UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended
June 30, 2015
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number 1-15525
EDWARDS LIFESCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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36-4316614
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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One Edwards Way, Irvine, California
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92614
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(Address of principal executive offices)
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(Zip Code)
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(949) 250-2500
(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
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No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
o
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Non-accelerated filer
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(Do not check if a smaller
reporting company)
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Smaller Reporting Company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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No
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The number of shares outstanding of the registrant's common stock, $1.00 par value, as of
July 23, 2015
was
107,515,661
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EDWARDS LIFESCIENCES CORPORATION
FORM 10-Q
For the quarterly period ended
June 30, 2015
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Financial Statements
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions, except par value; unaudited)
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June 30,
2015
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December 31,
2014
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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597.6
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$
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653.8
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Short-term investments (Note 5)
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811.4
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785.0
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Accounts and other receivables, net of allowances of $8.1 and $5.1, respectively
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351.0
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325.0
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Inventories (Note 4)
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313.3
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296.8
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Deferred income taxes
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65.2
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63.5
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Prepaid expenses
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46.1
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48.8
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Other current assets
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112.4
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121.7
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Total current assets
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2,297.0
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2,294.6
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Long-term accounts receivable, net of allowances of $5.5 and $6.2, respectively
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6.6
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5.8
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Long-term investments (Note 5)
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324.6
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240.9
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Property, plant, and equipment, net
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450.6
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442.9
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Goodwill
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370.9
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376.0
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Other intangible assets, net
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18.9
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23.4
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Deferred income taxes
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82.0
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91.5
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Other assets
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57.7
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49.2
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Total assets
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$
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3,608.3
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$
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3,524.3
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Accounts payable and accrued liabilities (Note 4)
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$
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445.2
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$
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434.4
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Long-term debt
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600.3
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598.1
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Other long-term liabilities
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274.2
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300.4
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Commitments and contingencies (Note 9)
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Stockholders' equity
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Preferred stock, $.01 par value, authorized 50.0 shares, no shares outstanding
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—
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—
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Common stock, $1.00 par value, 350.0 shares authorized, 129.9 and 128.9 shares issued, and 107.4 and 107.8 shares outstanding, respectively
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129.9
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128.9
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Additional paid-in capital
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964.1
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878.4
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Retained earnings
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3,078.0
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2,841.9
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Accumulated other comprehensive loss
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(146.6
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(100.9
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)
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Treasury stock, at cost, 22.5 and 21.1 shares, respectively
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(1,736.8
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)
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(1,556.9
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Total stockholders' equity
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2,288.6
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2,191.4
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Total liabilities and stockholders' equity
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$
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3,608.3
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$
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3,524.3
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The accompanying notes are an integral part of these
consolidated condensed financial statements.
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in millions, except per share information; unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2015
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2014
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2015
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2014
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Net sales
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$
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616.8
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$
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575.1
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$
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1,207.1
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$
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1,097.5
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Cost of sales
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158.6
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151.2
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294.6
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297.1
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Gross profit
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458.2
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423.9
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912.5
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800.4
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Selling, general, and administrative expenses
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213.9
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215.5
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416.4
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412.7
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Research and development expenses
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97.5
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89.1
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183.9
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174.9
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Intellectual property litigation expenses (income), net
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1.0
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(747.4
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1.3
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(741.9
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Special charges (Note 3)
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—
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50.0
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—
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57.5
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Interest expense, net
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1.8
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3.1
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4.2
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6.6
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Other expense, net
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1.8
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0.4
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2.0
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0.1
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Income before provision for income taxes
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142.2
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813.2
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304.7
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890.5
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Provision for income taxes
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29.5
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266.2
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68.6
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283.2
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Net income
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$
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112.7
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$
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547.0
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$
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236.1
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$
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607.3
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Share information
(Note 11)
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Earnings per share:
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Basic
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$
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1.05
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$
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5.18
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$
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2.19
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$
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5.72
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Diluted
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$
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1.02
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$
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5.09
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$
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2.14
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$
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5.63
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Weighted-average number of common shares outstanding:
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Basic
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107.6
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105.6
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107.7
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106.1
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Diluted
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110.0
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107.4
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110.1
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107.9
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The accompanying notes are an integral part of these
consolidated condensed financial statements.
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2015
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2014
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2015
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2014
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Net income
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$
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112.7
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$
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547.0
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$
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236.1
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$
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607.3
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Other comprehensive income (loss), net of tax (Note 10)
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Foreign currency translation adjustments
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18.4
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(5.4
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(46.3
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(6.2
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Unrealized (loss) gain on cash flow hedges
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(16.5
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(3.4
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0.7
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(7.4
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Unrealized loss on available-for-sale investments
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(0.8
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(0.2
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(0.5
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(0.2
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Reclassification of net realized investment loss to earnings
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0.2
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0.3
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0.4
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0.3
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Other comprehensive income (loss)
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1.3
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(8.7
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(45.7
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(13.5
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Comprehensive income
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$
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114.0
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$
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538.3
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$
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190.4
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$
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593.8
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The accompanying notes are an integral part of these
consolidated condensed financial statements.
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
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Six Months Ended
June 30,
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2015
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2014
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Cash flows from operating activities
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Net income
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$
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236.1
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$
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607.3
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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32.8
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32.3
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Stock-based compensation (Note 8)
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24.4
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23.9
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Excess tax benefit from stock plans
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(19.7
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(21.3
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(Gain) loss on investments
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(1.4
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0.9
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Deferred income taxes
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2.2
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0.5
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Other
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0.7
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0.4
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Changes in operating assets and liabilities:
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Accounts and other receivables, net
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(39.5
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(0.2
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Inventories
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(32.3
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(11.5
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Accounts payable and accrued liabilities
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(19.3
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37.4
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Income taxes
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44.9
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250.9
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Prepaid expenses and other current assets
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9.6
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(7.4
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Other
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4.9
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3.7
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Net cash provided by operating activities
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243.4
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916.9
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Cash flows from investing activities
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Capital expenditures
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(39.2
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(30.3
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Purchases of held-to-maturity investments (Note 5)
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(553.4
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(1,146.5
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Proceeds from held-to-maturity investments (Note 5)
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562.6
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594.9
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Purchases of available-for sale investments (Note 5)
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(206.6
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—
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Proceeds from available-for-sale investments (Note 5)
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78.0
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—
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Investments in trading securities, net
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(4.8
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(10.9
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Proceeds from unconsolidated affiliates, net (Note 5)
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0.7
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1.3
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Other
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(5.1
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1.3
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Net cash used in investing activities
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(167.8
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(590.2
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)
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Cash flows from financing activities
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Proceeds from issuance of debt
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13.3
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214.1
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Payments on debt and capital lease obligations
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(14.7
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)
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(212.9
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)
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Purchases of treasury stock
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(179.9
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)
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(300.6
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)
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Excess tax benefit from stock plans
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19.7
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21.3
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Proceeds from stock plans
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42.5
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32.9
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Other
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(3.4
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(2.4
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Net cash used in financing activities
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(122.5
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(247.6
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)
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Effect of currency exchange rate changes on cash and cash equivalents
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(9.3
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)
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(0.9
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Net (decrease) increase in cash and cash equivalents
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(56.2
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)
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78.2
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Cash and cash equivalents at beginning of period
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653.8
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420.4
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Cash and cash equivalents at end of period
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$
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597.6
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$
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498.6
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Supplemental disclosures:
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Non-cash investing and financing transactions:
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Capital expenditures accruals
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$
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8.8
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$
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8.2
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The accompanying notes are an integral part of these
consolidated condensed financial statements.
1. BASIS OF PRESENTATION
The accompanying interim consolidated condensed financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in Edwards Lifesciences Corporation's Annual Report on Form 10-K for the year ended
December 31, 2014
. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted.
In the opinion of management of Edwards Lifesciences Corporation ("Edwards Lifesciences" or the "Company"), the interim consolidated condensed financial statements reflect all adjustments considered necessary for a fair statement of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.
Certain reclassifications related to the presentation of income taxes and special charges have been made in the prior year's consolidated condensed statement of cash flows to conform to the current year presentation. These reclassifications had no impact on the cash flows from operating, investing, or financing activities.
New Accounting Standards Not Yet Adopted
In April 2015, the Financial Accounting Standards Board ("FASB") issued an amendment to the accounting guidance on the presentation of debt issuance costs. The guidance requires an entity to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt, consistent with debt discounts. The guidance is effective for annual reporting periods beginning after December 31, 2015 and interim periods within those periods, and must be applied retrospectively to each prior reporting period presented. The Company does not expect the adoption of this guidance will have a material impact on its consolidated financial statements.
In May 2014, the FASB issued an update to the accounting guidance on revenue recognition. The new guidance provides a comprehensive, principles-based approach to revenue recognition, and supersedes most previous revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires improved disclosures on the nature, amount, timing, and uncertainty of revenue that is recognized. In July 2015, the FASB voted to defer the effective date by one year, such that the new standard will be effective for annual reporting periods beginning after December 15, 2017 and interim periods therein. The new guidance can be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application. The Company is currently assessing the impact this guidance will have on its consolidated financial statements, and has not yet selected a transition method.
In July 2015, the FASB issued an update to the accounting guidance on inventory. The new guidance requires an entity to measure inventory within the scope of the amendment at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.
2. INTELLECTUAL PROPERTY LITIGATION EXPENSES (INCOME), NET
In May 2014, the Company entered into an agreement with Medtronic, Inc. and its affiliates (“Medtronic”) to settle all outstanding patent litigation between the companies, including all cases related to transcatheter heart valves. In the second quarter of 2014, under the terms of a patent cross-license that was part of the agreement, Medtronic made a one-time, upfront payment to the Company in the amount of
$750.0 million
.
