defined in Clause 4.2.

 

16.20                          Heir means the person, the persons, the trust or trusts, which are nominated by a Participant or, if no such nomination is made, is or are entitled by will or the respective applicable law in the event of the death of a Participant, to receive the benefit of the Performance Shares under this Plan. The concept “heir” therefore also includes the executor appointed by will or the administrator appointed by the court, if no heir is named and is in a position to act under the given circumstances.

 

16.21                          IFRS means the “International Financial Reporting Standards” which are issued by the International Accounting Standards Board, as amended.

 

16.22         Management Board is defined in Clause 1.1.

 

16.23                          Mandatory Retirement Age is the age which, when reached or exceeded, causes the mandatory termination of the Participant’s employment or service relationship with the Company or the Affiliated Company as per the employment or service contract or as per the local laws and regulations applicable to the Participant’s employment or service relationship. A termination within the meaning of the preceding sentence shall not be caused (i) in circumstances where the termination of the employment or service relationship is the result of a unilateral declaration or a subsequent individual agreement between the Company or an Affiliated Company on the one hand and the Participant on the other hand at a time when the Participant has not yet reached the age defined in sentence 1 or (ii) as long as the Company or an Affiliated Company on the one hand and the Participant on the other hand agree subsequently to continue the employment or service relationship in excess of the age defined in sentence 1. In this respect, the local laws and regulations applicable to the Participant’s employment or service relationship are the laws and regulations of the local employment or service relationship, i.e. the laws and regulations of the country or state in which the Participant regularly performs his/her work in accordance with the rules governing his/her employment or service relationship or, in the absence of contractual provisions or other arrangements regarding the place of work, the laws and regulations of the country or state from which the Participant regularly carries out the predominant part of his/her work in fulfillment of the employment or service relationship; the country or state

 

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where the predominant part of the work is regularly carried out shall not be deemed to have changed if the Participant is temporarily employed in another country or state or is performing services in another country or state, e.g. during a global assignment within FME Group. In such cases, the employment or service relationship with the home employer is deemed to be the local employment or service relationship for the purposes of this Plan, even if it is temporarily suspended.

 

16.24         Net Income Growth is defined in Clause 5.2 (b).

 

16.25         Number of Granted Performance Shares is defined in Clause 4.2.

 

16.26         Number of Performance Shares to Vest is defined in Clause 5.5.

 

16.27                          Occupational Disability is a condition in which the Participant is unable, for an indefinite period of time, to exercise his/her current position or a comparable replacement position in an employment or service relationship with the FME Group under normal conditions, due to illness or disability. For the purposes of this Plan, a Participant’s classification as fully disabled by the US Social Security Administration constitutes Occupational Disability.

 

16.28         Overall Target Achievement is defined in Clause 5.4.

 

16.29         Participant is defined in Clause 1.1.

 

16.30         Performance Period is defined in Clause 5.2.

 

16.31         Performance Shares is defined in Clause 1.1.

 

16.32         Performance Shares Proceeds is defined in Clause 8.1.

 

16.33         Performance Targets is defined in Clause 5.1.

 

16.34         Plan is defined in Clause 1.1.

 

16.35         Plan Conditions is defined in Clause 1.2.

 

16.36         Retirement is defined in Clause 9.1(a).

 

16.37         Return on Invested Capital (ROIC) is defined in Clause 5.2(c).

 

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16.38         Revenue Growth is defined in Clause 5.2(a).

 

16.39         Service Condition is defined in Clause 7.2(a).

 

16.40         Settlement Currency is defined in Clause 8.2.

 

16.41                          Stock Exchange Price means the closing price (Schlusskurs) of the Company’s shares in the electronic XETRA trading system of Deutsche Börse AG in Frankfurt/Main or a comparable successor system denominated in Euro. If no closing price is set in the XETRA trading system, the Management Board is entitled to agree on a suitable means of replacing the closing price.

 

16.42         Target ROIC is defined in Clause 5.2(c).

 

16.43         Vesting Date is defined in Clause 7.1.

 

16.44         Yearly Target Achievement is defined in Clause 5.3.

 

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