Document:

2006 - 2008 Chemtura LTIP

 

LTIP for this cycle will be based on accomplishment of stock price growth over the three year cycle.  Participants in LTIP will be recommended by the CEO.  LTIP will be paid out in shares of Chemtura restricted stock that will unrestrict according to the terms below.  

Chemtura stock price appreciation will be the only performance measure for this LTIP cycle.  With the December 31, 2005 closing price as the starting point, a portion (indicated in the table below) of each participant's target will be scheduled to vest when the closing price of Chemtura stock appreciates approximately 19% from the prior milestone and maintains that level for a minimum of fifteen (15) consecutive trading days.  Credit for accomplishing a particular milestone will only occur once.  The milestone amounts and the resulting percent of target payouts are indicated in the chart below:  

 

Payout for Share Price Between $12.70 and $25.40

	
Starting Point

	
Milestone 1
	
Milestone 2
	
Milestone 3
	
Milestone 4

	
$12.70

12/31/2005 closing price

	
$15.11
	
$17.98
	
$21.40
	
$25.40

2x 12/31/2005 closing price 

	 	 	 	 	 
	
Appreciation Amount
	
$2.41
	
$2.87
	
$3.42
	
$4.00

	
Percentage Amount
	
19% appreciation
	
19% appreciation
	
19% appreciation
	
19% appreciation

	 	 	 	 	 
	
Percent of total award that will be scheduled to vest when milestone is accomplished
	

20%
	

20%
	

20%
	

40%

	
Cumulative percentage of target paid out
	
20%
	
40%
	
60%
	
100%

Shares will be scheduled to vest when a particular milestone is reached and maintained (based on closing price on the New York Stock Exchange) for fifteen (15) consecutive trading days.  Share awards for milestones achieved during 2006 and 2007 will become vested and paid out on February 1, 2008.  Share awards for milestones achieved during 2008 will become vested and paid out on February 1, 2009.  

If Milestone 4 is achieved, the plan will pay above target based on the maximum closing price achieved and maintained for fifteen (15) consecutive trading days.  The number of shares will be prorated, on directly proportional basis so that a 2x target payout will be made in the event that a $32.00 or higher share price is achieved and maintained for fifteen (15) consecutive trading days.  The table below indicates the payout at various sample levels of accomplishment above $25.40.  

 

Payout for Exceeding $25.40 Share Price

	
Stock Price
	
Additional Percent of Target Paid
	
Total Percent of Target Paid

	
$25.40
	
0.00
	
100.00

	
$26.00
	
9.10
	
109.10

	
$27.00
	
24.20
	
124.20

	
$28.00
	
39.40
	
139.40

	
$29.00
	
54.60
	
154.60

	
$30.00
	
69.70
	
169.70

	
$31.00
	
84.90
	
184.90

	
$32.00
	
100.00
	
200.00

	
$33.00
	
100.00
	
200.00

	
$34.00
	
100.00
	
200.00

Payouts for amounts earned due to a share price over $25.40 will be made on February 1, 2009.Exhibit 10.1

 

Alexis
Borisy

Name
of Employee

 

COMBINATORX,
INCORPORATED

2004
Incentive Plan

 

Restricted
Stock Award Agreement

 

CombinatoRx, Incorporated

650 Albany St.

Boston, MA 02118

 

Attn:  Robert Forrester

 

Ladies and Gentlemen:

 

The undersigned (i) acknowledges
that he has received an award (the “Award”) of restricted stock from CombinatoRx,
Incorporated (the “Company”) under the 2004 Incentive Plan (the “Plan”),
subject to the terms set forth below and in the Plan; (ii) further acknowledges
receipt of a copy of the Plan as in effect on the date hereof; and (iii) agrees
with the Company as follows:

 

1.               Effective
Date.  This
Agreement shall take effect as of January 26, 2006, which is the date of grant
of the Award.

 

2.               Shares
Subject to Award.  The Award
consists of 50,000 shares (the “Shares”) of common stock of the Company (“Stock”).  The undersigned’s rights to the Shares are
subject to the restrictions described in this Agreement and the Plan (which is
incorporated herein by reference with the same effect as if set forth herein in
full) in addition to such other restrictions, if any, as may be imposed by law.