3. SPECIAL CHARGES
Charitable Foundation Contribution
In June 2014, the Company contributed
$50.0 million
to the Edwards Lifesciences Foundation, a related-party not-for-profit organization intended to provide philanthropic support to health- and community-focused charitable organizations. The contribution was irrevocable and was recorded as an expense at the time of payment.
Settlement
In March 2014, the Company recorded a
$7.5 million
charge to settle past and future obligations related to one of its intellectual property agreements.
4. COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
Components of selected captions in the consolidated condensed balance sheets consisted of the following (in millions):
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June 30, 2015
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December 31, 2014
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Inventories
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Raw materials
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$
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69.3
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$
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67.4
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Work in process
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78.5
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59.3
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Finished products
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165.5
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170.1
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$
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313.3
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$
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296.8
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At
June 30, 2015
and
December 31, 2014
, approximately
$52.5 million
and
$46.2 million
, respectively, of the Company's finished products inventories were held on consignment.
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June 30, 2015
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December 31, 2014
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Accounts payable and accrued liabilities
|
|
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Accounts payable
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$
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66.2
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$
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58.2
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Employee compensation and withholdings
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145.0
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190.5
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Uncertain tax positions
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39.2
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—
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Research and development accruals
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38.2
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39.9
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Property, payroll, and other taxes
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32.9
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32.7
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Accrued rebates
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11.1
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11.7
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Deferred income taxes
|
10.5
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8.3
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Taxes payable
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8.1
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9.1
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Litigation reserves
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5.8
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4.4
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Fair value of derivatives
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5.1
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2.6
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Realignment reserves
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1.9
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7.7
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Other accrued liabilities
|
81.2
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|
|
69.3
|
|
|
$
|
445.2
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|
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$
|
434.4
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5. INVESTMENTS
Debt Securities
Investments in debt securities at the end of each period were as follows (in millions):
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June 30, 2015
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December 31, 2014
|
Held-to-maturity
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
Fair Value
|
Bank time deposits
|
$
|
638.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
638.2
|
|
|
$
|
661.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
661.5
|
|
Commercial paper
|
100.1
|
|
|
—
|
|
|
—
|
|
|
100.1
|
|
|
80.0
|
|
|
—
|
|
|
—
|
|
|
80.0
|
|
U.S. government and agency securities
|
51.7
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
51.7
|
|
|
58.9
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
58.9
|
|
Asset-backed securities
|
2.9
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
8.2
|
|
|
—
|
|
|
—
|
|
|
8.2
|
|
Corporate debt securities
|
22.6
|
|
|
—
|
|
|
—
|
|
|
22.6
|
|
|
24.7
|
|
|
—
|
|
|
—
|
|
|
24.7
|
|
Municipal securities
|
5.2
|
|
|
—
|
|
|
—
|
|
|
5.2
|
|
|
6.1
|
|
|
—
|
|
|
—
|
|
|
6.1
|
|
Total
|
$
|
820.7
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
820.7
|
|
|
$
|
839.4
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
839.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper
|
13.2
|
|
|
—
|
|
|
—
|
|
|
13.2
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
U.S. government and agency securities
|
13.0
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
Asset-backed securities
|
64.6
|
|
|
—
|
|
|
—
|
|
|
64.6
|
|
|
42.9
|
|
|
—
|
|
|
—
|
|
|
42.9
|
|
Corporate debt securities
|
200.2
|
|
|
0.1
|
|
|
(0.5
|
)
|
|
199.8
|
|
|
103.6
|
|
|
—
|
|
|
(0.4
|
)
|
|
103.2
|
|
Total
|
$
|
291.0
|
|
|
$
|
0.1
|
|
|
$
|
(0.5
|
)
|
|
$
|
290.6
|
|
|
$
|
160.5
|
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
160.1
|
|
The cost and fair value of investments in debt securities, by contractual maturity, as of
June 30, 2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity
|
|
Available-for-Sale
|
|
Cost
|
|
Fair Value
|
|
Cost
|
|
Fair Value
|
|
(in millions)
|
Due in 1 year or less
|
$
|
767.3
|
|
|
$
|
767.4
|
|
|
$
|
44.1
|
|
|
$
|
44.1
|
|
Due after 1 year through 5 years
|
36.9
|
|
|
36.9
|
|
|
183.4
|
|
|
183.1
|
|
Instruments not due at a single maturity date
|
16.5
|
|
|
16.4
|
|
|
63.5
|
|
|
63.4
|
|
|
$
|
820.7
|
|
|
$
|
820.7
|
|
|
$
|
291.0
|
|
|
$
|
290.6
|
|
Actual maturities may differ from the contractual maturities due to call or prepayment rights.
Investments in Unconsolidated Affiliates
The Company has a number of equity investments in privately and publicly held companies. Investments in these unconsolidated affiliates are recorded in "
Long-term Investments
" on the consolidated condensed balance sheets, and are as follows:
|
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
|
(in millions)
|
Available-for-sale investments
|
|
|
|
|
|
Cost
|
$
|
—
|
|
|
$
|
—
|
|
Unrealized gains
|
0.3
|
|
|
0.4
|
|
Fair value of available-for-sale investments
|
0.3
|
|
|
0.4
|
|
Equity method investments
|
|
|
|
|
|
Cost
|
12.1
|
|
|
12.8
|
|
Equity in losses
|
(5.0
|
)
|
|
(3.5
|
)
|
Carrying value of equity method investments
|
7.1
|
|
|
9.3
|
|
Cost method investments
|
|
|
|
|
|
Carrying value of cost method investments
|
17.3
|
|
|
16.7
|
|
Total investments in unconsolidated affiliates
|
$
|
24.7
|
|
|
$
|
26.4
|
|
During the
three and six months ended June 30, 2015
, the gross realized gains or losses from sales of available-for-sale investments were not material. In March 2014, the Company recorded an other-than-temporary impairment charge of
$3.5 million
related to one of its cost method investments.
6. FAIR VALUE MEASUREMENTS
The consolidated condensed financial statements include financial instruments for which the fair market value of such instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company consist of cash deposits, accounts and other receivables, investments, accounts payable, certain accrued liabilities, and borrowings under a revolving credit agreement. The carrying value of these financial instruments generally approximates fair value due to their short-term nature. Financial instruments also include notes payable. As of
June 30, 2015
, the fair value of the notes payable, based on Level 2 inputs, was
$615.4 million
.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company prioritizes the inputs used to determine fair values in one of the following three categories:
Level 1—Quoted market prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.
Level 3—Unobservable inputs that are not corroborated by market data.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the Company's financial instruments which are measured at fair value on a recurring basis (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
Level 1
|
|
Level 2
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
0.3
|
|
|
$
|
9.8
|
|
|
$
|
10.1
|
|
Available-for-sale investments:
|
|
|
|
|
|
|
Corporate debt securities
|
—
|
|
|
199.8
|
|
|
199.8
|
|
Asset-backed securities
|
—
|
|
|
64.7
|
|
|
64.7
|
|
U.S. government and agency securities
|
—
|
|
|
12.9
|
|
|
12.9
|
|
Commercial paper
|
—
|
|
|
13.2
|
|
|
13.2
|
|
Equity investments in unconsolidated affiliates
|
0.3
|
|
|
—
|
|
|
0.3
|
|
Investments held for deferred compensation plans
|
33.6
|
|
|
—
|
|
|
33.6
|
|
Derivatives
|
—
|
|
|
46.8
|
|
|
46.8
|
|
|
$
|
34.2
|
|
|
$
|
347.2
|
|
|
$
|
381.4
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivatives
|
$
|
—
|
|
|
$
|
5.1
|
|
|
$
|
5.1
|
|
Deferred compensation plans
|
33.6
|
|
|
—
|
|
|
33.6
|
|
|
$
|
33.6
|
|
|
$
|
5.1
|
|
|
$
|
38.7
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash equivalents
|
$
|
32.6
|
|
|
$
|
12.0
|
|
|
$
|
44.6
|
|
Available-for-sale investments:
|
|
|
|
|
|
Corporate debt securities
|
—
|
|
|
103.2
|
|
|
103.2
|
|
Asset-backed securities
|
—
|
|
|
42.9
|
|
|
42.9
|
|
U.S. government and agency securities
|
—
|
|
|
1.0
|
|
|
1.0
|
|
Commercial paper
|
—
|
|
|
13.0
|
|
|
13.0
|
|
Equity investments in unconsolidated affiliates
|
0.4
|
|
|
—
|
|
|
0.4
|
|
Investments held for deferred compensation plans
|
28.2
|
|
|
—
|
|
|
28.2
|
|
Derivatives
|
—
|
|
|
50.7
|
|
|
50.7
|
|
|
$
|
61.2
|
|
|
$
|
222.8
|
|
|
$
|
284.0
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivatives
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
2.6
|
|
Deferred compensation plans
|
28.7
|
|
|
—
|
|
|
28.7
|
|
|
$
|
28.7
|
|
|
$
|
2.6
|
|
|
$
|
31.3
|
|
Cash Equivalents and Available-for-sale Investments
The Company estimates the fair values of its money market funds based on quoted prices in active markets for identical assets. The Company estimates the fair values of its commercial paper, U.S. government and agency securities, asset-backed securities, and corporate debt securities by taking into consideration valuations obtained from third-party pricing services. The pricing services use industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker-dealer quotes on the same or similar securities, benchmark yields, credit spreads, prepayment and default projections based on historical data, and other observable inputs. The Company independently reviews and validates the pricing received from the third-party pricing service by comparing the prices to prices reported by a secondary pricing source. The Company’s validation procedures have not resulted in an adjustment to the pricing received from the pricing service.
Investments in unconsolidated affiliates are long-term equity investments in companies that are in various stages of development. Certain of the Company’s investments in unconsolidated affiliates are designated as available-for-sale. These investments are carried at fair market value based on quoted market prices.
Deferred Compensation Plans
The Company holds investments in trading securities related to its deferred compensation plans. The investments are in a variety of stock and bond mutual funds. The fair values of these investments and the corresponding liabilities are based on quoted market prices.
Derivative Instruments
The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and foreign currency option contracts to manage foreign currency exposures, and interest rate swap agreements to manage its interest rate exposures. All derivatives contracts are recognized on the balance sheet at their fair value. The fair value of foreign currency derivative financial instruments was estimated based on quoted market foreign exchange rates and market discount rates. The fair value of the interest rate swap agreements was determined based on a discounted cash flow analysis reflecting the contractual terms of the agreements and the 6-month LIBOR forward interest rate curve. Judgment was employed in interpreting market data to develop estimates of fair value; accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts.
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company uses derivative financial instruments to manage its currency exchange rate risk and its interest rate risk, as summarized below. Notional amounts are stated in United States dollar equivalents at spot exchange rates at the respective dates.
|
|
|
|
|
|
|
|
|
|
Notional Amount
|
|
June 30, 2015
|
|
December 31, 2014
|
|
(in millions)
|
Foreign currency forward exchange contracts
|
$
|
753.1
|
|
|
$
|
761.2
|
|
Interest rate swap agreements
|
300.0
|
|
|
300.0
|
|
Foreign currency option contracts
|
18.2
|
|
|
9.2
|
|
The Company uses derivative financial instruments to manage interest rate and foreign currency risks. It is the Company's policy not to enter into derivative financial instruments for speculative purposes. The Company uses interest rate swaps to convert a portion of its fixed-rate debt into variable-rate debt. These interest rate swaps are designated as fair value hedges and meet the shortcut method requirements under the accounting standards for derivatives and hedging. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. The Company uses foreign currency forward exchange contracts to offset the changes due to currency rate movements in the amount of future cash flows associated with intercompany transactions and certain local currency expenses expected to occur within the next
13 months
. These foreign currency forward exchange contracts are designated as cash flow hedges. Certain of the Company's locations have assets and liabilities denominated in currencies other than their functional currencies resulting principally from intercompany and local currency transactions. The Company uses foreign currency forward exchange contracts and foreign currency option contracts that are not designated as hedging instruments to offset the transaction gains and losses associated with certain of these assets and liabilities. All foreign currency forward exchange contracts and foreign currency option contracts are denominated in currencies of major industrial countries, principally the Euro and the Japanese yen.
All derivative financial instruments are recognized at fair value in the consolidated condensed balance sheets. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets the loss or gain on the underlying hedged item. The gain or loss on fair value hedges is classified in net interest expense, as they hedge the interest rate risk associated with the Company's fixed-rate debt. The Company reports in "
Accumulated Other Comprehensive Loss
" the effective portion of the gain or loss on derivative financial instruments that are designated, and that qualify, as cash flow hedges. The Company reclassifies these gains and losses into earnings in the same period in which the underlying hedged transactions affect earnings. Any hedge ineffectiveness (which represents the amount by which the changes in the fair value of the derivative exceed the variability in the cash flows of the forecasted transaction) is recorded in current period earnings. For the
six months ended June 30, 2015
and
2014
, the Company did not record any gains or losses due to hedge ineffectiveness. The gains and losses on derivative financial instruments for which the Company does not elect hedge accounting treatment are recognized in the consolidated condensed statements of operations in each period based upon the change in the fair value of the derivative financial instrument. Cash flows from derivative financial instruments are reported as operating activities in the consolidated condensed statements of cash flows.
Derivative financial instruments involve credit risk in the event the counterparty should default. It is the Company's policy to execute such instruments with global financial institutions that the Company believes to be creditworthy. The Company diversifies its derivative financial instruments among counterparties to minimize exposure to any one of these entities. The Company also uses International Swap Dealers Association master-netting agreements. The master-netting agreements provide for the net settlement of all contracts through a single payment in a single currency in the event of default, as defined by the agreements.
The following table presents the location and fair value amounts of derivative instruments reported in the consolidated condensed balance sheets (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
Derivatives designated as hedging instruments
|
|
Balance Sheet
Location
|
|
June 30, 2015
|
|
December 31, 2014
|
Assets
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Other current assets
|
|
$
|
37.2
|
|
|
$
|
45.2
|
|
Interest rate swap agreements
|
|
Other assets
|
|
$
|
2.3
|
|
|
$
|
0.4
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Accrued and other liabilities
|
|
$
|
5.1
|
|
|
$
|
2.6
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Other assets
|
|
$
|
7.3
|
|
|
$
|
5.1
|
|
The following table presents the effect of master-netting agreements and rights of offset on the consolidated condensed balance sheets (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts
Not Offset in
the Consolidated
Balance Sheet
|
|
|
|
|
|
Gross Amounts
Offset in the
Consolidated
Balance Sheet
|
|
|
|
|
|
|
|
Net Amounts
Presented in the
Consolidated
Balance Sheet
|
|
|
June 30, 2015
|
Gross
Amounts
|
|
Financial
Instruments
|
|
Cash
Collateral
Received
|
|
Net
Amount
|
Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
44.5
|
|
|
$
|
—
|
|
|
$
|
44.5
|
|
|
$
|
(5.1
|
)
|
|
$
|
—
|
|
|
$
|
39.4
|
|
Interest rate swap agreements
|
$
|
2.3
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
5.1
|
|
|
$
|
—
|
|
|
$
|
5.1
|
|
|
$
|
(5.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
50.3
|
|
|
$
|
—
|
|
|
$
|
50.3
|
|
|
$
|
(2.6
|
)
|
|
$
|
—
|
|
|
$
|
47.7
|
|
Interest rate swap agreements
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
(2.6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
The following tables present the effect of derivative instruments on the consolidated condensed statements of operations and consolidated condensed statements of comprehensive income (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in OCI
on Derivative
(Effective Portion)
|
|
|
|
Amount of Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
|
|
|
Three Months Ended
June 30,
|
|
|
|
Three Months Ended
June 30,
|
|
|
Location of Gain or
(Loss) Reclassified from
Accumulated OCI
into Income
|
|
Derivatives in cash flow hedging relationships
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Foreign currency contracts
|
|
$
|
(7.4
|
)
|
|
$
|
(2.7
|
)
|
|
Cost of sales
|
|
$
|
19.0
|
|
|
$
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in OCI
on Derivative
(Effective Portion)
|
|
|
|
Amount of Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
|
|
|
Six Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
Location of Gain or
(Loss) Reclassified from
Accumulated OCI
into Income
|
|
Derivatives in cash flow hedging relationships
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Foreign currency contracts
|
|
$
|
28.9
|
|
|
$
|
(4.4
|
)
|
|
Cost of sales
|
|
$
|
29.5
|
|
|
$
|
8.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in Income on
Derivative
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Location of Gain or (Loss)
Recognized in Income on
Derivative
|
|
Derivatives in fair value hedging relationships
|
|
2015
|
|
2014
|
Interest rate swap agreements
|
|
Interest expense, net
|
|
$
|
(2.6
|
)
|
|
$
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in Income on
Derivative
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
Location of Gain or (Loss)
Recognized in Income on
Derivative
|
|
Derivatives in fair value hedging relationships
|
|
2015
|
|
2014
|
Interest rate swap agreements
|
|
Interest expense, net
|
|
$
|
1.9
|
|
|
$
|
4.7
|
|
The gains on the interest rate swap agreements are fully offset by the changes in the fair value of the fixed-rate debt being hedged.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in Income on
Derivative
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Location of Gain or (Loss)
Recognized in Income on
Derivative
|
|
Derivatives not designated as hedging instruments
|
|
2015
|
|
2014
|
Foreign currency contracts
|
|
Other expense, net
|
|
$
|
1.9
|
|
|
$
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in Income on
Derivative
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
Location of Gain or (Loss)
Recognized in Income on
Derivative
|
|
Derivatives not designated as hedging instruments
|
|
2015
|
|
2014
|
Foreign currency contracts
|
|
Other expense, net
|
|
$
|
6.8
|
|
|
$
|
(3.2
|
)
|
The Company expects that during the next twelve months it will reclassify to earnings a
$19.7 million
gain currently recorded in "
Accumulated Other Comprehensive Loss
."
8. STOCK-BASED COMPENSATION
Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the
three and six months ended June 30, 2015
and
2014
was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Cost of sales
|
$
|
1.6
|
|
|
$
|
1.5
|
|
|
$
|
3.4
|
|
|
$
|
3.0
|
|
Selling, general, and administrative expenses
|
7.1
|
|
|
8.6
|
|
|
16.7
|
|
|
17.4
|
|
Research and development expenses
|
2.1
|
|
|
1.8
|
|
|
4.3
|
|
|
3.5
|
|
Total stock-based compensation expense
|
$
|
10.8
|
|
|
$
|
11.9
|
|
|
$
|
24.4
|
|
|
$
|
23.9
|
|
At
June 30, 2015
, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to
$108.1 million
, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of
33 months
.
During the
six months ended June 30, 2015
, the Company granted
0.8 million
stock options at a weighted-average exercise price of
$130.89
and
0.2 million
shares of restricted stock units at a weighted-average grant-date fair value of
$131.23
. The Company also granted
34,000
shares of market-based restricted stock units at a weighted-average grant-date fair value of
$138.66
. The market-based restricted stock units vest based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company’s total shareholder return relative to a selected industry peer group over a
three
-year performance period, and may range from
0%
to
175%
of the targeted number of shares granted.
Fair Value Disclosures
The fair value of the market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units granted during the
six months ended June 30, 2015
and
2014
included a risk-free interest rate of
1.0%
and
0.9%
, respectively, and an expected volatility rate of
31.0%
and
31.7%
, respectively.