 

3.               Meaning
of Certain Terms.  Except as
otherwise expressly provided, all terms used herein shall have the same meaning
as in the Plan.  The term “vest” as used
herein with respect to any Share means the lapsing of the restrictions described
herein with respect to such Share.

 

4.               Nontransferability
of Shares.  The Shares
acquired by the undersigned pursuant to this Agreement shall not be sold, transferred,
pledged, assigned or otherwise encumbered or disposed of except as provided
below and in the Plan.

 

5.               Accelerated
Vesting of Unvested Shares Upon Termination Without Cause or for Good Reason.  If the undersigned is terminated by the
Company without Cause (as defined below) or if the undersigned terminates his
employment for Good Reason, to the extent there are any unvested Shares, the
twenty five (25%) percent of the then unvested Shares shall vest for each year
of employment of the undersigned with the Company.  For example, if there is a termination
without Cause at the end of the second year of employment, then fifty (50%)
percent of Shares would be unvested and automatically an additional twenty five
(25%) percent of the initial amount shall be vested (50% of the remaining 50%),
and thereafter no additional Shares shall vest and such Shares shall be
forfeited.

 

 

For
the purposes of this Agreement, the term “Cause” shall mean (a) the conviction
of the undersigned of any felony; (b) the willful failure to perform (other
than by reason of disability), or gross negligence in the performance of, his
duties and responsibilities under the terms or requirements of his employment,
which failure or negligence continues or remains uncured after 30 days notice
setting forth in reasonable detail the nature of such failure or negligence;
(c) material breach by the undersigned of any material terms or requirements of
his employment, which breach continues or remains uncured after thirty (30)
days’ notice to the undersigned setting forth in reasonable detail the nature
of such breach; or (d) engaging in material fraudulent conduct with respect to
the Company.

 

For the purposes of this
Agreement, the term “Good Reason”
shall mean, without the express written consent of the undersigned: (i) any
material breach by the Company of the terms or requirements of the undersigned’s
employment, including a reduction in the compensation, or in the position,
duties, responsibilities or authority of the undersigned; or (ii) a relocation
of the place of employment for the undersigned beyond a 35-mile radius of the
Company’s current office.

 

6.               Accelerated
Vesting of Unvested Shares After a Change of Control.  If a Change of Control (as defined below)
occurs, and within two (2) years following the date of consummation of such
Change of Control the Company terminates the undersigned other than for Cause,
or the undersigned terminates his employment for Good Reason, all unvested
Shares will immediately become vested. 
For purposes of this Agreement, the term “Change of Control” shall mean:
(a) a sale, merger or consolidation after which securities possessing more than
fifty (50%) percent of the total combined voting power of the Company’s
outstanding securities have been transferred to or acquired by a person or
persons different from the persons who held such percentage of the total
combined voting power immediately prior to such transaction; or (b) the sale,
transfer or other disposition of all or substantially all of the Company’s
assets to one or more persons (other than a wholly owned subsidiary of the
Company or a parent company whose stock ownership after the transaction is the
same as the Company’s ownership before the transaction); or (c) an acquisition,
merger or similar transaction or a divestiture of a substantial portion of the
Company’s business after which the role of the undersigned is not substantially
the same as such role prior to the transaction.

 

7.               Forfeiture
Risk.  If the undersigned ceases to be employed by
the Company and its subsidiaries because of death or disability or for any
reason other than as specified in Section 5 or 6 above, any then outstanding
and unvested Shares acquired by the undersigned hereunder shall be
automatically and immediately forfeited. 
With respect to any Shares that are forfeited under this Section
7 or Section 5 above, the undersigned hereby (i) appoints the Company as the
attorney-in-fact of the undersigned to take such actions as may be necessary or
appropriate to effectuate a transfer of the record ownership of any such shares
that are unvested and forfeited hereunder, (ii) agrees to deliver to the
Company, as a precondition to the issuance of any certificate or certificates
with respect to unvested Shares hereunder, one or more stock powers, endorsed
in blank, with respect to such Shares, and (iii) agrees to sign such other
powers and take such other actions as the Company may reasonably request to
accomplish the transfer or forfeiture of any unvested Shares that are forfeited
hereunder.

 

8.               Retention
of Certificates.  Any
certificates representing unvested Shares shall be held by the Company.  If unvested Shares are held in book entry
form, the undersigned agrees that the Company may give stop transfer
instructions to the depository to ensure compliance with the provisions hereof.