The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Average risk-free interest rate
|
1.4
|
%
|
|
1.4
|
%
|
|
1.4
|
%
|
|
1.4
|
%
|
Expected dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|
None
|
|
Expected volatility
|
29.7
|
%
|
|
30.7
|
%
|
|
29.8
|
%
|
|
30.7
|
%
|
Expected term (years)
|
4.5
|
|
|
4.5
|
|
|
4.5
|
|
|
4.6
|
|
Fair value, per share
|
$
|
35.40
|
|
|
$
|
23.58
|
|
|
$
|
35.64
|
|
|
$
|
23.21
|
|
The Black-Scholes option pricing model was used with the following weighted-average assumptions for ESPP subscriptions granted during the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESPP
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Average risk-free interest rate
|
0.2
|
%
|
|
0.1
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
Expected dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|
None
|
|
Expected volatility
|
26.5
|
%
|
|
29.2
|
%
|
|
27.6
|
%
|
|
31.3
|
%
|
Expected term (years)
|
0.6
|
|
|
0.7
|
|
|
0.6
|
|
|
0.7
|
|
Fair value, per share
|
$
|
33.01
|
|
|
$
|
18.33
|
|
|
$
|
30.86
|
|
|
$
|
16.96
|
|
9. COMMITMENTS AND CONTINGENCIES
Edwards Lifesciences is or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits related primarily to products and services currently or formerly manufactured or performed, as applicable, by Edwards Lifesciences. Such cases and claims raise difficult and complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. Upon resolution of any such legal matter or other claim, Edwards Lifesciences may incur charges in excess of established reserves. The Company is not able to estimate the amount or range of any loss for legal contingencies for which there is no reserve or additional loss for matters already reserved. While any such charge related to these matters could have a material adverse impact on Edwards Lifesciences’ net income or cash flows in the period in which it is recorded or paid, management does not believe that any such charge relating to any currently pending lawsuit would have a material adverse effect on Edwards Lifesciences’ financial position, results of operations, or liquidity.
Edwards Lifesciences is subject to various environmental laws and regulations both within and outside of the United States. The operations of Edwards Lifesciences, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential cost of a program to comply with environmental protection laws, management believes that such cost will not have a material impact on Edwards Lifesciences’ financial position, results of operations, or liquidity.
10. ACCUMULATED OTHER COMPREHENSIVE LOSS
Presented below is a summary of activity for each component of "
Accumulated Other Comprehensive Loss
" for the
six months ended June 30, 2015
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
Translation
Adjustments
|
|
Unrealized Gain
on Cash Flow
Hedges
|
|
Unrealized Loss
on Available-for-
sale Investments
|
|
Unrealized
Pension
Costs
|
|
Total
Accumulated
Other
Comprehensive
Loss
|
|
(in millions)
|
December 31, 2014
|
$
|
(116.4
|
)
|
|
$
|
32.3
|
|
|
$
|
—
|
|
|
$
|
(16.8
|
)
|
|
$
|
(100.9
|
)
|
Other comprehensive (loss) gain before reclassifications
|
(46.3
|
)
|
|
28.9
|
|
|
(0.5
|
)
|
|
—
|
|
|
(17.9
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(29.5
|
)
|
|
0.4
|
|
|
—
|
|
|
(29.1
|
)
|
Deferred income tax benefit
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
June 30, 2015
|
$
|
(162.7
|
)
|
|
$
|
33.0
|
|
|
$
|
(0.1
|
)
|
|
$
|
(16.8
|
)
|
|
$
|
(146.6
|
)
|
The following table provides information about amounts reclassified from "
Accumulated Other Comprehensive Loss
" (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
Affected Line on Consolidated Condensed
Statements of Operations
|
Details about Accumulated Other
Comprehensive Loss Components
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Gain on cash flow hedges
|
$
|
19.0
|
|
|
$
|
3.0
|
|
|
$
|
29.5
|
|
|
$
|
8.0
|
|
|
Cost of sales
|
|
(6.9
|
)
|
|
(1.1
|
)
|
|
(10.7
|
)
|
|
(3.0
|
)
|
|
Provision for income taxes
|
|
$
|
12.1
|
|
|
$
|
1.9
|
|
|
$
|
18.8
|
|
|
$
|
5.0
|
|
|
Net of tax
|
Loss on available-for-sale investments
|
$
|
(0.2
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(0.3
|
)
|
|
Other expense, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
|
$
|
(0.2
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(0.3
|
)
|
|
Net of tax
|
11. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted-average common shares outstanding during a period. Employee equity share options, nonvested shares, and similar equity instruments granted by the Company are treated as potential common shares in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of
restricted stock units, market-based restricted stock units, and in-the-money options. The dilutive impact of the restricted stock units, market-based restricted stock units, and in-the-money options is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount that the employee must pay for exercising stock options, the amount of compensation expense for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in "
Additional Paid-in Capital
" when the award becomes deductible are assumed to be used to repurchase shares. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive.
The table below presents the computation of basic and diluted earnings per share (in millions, except for per share information):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
112.7
|
|
|
$
|
547.0
|
|
|
$
|
236.1
|
|
|
$
|
607.3
|
|
Weighted-average shares outstanding
|
107.6
|
|
|
105.6
|
|
|
107.7
|
|
|
106.1
|
|
Basic earnings per share
|
$
|
1.05
|
|
|
$
|
5.18
|
|
|
$
|
2.19
|
|
|
$
|
5.72
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
112.7
|
|
|
$
|
547.0
|
|
|
$
|
236.1
|
|
|
$
|
607.3
|
|
Weighted-average shares outstanding
|
107.6
|
|
|
105.6
|
|
|
107.7
|
|
|
106.1
|
|
Dilutive effect of stock plans
|
2.4
|
|
|
1.8
|
|
|
2.4
|
|
|
1.8
|
|
Dilutive weighted-average shares outstanding
|
110.0
|
|
|
107.4
|
|
|
110.1
|
|
|
107.9
|
|
Diluted earnings per share
|
$
|
1.02
|
|
|
$
|
5.09
|
|
|
$
|
2.14
|
|
|
$
|
5.63
|
|
Stock options, restricted stock units, and market-based restricted stock units to purchase
1.0 million
and
4.4 million
shares for the
three months ended June 30,
2015
and
2014
, respectively, and
0.6 million
and
4.0 million
shares for the
six months ended June 30, 2015
and
2014
, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.
12. INCOME TAXES
The Company's effective income tax rates were
20.7%
and
32.7%
for the
three months ended June 30,
2015
and
2014
, respectively, and
22.5%
and
31.8%
for the
six months ended June 30, 2015
and
2014
, respectively.
The effective tax rate for the
three and six months ended June 30, 2014
included (1)
$262.1 million
of tax expense associated with a
$750.0 million
litigation settlement payment received from Medtronic in May 2014 (see Note 2) and (2)
$6.2 million
of tax benefits from the remeasurement of uncertain tax positions.
The federal research credit expired on December 31, 2014 and had not been reinstated as of
June 30, 2015
. Therefore, the effective income tax rate for the
three and six months ended June 30, 2015
was calculated without an assumed benefit from the federal research credit.
The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for matters it believes are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated condensed financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law.
As of
June 30, 2015
and
December 31, 2014
, the liability for income taxes associated with uncertain tax positions was
$201.6 million
and
$192.3 million
, respectively. The Company estimates that these liabilities would be reduced by
$35.1 million
and
$34.3 million
, respectively, from offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes, and timing adjustments. The net amounts of
$166.5 million
and
$158.0 million
, respectively, if not required, would favorably affect the Company's effective tax rate.
At
June 30, 2015
, all material state, local, and foreign income tax matters have been concluded for years through 2008. During the third quarter of 2013, the Internal Revenue Service ("IRS") completed its fieldwork for the 2009 and 2010 tax years. The case is currently in suspense pending finalization of an Advance Pricing Agreement ("APA") and Joint Committee of Taxation approval. The IRS began its examination of the 2011 and 2012 tax years during the fourth quarter of 2013.
The Company has also entered into an APA process between the Switzerland and United States governments for the years 2009 through 2015 covering transfer pricing matters. The transfer pricing matters are significant to the Company's consolidated condensed financial statements, and the final outcome and timing of the negotiations between the two governments is uncertain.
During 2014, the Company also filed with the IRS a request for a pre-filing agreement associated with a tax return filing position on a portion of the litigation settlement payment received from Medtronic, Inc. in May 2014. During the first quarter of 2015, the IRS accepted the pre-filing agreement into the pre-filing agreement program. The finalization of the pre-filing agreement could result in a significant change in our uncertain tax positions within the next 12 months.
13. SEGMENT INFORMATION
Edwards Lifesciences conducts operations worldwide and is managed in the following geographical regions: United States, Europe, Japan, and Rest of World. All regions sell products that are used to treat advanced cardiovascular disease and critically ill patients.
The Company's geographic segments are reported based on the financial information provided to the Chief Operating Decision Maker (the Chief Executive Officer). The Company evaluates the performance of its geographic segments based on net sales and income before provision for income taxes ("pre-tax income"). The accounting policies of the segments are substantially the same as those described in Note 2 of the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2014. Segment net sales and segment pre-tax income are based on internally derived standard foreign exchange rates, which may differ from year to year, and do not include inter-segment profits. Because of the interdependence of the reportable segments, the pre-tax income as presented may not be representative of the geographical distribution that would occur if the segments were not interdependent. Net sales by geographic area are based on the location of the customer.
Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include net interest expense, global marketing expenses, corporate research and development expenses, manufacturing variances, corporate headquarters costs, special gains and charges, stock-based compensation, foreign currency hedging activities, certain litigation costs, and most of the Company's amortization expense. Although most of the Company's depreciation expense is included in segment pre-tax income, due to the Company's methodology for cost build-up, it is impractical to determine the amount of depreciation expense included in each segment, and, therefore, a portion is maintained at the corporate level. The Company neither discretely allocates assets to its operating segments, nor evaluates the operating segments using discrete asset information.
The table below presents information about Edwards Lifesciences' reportable segments (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Segment Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
302.7
|
|
|
$
|
242.0
|
|
|
$
|
586.2
|
|
|
$
|
464.4
|
|
Europe
|
213.9
|
|
|
188.3
|
|
|
430.4
|
|
|
363.9
|
|
Japan
|
75.2
|
|
|
68.2
|
|
|
143.9
|
|
|
128.4
|
|
Rest of World
|
80.4
|
|
|
75.1
|
|
|
151.7
|
|
|
138.8
|
|
Total segment net sales
|
$
|
672.2
|
|
|
$
|
573.6
|
|
|
$
|
1,312.2
|
|
|
$
|
1,095.5
|
|
Segment Pre-tax Income
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
166.4
|
|
|
$
|
131.2
|
|
|
$
|
333.8
|
|
|
$
|
249.6
|
|
Europe
|
103.2
|
|
|
87.7
|
|
|
211.1
|
|
|
167.9
|
|
Japan
|
36.6
|
|
|
31.9
|
|
|
68.0
|
|
|
59.5
|
|
Rest of World
|
21.5
|
|
|
23.7
|
|
|
38.3
|
|
|
40.0
|
|
Total segment pre-tax income
|
$
|
327.7
|
|
|
$
|
274.5
|
|
|
$
|
651.2
|
|
|
$
|
517.0
|
|
The table below presents reconciliations of segment net sales to consolidated net sales and segment pre-tax income to consolidated pre-tax income (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Sales Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
Segment net sales
|
$
|
672.2
|
|
|
$
|
573.6
|
|
|
$
|
1,312.2
|
|
|
$
|
1,095.5
|
|
Foreign currency
|
(55.4
|
)
|
|
1.5
|
|
|
(105.1
|
)
|
|
2.0
|
|
Consolidated net sales
|
$
|
616.8
|
|
|
$
|
575.1
|
|
|
$
|
1,207.1
|
|
|
$
|
1,097.5
|
|
Pre-tax Income Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax income
|
$
|
327.7
|
|
|
$
|
274.5
|
|
|
$
|
651.2
|
|
|
$
|
517.0
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
|
|
|
|
Corporate items
|
(178.8
|
)
|
|
(158.1
|
)
|
|
(335.6
|
)
|
|
(312.7
|
)
|
Special charges (Note 3)
|
—
|
|
|
(50.0
|
)
|
|
—
|
|
|
(57.5
|
)
|
Intellectual property litigation (expenses) income, net
|
(1.0
|
)
|
|
747.4
|
|
|
(1.3
|
)
|
|
741.9
|
|
Interest expense, net
|
(1.8
|
)
|
|
(3.1
|
)
|
|
(4.2
|
)
|
|
(6.6
|
)
|
Foreign currency
|
(3.9
|
)
|
|
2.5
|
|
|
(5.4
|
)
|
|
8.4
|
|
Consolidated pre-tax income
|
$
|
142.2
|
|
|
$
|
813.2
|
|
|
$
|
304.7
|
|
|
$
|
890.5
|
|
Enterprise-wide Information
Enterprise-wide information is based on actual foreign exchange rates used in the Company's consolidated condensed financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(in millions)
|
|
|
|
|
Net Sales by Geographic Area
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
302.7
|
|
|
$
|
242.0
|
|
|
$
|
586.2
|
|
|
$
|
464.4
|
|
Europe
|
181.9
|
|
|
193.8
|
|
|
367.2
|
|
|
374.1
|
|
Japan
|
62.3
|
|
|
66.7
|
|
|
120.4
|
|
|
125.4
|
|
Rest of World
|
69.9
|
|
|
72.6
|
|
|
133.3
|
|
|
133.6
|
|
|
$
|
616.8
|
|
|
$
|
575.1
|
|
|
$
|
1,207.1
|
|
|
$
|
1,097.5
|
|
Net Sales by Major Product and Service Area
|
|
|
|
|
|
|
|
|
|
|
|
Transcatheter Heart Valve Therapy
|
$
|
281.4
|
|
|
$
|
219.7
|
|
|
$
|
549.9
|
|
|
$
|
408.9
|
|
Surgical Heart Valve Therapy
|
204.0
|
|
|
214.0
|
|
|
400.9
|
|
|
416.6
|
|
Critical Care
|
131.4
|
|
|
141.4
|
|
|
256.3
|
|
|
272.0
|
|
|
$
|
616.8
|
|
|
$
|
575.1
|
|
|
$
|
1,207.1
|
|
|
$
|
1,097.5
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
|
(in millions)
|
Long-lived Tangible Assets by Geographic Area
|
|
|
|
|
|
United States
|
$
|
367.5
|
|
|
$
|
347.6
|
|
Europe
|
39.9
|
|
|
42.1
|
|
Japan
|
8.2
|
|
|
8.5
|
|
Rest of World
|
92.7
|
|
|
93.9
|
|
|
$
|
508.3
|
|
|
$
|
492.1
|
|
14. SUBSEQUENT EVENT
On July 3, 2015, the Company entered into an agreement and plan of merger to acquire CardiAQ Valve Technologies, Inc. ("CardiAQ") for an aggregate cash purchase price of
$350.0 million
, subject to certain adjustments. In addition, the Company agreed to pay an additional
$50.0 million
if a certain European regulatory approval is obtained within
48
months of the acquisition closing date. CardiAQ is a developer of a transcatheter mitral valve replacement system. The Company plans to integrate the acquired technology platform into its mitral heart valve program. The acquisition will be accounted for as a business combination, and is expected to consist primarily of goodwill and in-process research and development. The Company is in the process of evaluating the potential impact of the business combination on its consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend the forward-looking statements contained in this report to be covered by the safe harbor provisions of such Acts. All statements other than statements of historical fact in this report or referred to or incorporated by reference into this report are "forward-looking statements" for purposes of these sections. These statements include, among other things, any predictions of earnings, revenues, expenses or other financial items, plans or expectations with respect to development activities, clinical trials or regulatory approvals, any statements of plans, strategies and objectives of management for future operations, any statements concerning our future operations, financial conditions and prospects, and any statements of assumptions underlying any of the foregoing. These statements can sometimes be identified by the use of the forward-looking words such as "may," "believe," "will," "expect," "project," "estimate," "should," "anticipate," "plan," "goal," "continue," "seek," "pro forma," "forecast," "intend," "guidance," "optimistic," "aspire," "confident," other forms of these words or similar words or expressions or the negative thereof. Investors are cautioned not to unduly rely on such forward-looking statements. These forward-looking statements are subject to substantial risks and uncertainties that could cause our results or future business, financial condition, results of operations or performance to differ materially from our historical results or experiences or those expressed or implied in any forward-looking statements contained in this report. Investors should carefully review the information contained in, or incorporated by reference into, our annual report on Form 10-K for the year ended December 31, 2014 and subsequent reports on Forms 10-Q and 8-K for a description of certain of these risks and uncertainties. These forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections.
Overview
We are the global leader in the science of heart valves and hemodynamic monitoring. Driven by a passion to help patients, we partner with clinicians to develop innovative technologies in the areas of structural heart disease and critical care monitoring, enabling them to save and enhance lives. We conduct operations worldwide and are managed in the following geographical regions: United States, Europe, Japan, and Rest of World. Our products are categorized into the following main areas: Transcatheter Heart Valve Therapy ("THV"), Surgical Heart Valve Therapy, and Critical Care.
Financial Results
The following is a summary of our financial performance (dollars in millions, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
|
Net sales
|
$
|
616.8
|
|
|
$
|
575.1
|
|
|
7.3
|
%
|
|
$
|
1,207.1
|
|
|
$
|
1,097.5
|
|
|
10.0
|
%
|
|
Gross profit as a percentage of net sales
|
74.3
|
%
|
|
73.7
|
%
|
|
0.6
|
|
pts.
|
75.6
|
%
|
|
72.9
|
%
|
|
2.7
|
|
pts.
|
Net income
|
$
|
112.7
|
|
|
$
|
547.0
|
|
|
(79.4
|
)%
|
|
$
|
236.1
|
|
|
$
|
607.3
|
|
|
(61.1
|
)%
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.05
|
|
|
$
|
5.18
|
|
|
(79.7
|
)%
|
|
$
|
2.19
|
|
|
$
|
5.72
|
|
|
(61.7
|
)%
|
|
Diluted
|
$
|
1.02
|
|
|
$
|
5.09
|
|
|
(80.0
|
)%
|
|
$
|
2.14
|
|
|
$
|
5.63
|
|
|
(62.0
|
)%
|
|
Our sales growth was led by our THV products, which benefited from the June 2014 launch of the
Edwards SAPIEN XT
transcatheter heart valve in the United States, and the January 2014 launch of
Edwards SAPIEN 3
transcatheter heart valve in Europe. Our gross profit margin was positively impacted by foreign currency exchange rate fluctuations and an improved product mix, led by THV products. Our gross profit margins in 2015 and 2014 were negatively impacted by the THV sales return reserve and related costs in connection with the launches of our next-generation products, and in 2015 by multiple investments in our operations, including costs of improving our manufacturing processes. Net income in the first six months of 2014 benefited from special items. In the second quarter of 2014, we received $750.0 million ($487.9 million, net of tax), from Medtronic, Inc. ("Medtronic") for an upfront payment due under a litigation settlement agreement.
Healthcare Environment, Opportunities, and Challenges
The medical device industry is highly competitive and continues to evolve. Our success is measured both by the development of innovative products and the value we bring to our stakeholders. We are committed to developing new technologies, providing innovative patient care, and to defending our intellectual property. To strengthen our leadership and
enable future growth opportunities, in the first
six
months of
2015
we invested
15.2%
of our net sales in research and development. In a consolidating industry, we believe our focus on innovation and a robust product pipeline will continue to help us compete more effectively.
New Accounting Standards
For information on new accounting standards, see Note 1 to the "
Consolidated Condensed Financial Statements.