 

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9.               Vesting
of Shares.  The shares
acquired hereunder shall vest in accordance with the provisions of this Section
9 and applicable provisions of the Plan, as follows: 25% percent of the Shares
on January 26, 2007 and an additional 6.25% on each three months anniversary
thereafter until January 26, 2010.

 

Notwithstanding
the foregoing, no shares shall vest on any vesting date specified above unless
the undersigned is then, and since the date of grant has continuously been,
employed by the Company or its subsidiaries.

 

10.         Legends.  Any certificates representing unvested Shares
shall be held by the Company, and any such certificate shall contain legends substantially
in the following form:

 

THE TRANSFERABILITY OF THIS
CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
AND CONDITIONS (INCLUDING FORFEITURE) OF THE 2004 INCENTIVE PLAN AND A
RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND COMBINATORX,
INCORPORATED.  COPIES OF SUCH PLAN AND
AGREEMENT ARE ON FILE IN THE OFFICES OF COMBINATORX, INCORPORATED.

 

THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

As soon as practicable following the vesting of any
such Shares the Company shall cause a certificate or certificates covering such
vested Shares to be issued and delivered to the undersigned without the first
legend set forth above referencing the Restricted Stock Award Agreement.  If any Shares are held in
book-entry form, the Company may take such steps as it deems necessary or
appropriate to record and manifest the restrictions applicable to such Shares.

 

11.         Dividends, etc..  The undersigned shall be entitled to (i)
receive any and all dividends or other distributions paid with respect to those
Shares of which he is the record owner on the record date for such dividend or
other distribution, and (ii) vote any Shares of which he is the record owner on
the record date for such vote; provided, however,
that any property (other than cash) distributed with respect to a share of
Stock (the “associated share”) acquired hereunder, including without limitation
a distribution of Stock by reason of a stock dividend, stock split or
otherwise, or a distribution of other securities with respect to an associated
share, shall be subject to the restrictions of this Agreement in the same
manner and for so long as the associated share remains subject to such
restrictions, and shall be promptly forfeited if and when the associated share
is so forfeited;  and
further provided, that the Administrator may require that any cash
distribution with respect to the Shares other than a normal cash dividend be
placed in escrow or otherwise made subject to such restrictions as the
Administrator deems appropriate to carry out the intent of the Plan.  References in this Agreement to the Shares
shall  refer, mutatis
mutandis, to any such restricted amounts.

 

12.         Sale of Vested Shares.  The undersigned understands
that he will be free to sell any Share once it has vested, subject to (i)
satisfaction of any applicable tax withholding requirements 

 

3

 

with respect to the vesting
or transfer of such Share; (ii) the completion of any administrative steps
(for example, but without limitation, the transfer of certificates) that the
Company may reasonably impose; and (iii) applicable requirements of federal and
state securities laws.

 

13.         Certain Tax Matters.  The undersigned expressly acknowledges the
following:

 

a.               The undersigned has been
advised to confer promptly with a professional tax advisor to consider whether
the undersigned should make a so-called “83(b) election” with respect to the
Shares.  Any such election, to be
effective, must be made in accordance with applicable regulations and within
thirty (30) days following the date of this Award.  The Company has made no recommendation to the
undersigned with respect to the advisability of making such an election.

 

b.              The award or vesting of the
Shares acquired hereunder, and the payment of dividends with respect to such Shares,
may give rise to “wages” subject to withholding.  The undersigned expressly acknowledges and
agrees that his rights hereunder are subject to his promptly paying to the
Company in cash (or by such other means as may be acceptable to the Company in
its discretion, including, if the Administrator so determines, by the delivery
of previously acquired Stock or shares of Stock acquired hereunder or by the
withholding of amounts from any payment hereunder) all taxes required to be
withheld in connection with such award, vesting or payment.

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Alexis Borisy

  	
   

  
	
   

  	
  (Signature of Employee)

  	
   

  
	
   

  	
   

  	
   

  

Dated:

 

The foregoing Restricted Stock

Award Agreement is hereby accepted:

 

COMBINATORX, INCORPORATED

 

 

	
  By

  	
  /s/ Robert Forrester

  	
   

  

 

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