"
Results of Operations
Net Sales Trends
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
Percent Change
|
|
|
|
Percent Change
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
|
United States
|
$
|
302.7
|
|
|
$
|
242.0
|
|
|
$
|
60.7
|
|
|
25.1
|
%
|
|
$
|
586.2
|
|
|
$
|
464.4
|
|
|
$
|
121.8
|
|
|
26.2
|
%
|
International
|
314.1
|
|
|
333.1
|
|
|
(19.0
|
)
|
|
(5.7
|
)%
|
|
620.9
|
|
|
633.1
|
|
|
(12.2
|
)
|
|
(1.9
|
)%
|
Total net sales
|
$
|
616.8
|
|
|
$
|
575.1
|
|
|
$
|
41.7
|
|
|
7.3
|
%
|
|
$
|
1,207.1
|
|
|
$
|
1,097.5
|
|
|
$
|
109.6
|
|
|
10.0
|
%
|
United States net sales increased
$60.7 million
and
$121.8 million
for the
three and six months ended June 30, 2015
, respectively, due primarily to:
|
|
•
|
THV, which increased net sales by $58.1 million and $117.7 million, respectively, due primarily to sales of the
Edwards SAPIEN XT
transcatheter heart valve resulting from its launch in June 2014, partially offset by decreased sales of the
Edwards SAPIEN
transcatheter heart valve as customers converted to
Edwards SAPIEN XT.
|
International net sales decreased $
19.0 million
and
$12.2 million
for the
three and six months ended June 30, 2015
, respectively, due primarily to:
|
|
•
|
foreign currency exchange rate fluctuations, which decreased net sales for the
three and six months ended June 30, 2015
by
$49.0 million
and
$90.3 million
, respectively, due primarily to the weakening of various currencies against the United States dollar, mainly the Euro and the Japanese yen;
|
partially offset by:
|
|
•
|
higher THV sales, excluding the impact of foreign currency exchange rate fluctuations, driven primarily by the launches of the
Edwards SAPIEN 3
transcatheter heart valve in Europe and the
Edwards SAPIEN XT
transcatheter heart valve in Japan, partially offset by lower sales of the
Edwards SAPIEN XT
transcatheter heart valve in Europe, as customers converted to
Edwards SAPIEN 3.
|
The impact of foreign currency exchange rate fluctuations on net sales is not necessarily indicative of the impact on net income due to the corresponding effect of foreign currency exchange rate fluctuations on international manufacturing and operating costs and our hedging activities. For more information, see Item 3, "
Quantitative and Qualitative Disclosures About Market Risk
."
Net Sales by Product Group
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
Percent Change
|
|
|
|
Percent Change
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
|
Transcatheter Heart Valve Therapy
|
$
|
281.4
|
|
|
$
|
219.7
|
|
|
$
|
61.7
|
|
|
28.1
|
%
|
|
$
|
549.9
|
|
|
$
|
408.9
|
|
|
$
|
141.0
|
|
|
34.5
|
%
|
Surgical Heart Valve Therapy
|
204.0
|
|
|
214.0
|
|
|
(10.0
|
)
|
|
(4.6
|
)%
|
|
400.9
|
|
|
416.6
|
|
|
(15.7
|
)
|
|
(3.8
|
)%
|
Critical Care
|
131.4
|
|
|
141.4
|
|
|
(10.0
|
)
|
|
(7.1
|
)%
|
|
256.3
|
|
|
272.0
|
|
|
(15.7
|
)
|
|
(5.8
|
)%
|
Total net sales
|
$
|
616.8
|
|
|
$
|
575.1
|
|
|
$
|
41.7
|
|
|
7.3
|
%
|
|
$
|
1,207.1
|
|
|
$
|
1,097.5
|
|
|
$
|
109.6
|
|
|
10.0
|
%
|
Transcatheter Heart Valve Therapy
The
$61.7 million
and
$141.0 million
increases in net sales of THV products for the
three and six months ended June 30, 2015
, respectively, were due primarily to:
|
|
•
|
the
Edwards SAPIEN XT
valve, driven primarily by the launches in the United States and Japan;
|
|
|
•
|
the
Edwards SAPIEN 3
valve, driven primarily by the launch in Europe; and
|
|
|
•
|
royalties earned in the United States under a license agreement with Medtronic;
|
partially offset by:
|
|
•
|
lower sales of the
Edwards SAPIEN
transcatheter heart valve in the United States and the
Edwards SAPIEN XT
transcatheter heart valve in Europe, as customers converted to next-generation products; and
|
|
|
•
|
foreign currency exchange rate fluctuations, which decreased net sales for the
three and six months ended June 30, 2015
by
$20.3 million
and
$37.5 million
, respectively, due primarily to the weakening of the Euro against the United States dollar.
|
In June 2015, we received approval from the United States Food and Drug Administration for the
Edwards SAPIEN 3
valve with the Commander Delivery System for the treatment of high-risk patients. In the first quarter of 2015, we began enrollment in our
SAPIEN 3
continued access program for up to 1,000 intermediate-risk patients, and we began enrollment in our pivotal trial in Europe of our self-expanding
CENTERA
valve platform.
Surgical Heart Valve Therapy
The
$10.0 million
and
$15.7 million
decreases in net sales of Surgical Heart Valve Therapy products for the
three and six months ended June 30, 2015
, respectively, were due primarily to:
|
|
•
|
foreign currency exchange rate fluctuations, which decreased net sales by
$17.0 million
and
$31.7 million
, respectively, due primarily to the weakening of the Euro and the Japanese yen against the United States dollar;
|
partially offset by:
|
|
•
|
higher sales of surgical heart valve products, excluding the impact of foreign currency exchange rate fluctuations, driven by pericardial aortic tissue valves, primarily in Europe and the United States, and
EDWARDS INTUITY Elite
valves, primarily in Europe.
|
Critical Care
The
$10.0 million
and
$15.7 million
decreases in net sales of Critical Care products during the
three and six months ended June 30, 2015
, respectively, were due primarily to:
|
|
•
|
foreign currency exchange rate fluctuations, which decreased net sales by
$11.7 million
and
$21.1 million
, respectively, due primarily to the weakening of the Euro and the Japanese yen against the United States dollar;
|
partially offset by:
|
|
•
|
higher sales of enhanced surgical recovery products, primarily outside the United States.
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
|
Gross profit as a percentage of net sales
|
74.3
|
%
|
|
73.7
|
%
|
|
0.6
|
pts.
|
75.6
|
%
|
|
72.9
|
%
|
|
2.7
|
pts.
|
The increase in gross profit as a percentage of net sales for the
three and six months ended June 30, 2015
was driven primarily by:
|
|
•
|
a 3.1 percentage point and 2.8 percentage point increase, respectively, due to the impact of foreign currency exchange rate fluctuations, including the settlement of foreign currency hedging contracts; and
|
|
|
•
|
a 1.1 percentage point and 1.1 percentage point increase, respectively, in the United States, and a 0.5 percentage point and 0.3 percentage point increase, respectively, in international markets, due to an improved product mix, driven by THV products;
|
partially offset by:
|
|
•
|
multiple investments in our operations, including costs of improving our manufacturing processes; and
|
|
|
•
|
a 1.1 percentage point decrease in the three month period due to the THV sales return reserve and related inventory write-off in connection with our 2015 launch of
SAPIEN 3
in the United States, and the 2014 launches of
SAPIEN 3
in Europe and
SAPIEN XT
in the United States.
|
Selling, General, and Administrative ("SG&A") Expenses
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
|
SG&A expenses
|
$
|
213.9
|
|
|
$
|
215.5
|
|
|
$
|
(1.6
|
)
|
|
$
|
416.4
|
|
|
$
|
412.7
|
|
|
$
|
3.7
|
|
|
SG&A expenses as a percentage of net sales
|
34.7
|
%
|
|
37.5
|
%
|
|
(2.8
|
)
|
pts.
|
34.5
|
%
|
|
37.6
|
%
|
|
(3.1
|
)
|
pts.
|
Our SG&A expenses for the
three and six months ended June 30, 2015
were impacted by (1) higher sales and marketing expenses in Europe and the United States, mainly to support the THV and Surgical Heart Valve Therapy programs and (2) higher personnel-related costs. These increases were offset by the impact of foreign currency, which reduced expenses by $17.3 million and $32.0 million, respectively, due primarily to the weakening of the Euro against the United States dollar. The decrease in SG&A expenses as a percentage of net sales for the
three and six months ended June 30, 2015
was due to leverage from our strong THV sales growth in the United States and Europe.
Research and Development ("R&D") Expenses
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
|
|
R&D expenses
|
$
|
97.5
|
|
|
$
|
89.1
|
|
|
$
|
8.4
|
|
|
$
|
183.9
|
|
|
$
|
174.9
|
|
|
$
|
9.0
|
|
|
|
R&D expenses as a percentage of net sales
|
15.8
|
%
|
|
15.5
|
%
|
|
0.3
|
|
pts.
|
15.2
|
%
|
|
15.9
|
%
|
|
(0.7
|
)
|
|
pts.
|
The increase in R&D expenses for the
three and six months ended June 30, 2015
was due primarily to new THV and Surgical Heart Valve Therapy product development efforts. These costs were partially offset by lower spending for THV clinical trials. The decrease in R&D expenses as a percentage of net sales for the six months ended June 30, 2015 was due primarily to the timing of clinical expenses.
Intellectual Property Litigation Expenses (Income), Net
In May 2014, we entered into an agreement with Medtronic to settle all outstanding patent litigation between the companies, and, pursuant to the agreement, we received an upfront payment from Medtronic in the amount of $750.0 million.
We incurred external legal costs related to intellectual property litigation of $
1.0 million
and $2.6 million for the
three months ended June 30,
2015
and
2014
, respectively, and
$1.3 million
and $8.1 million for the
six months ended June 30, 2015
and
2014
, respectively. Intellectual property litigation expense decreased from the prior year due to the May 2014 litigation settlement agreement with Medtronic.
Special Charges
For information on special charges, see Note 3 to the "
Consolidated Condensed Financial Statements.
"
Interest Expense, net
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Interest expense
|
$
|
4.2
|
|
|
$
|
4.4
|
|
|
$
|
(0.2
|
)
|
|
$
|
8.4
|
|
|
$
|
9.0
|
|
|
$
|
(0.6
|
)
|
Interest income
|
(2.4
|
)
|
|
(1.3
|
)
|
|
(1.1
|
)
|
|
(4.2
|
)
|
|
(2.4
|
)
|
|
(1.8
|
)
|
Interest expense, net
|
$
|
1.8
|
|
|
$
|
3.1
|
|
|
$
|
(1.3
|
)
|
|
$
|
4.2
|
|
|
$
|
6.6
|
|
|
$
|
(2.4
|
)
|
The decrease in interest expense for the
three and six months ended June 30, 2015
resulted primarily from a lower average debt balance as compared to the prior year period, partially offset by higher average interest rates. The increase in interest income for the
three and six months ended June 30, 2015
resulted primarily from higher average investment balances and higher average interest rates.
Other Expense, net
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Foreign exchange losses, net
|
$
|
2.8
|
|
|
$
|
1.3
|
|
|
$
|
1.9
|
|
|
$
|
1.1
|
|
(Gain) loss on investments
|
(0.7
|
)
|
|
(0.9
|
)
|
|
0.7
|
|
|
2.6
|
|
Insurance settlement gain
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
Other
|
(0.2
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
0.1
|
|
Other expense, net
|
$
|
1.9
|
|
|
$
|
0.4
|
|
|
$
|
2.1
|
|
|
$
|
0.1
|
|
The foreign exchange losses relate to the foreign currency fluctuations, primarily in our global trade and intercompany receivable and payable balances, offset by the gains and losses on derivative instruments intended as an economic hedge of those exposures.
The (gain) loss on investments primarily represents our net share of gains and losses in investments accounted for under the equity method, and realized gains and losses on our available-for-sale and cost method investments. During the
six months ended June 30, 2014
, we recorded an other-than-temporary impairment charge of $3.5 million related to one of our cost method investments, and we recorded a $1.4 million gain related to a distribution we received from one of our equity method investments.
In March 2014, we recorded a $3.7 million insurance settlement gain related to inventory that was damaged in the fourth quarter of 2013.
Provision for Income Taxes
The provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside the United States, which have statutory tax rates lower than the United States tax rate. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates. Our effective income tax rates were
20.7%
and
32.7%
for the
three months ended June 30,
2015
and
2014
, respectively, and
22.5%
and
31.8%
for the
six months ended June 30, 2015
and
2014
, respectively.
The effective tax rate for the
three and six months ended June 30, 2014
included (1)
$262.1 million
of tax expense associated with a
$750.0 million
litigation settlement payment received from Medtronic in May 2014 (see Note 2) and (2)
$6.2 million
of tax benefits from the remeasurement of uncertain tax positions.
The federal research credit expired on December 31, 2014 and had not been reinstated as of
June 30, 2015
. Therefore, the effective income tax rate for the
three and six months ended June 30, 2015
was calculated without an assumed benefit from the federal research credit.
We strive to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While we have accrued for matters we believe are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated condensed
financial statements. Furthermore, we may later decide to challenge any assessments, if made, and may exercise our right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law. Management believes that adequate amounts of tax and related penalty and interest have been provided in income tax expense for any adjustments that may result from our uncertain tax positions. For further information, see Note 12 to the "
Consolidated Condensed Financial Statements
."
During 2014, we filed with the Internal Revenue Service ("IRS") a request for a pre-filing agreement associated with a tax return filing position on a portion of the litigation settlement payment received from Medtronic in May 2014. During the first quarter of 2015, the IRS accepted the pre-filing agreement into the pre-filing agreement program. The finalization of the pre-filing agreement could result in a significant change in our uncertain tax positions within the next 12 months. As a result, a portion of our long-term uncertain tax positions has been reclassified as short-term.
Liquidity and Capital Resources
Our sources of cash liquidity include cash and cash equivalents, short-term investments, amounts available under credit facilities, and cash from operations. We believe that these sources are sufficient to fund the current requirements of working capital, capital expenditures, and other financial commitments for the next twelve months. However, we periodically consider various financing alternatives and may, from time to time, seek to take advantage of favorable interest rate environments or other market conditions.
As of
June 30, 2015
, cash and cash equivalents and short-term investments held in the United States and outside the United States were $580.8 million and $828.2 million, respectively. We believe that cash held in the United States, in addition to amounts available under credit facilities and cash from operations, are sufficient to fund our United States operating requirements for the next twelve months. Cash and cash equivalents and short-term investments held outside the United States have historically been used to fund international operations and acquire businesses and assets outside of the United States, the majority of which relates to undistributed earnings of certain of our foreign subsidiaries, which are considered by us to be indefinitely reinvested. Repatriations of cash and cash equivalents and short-term investments held outside the United States are subject to restrictions in certain jurisdictions, and may be subject to withholding and other taxes. The potential tax liability related to any repatriation would be dependent on the facts and circumstances that exist at the time such repatriation is made and the complexities of the tax laws of the United States and the respective foreign jurisdictions.
On July 3, 2015, we entered into an agreement and plan of merger to acquire CardiAQ Valve Technologies, Inc. for an aggregate cash purchase price of
$350.0 million
, subject to certain adjustments. We plan to close the purchase with available cash on hand in the United States. For further information, see Note 14 to the "
Consolidated Condensed Financial Statements.
"
In October 2013, we issued $600.0 million of 2.875% fixed-rate unsecured senior notes due October 15, 2018. As of
June 30, 2015
, the total carrying value of our long-term debt was $
600.3 million
. We have a Five-Year Credit Agreement ("Credit Agreement") which provides up to an aggregate of $750.0 million in borrowings in multiple currencies. We may increase the amount available under the Credit Agreement, subject to agreement of the lenders, by up to an additional $250.0 million in the aggregate. As of
June 30, 2015
, there were no borrowings outstanding under the Credit Agreement.
From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Board of Directors. We consider several factors in determining when to execute share repurchases, including, among other things, expected dilution from stock plans, cash capacity, and the market price of our common stock. In May 2013, the Board of Directors approved a $750.0 million stock repurchase program providing for repurchases of our common stock through December 31, 2016. In July 2014, the Board of Directors approved a new stock repurchase program providing for an additional $750.0 million of repurchases without a specified end date. During
2015
, we repurchased a total of
1.3 million
shares under these programs at an aggregate cost of $
175.0 million
, and as of
June 30, 2015
, had remaining authority to purchase $
777.5 million
of our common stock.
At
June 30, 2015
, there had been no material changes in our significant contractual obligations and commercial commitments as disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2014
.
Net cash flows provided by
operating activities
of $
243.4 million
for the
six months ended June 30, 2015
decreased $
673.5 million
over the same period last year due primarily to (1) the $750.0 million upfront payment received in 2014 under a litigation settlement with Medtronic and (2) a higher bonus payout in 2015 associated with 2014 performance. These decreases were partially offset by improved operating performance in 2015 and the $50.0 million charitable contribution made in 2014 to the Edwards Lifesciences Foundation.
Net cash used in
investing activities
of $
167.8 million
for the
six months ended June 30, 2015
consisted primarily of net purchases of investments of $
123.5 million
and capital expenditures of $
39.2 million
.
Net cash used in investing activities of $
590.2 million
for the
six months ended June 30, 2014
consisted primarily of net purchases of investments of $
561.2 million
and capital expenditures of $
30.3 million
.
Net cash used in
financing activities
of $
122.5 million
for the
six months ended June 30, 2015
consisted primarily of purchases of treasury stock of $
179.9 million
, partially offset by proceeds from stock plans of $
42.5 million
and the excess tax benefits from stock plans of $
19.7 million
.
Net cash used in financing activities of $
247.6 million
for the
six months ended June 30, 2014
consisted primarily of purchases of treasury stock of $
300.6 million
, partially offset by proceeds from stock plans of $
32.9 million
, and the excess tax benefit from stock plans of $
21.3 million
(including the realization of previously suspended excess tax benefits).
Critical Accounting Policies and Estimates
The consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated condensed financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Information with respect to our critical accounting policies and estimates which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained on pages 36-38 in Item 7, "
Management's Discussion and Analysis of Financial Condition and Results of Operations,
" of our Annual Report on Form 10-K for the year ended
December 31, 2014
. There have been no significant changes from the information discussed therein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk, Foreign Currency Risk, Credit Risk, and Concentrations of Risk
For a complete discussion of our exposure to interest rate risk, foreign currency risk, credit risk, and concentrations of risk, refer to Item 7A "
Quantitative and Qualitative Disclosures About Market Risk
" on pages 38-40 of our Annual Report on Form 10-K for the year ended
December 31, 2014
. There have been no significant changes from the information discussed therein.
Investment Risk
We are exposed to investment risks related to changes in the fair values of our investments. Our investments include short-term and long-term investments in fixed-rate debt securities, and investments in equity instruments of public and private companies. See Note 5 to the "
Consolidated Condensed Financial Statements
" for additional information on our investments.
As of
June 30, 2015
, we had $
820.7 million
of investments in fixed-rate debt securities designated as held-to-maturity, of which $
53.4 million
were long-term, and $
290.6 million
of investments in fixed-rate debt securities designated as available-for-sale, of which $
246.5 million
were long-term. As of
June 30, 2015
, we had recorded unrealized losses of $
0.4 million
on the available-for-sale investments in "
Accumulated Other Comprehensive Loss,
" net of tax. The market value of our investments may decline if current market interest rates rise, which could result in a realized loss if we choose or are forced to sell an investment before its scheduled maturity, which we currently do not anticipate. In addition, we had $
24.7 million
of investments in equity instruments of other companies and had recorded unrealized gains of $
0.2 million
on these investments in "
Accumulated Other Comprehensive Loss,
" net of tax. Should these companies experience a decline in financial condition or fail to meet certain development milestones, the decline in the investments' value may be considered other-than-temporary and impairment charges may be necessary.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
Our management, including the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of
June 30, 2015
. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of
June 30, 2015
that our disclosure controls and procedures are effective in providing reasonable assurance that the information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There have been no changes in our internal controls over financial reporting during the quarter ended
June 30, 2015
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
Please see Note 9 to the "
Consolidated Condensed Financial Statements
" of this Quarterly Report on Form 10-Q, which is incorporated by reference.
Item 1A. Risk Factors
There have been no material changes to the risk factors under Part I, Item 1A "
Risk Factors
" in our Annual Report on Form 10-K for the year ended
December 31, 2014
.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
Total Number
of Shares
(or Units)
Purchased (a)
|
|
Average
Price Paid
per Share
(or Unit)
|
|
Total Number of
Shares (or Units)
Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs
(in millions) (b)
|
|
April 1, 2015 through April 30, 2015
|
|
430
|
|
|
$
|
140.61
|
|
|
—
|
|
|
$
|
852.5
|
|
|
May 1, 2015 through May 31, 2015
|
|
30,410
|
|
|
127.00
|
|
|
—
|
|
|
852.5
|
|
|
June 1, 2015 through June 30, 2015
|
|
548,316
|
|
|
136.76
|
|
|
548,316
|
|
|
777.5
|
|
|
Total
|
|
579,156
|
|
|
136.25
|
|
|
548,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The difference between the total number of shares (or units) purchased and the total number of shares (or units) purchased as part of publicly announced plans or programs is due to shares withheld by us to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees.
|
|
|
(b)
|
On May 14, 2013, the Board of Directors approved a stock repurchase program authorizing us to purchase on the open market, including pursuant to a Rule 10b5-1 plan, and in privately negotiated transactions up to $750.0 million of our common stock from time to time until December 31, 2016. On July 10, 2014, the Board of Directors approved a new stock repurchase program providing for an additional $750.0 million of repurchases of our common stock.
|
Item 6. Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index hereto and include the following:
|
|
|
|
|
*10.1
|
|
Edwards Lifesciences Corporation 2015 Edwards Incentive Plan (incorporated by reference to Appendix A in Edwards' Definitive Proxy Statement filed on March 30, 2015)
|
*10.2
|
|
Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program, as amended and restated as of February 19, 2015 (incorporated by reference to Appendix B in Edwards' Definitive Proxy Statement filed on March 30, 2015)
|
*10.3
|
|
Edwards Lifesciences Corporation Form of Participant Stock Option Statement and related Long-Term Stock Incentive Compensation Program Global Nonqualified Stock Option Award Agreement (for awards granted beginning in May 2015)
|
*10.4
|
|
Edwards Lifesciences Corporation Form of Participant Restricted Stock Unit Statement and related Long-Term Stock Incentive Compensation Program Global Restricted Stock Unit Award Agreement (for awards granted beginning in May 2015)
|
*10.5
|
|
Edwards Lifesciences Corporation Form of Performance-Based Restricted Stock Unit Statement and related Long-Term Stock Incentive Compensation Program Global Performance-Based Restricted Stock Unit Award Agreement (for awards granted beginning in May 2015)
|
31.1
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
The following financial statements from Edwards Lifesciences' Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Condensed Balance Sheets, (ii) the Consolidated Condensed Statements of Operations, (iii) the Consolidated Condensed Statements of Comprehensive Income, (iv) the Consolidated Condensed Statements of Cash Flows, and (v) Notes to Consolidated Condensed Financial Statements
|
|
|
|
*
|
|
Represents management contract or compensatory plan
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
EDWARDS LIFESCIENCES CORPORATION
|
|
(Registrant)
|
Date: July 29, 2015
|
By:
|
/s/ SCOTT B. ULLEM
|
|
|
Scott B. Ullem
Chief Financial Officer
(Principal Financial Officer)
|
Date: July 29, 2015
|
By:
|
/s/ ROBERT W.A. SELLERS
|
|
|
Robert W.A. Sellers
Corporate Controller
(Principal Accounting Officer)
|
EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
*10.1
|
|
|
Edwards Lifesciences Corporation 2015 Edwards Incentive Plan (incorporated by reference to Appendix A in Edwards' Definitive Proxy Statement filed on March 30, 2015)
|
*10.2
|
|
|
Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program, as amended and restated as of February 19, 2015 (incorporated by reference to Appendix B in Edwards' Definitive Proxy Statement filed on March 30, 2015)
|
*10.3
|
|
|
Edwards Lifesciences Corporation Form of Participant Stock Option Statement and related Long-Term Stock Incentive Compensation Program Global Nonqualified Stock Option Award Agreement (for awards granted beginning in May 2015)
|
*10.4
|
|
|
Edwards Lifesciences Corporation Form of Participant Restricted Stock Unit Statement and related Long-Term Stock Incentive Compensation Program Global Restricted Stock Unit Award Agreement (for awards granted beginning in May 2015)
|
*10.5
|
|
|
Edwards Lifesciences Corporation Form of Performance-Based Restricted Stock Unit Statement and related Long-Term Stock Incentive Compensation Program Global Performance-Based Restricted Stock Unit Award Agreement (for awards granted beginning in May 2015)
|
31.1
|
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following financial statements from Edwards Lifesciences' Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Condensed Balance Sheets, (ii) the Consolidated Condensed Statements of Operations, (iii) the Consolidated Condensed Statements of Comprehensive Income, (iv) the Consolidated Condensed Statements of Cash Flows, and (v) Notes to Consolidated Condensed Financial Statements
|
|
|
|
|
*
|
|
|
Represents management contract or compensatory plan
|
Exhibit 10.3
Edwards Lifesciences Corporation
Long-Term Stock Incentive Compensation Program
Global Nonqualified Stock Option Award Agreement
THIS AGREEMENT, including any appendix for the Participant’s country (the “Non-U.S. Countries Additional Terms Appendix”), the appendix containing additional defined terms (the “Additional Defined Terms Appendix” and, together with the Non-U.S. Countries Additional Terms Appendix, the “Appendices”) and the Participant Stock Option Statement attached to the front of this agreement (the “Statement”), sets forth the terms and conditions of the nonqualified stock option (the “Option”) granted by Edwards Lifesciences Corporation, a Delaware corporation (the “Company”), to the Participant named on the Statement, pursuant to the provisions of the Company’s Long-Term Stock Incentive Compensation Program (the “Program”). This agreement, the Appendices and the Statement shall be considered one agreement and are referred to herein as the “Agreement.”
The Program provides additional terms and conditions governing the Option and is incorporated herein by reference. If there is any inconsistency between the terms of this Agreement and the terms of the Program, the Program’s terms shall completely supersede and replace the conflicting terms of this Agreement. All capitalized terms shall have the meanings ascribed to them in the Program, unless specifically set forth otherwise herein. The parties hereto agree as follows:
1.
Grant of Stock Option.
Effective as of the Date of Grant set forth on the Statement, the Company grants to the Participant an Option to purchase the number of Shares set forth on the Statement, at the stated Option Price set forth on the Statement, which is one hundred percent (100%) of the Fair Market Value of a Share on the Date of Grant, in the manner and subject to the terms and conditions of the Program and this Agreement.
The grant of this Option to the Participant shall not confer any right to such Participant (or any other Participant) to be granted any Option or other Awards in the future under the Program.
2.
Exercise of Stock Option.
Except as may otherwise be provided in Sections 3 and 4 below, the Participant may only exercise this Option according to the vesting schedule set forth on the Statement, provided the Participant continues to be employed by the Company or one of its Subsidiaries through the applicable vesting date. No exercise may occur subsequent to the close of business on (i) the Date of Expiration (as set forth on the Statement) or (ii) such earlier date of the expiration of the Option as set forth in Section 3.
The number of Shares for which this Option becomes vested and exercisable pursuant to this Section 2 shall be rounded down to the next whole number in the event that the use of the percentages set forth on the Statement results in the Option being exercisable with respect to a fractional Share. In addition, the Option may be exercised in whole or in part, but not for less than fifty (50) Shares at any one time, unless fewer than fifty (50) Shares then remain subject to the Option, and the Option is then being exercised as to all such remaining Shares.
3.
Termination of Employment
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(a)
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By Death or Disability
: All unvested Shares under this Option shall immediately vest and become exercisable as of the Participant’s date of termination by death or Disability. Shares under this Option that vest and become exercisable in accordance with this Section 3(a) or that are already vested and exercisable as of the Participant’s date of termination by reason of death or Disability, may be purchased only until the earlier of: (i) the Date of Expiration of this Option; or (ii) the first (1
st
) anniversary of the Participant’s date of termination by reason of death or Disability.
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(b)
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By Retirement
: Subject to Section 4, all unvested Shares under this Option shall immediately terminate and be forfeited to the Company as of the date of the Participant’s termination of employment by Retirement. All Shares under this Option that are vested as of the Participant’s date of termination by Retirement may be purchased only until the earlier of: (i) the Date of Expiration of this Option; or (ii) the fifth (5
th
) anniversary of the Participant’s date of Retirement.
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(c)
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For Cause
: If the Participant’s employment is terminated for Cause (as defined in the Additional Defined Terms Appendix), all vested and unvested Shares under this Option shall terminate as of the Participant’s date of termination of employment and shall be forfeited to the Company.
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(d)
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For Other Reasons
:
Subject to Section 4, all unvested Shares under this Option shall immediately terminate and be forfeited to the Company as of the date of the Participant’s termination of employment for any reason other than the reasons set forth in Section 3(a) above. Shares under this Option that are vested and exercisable as of the date of an employment termination for any reason other than those reasons set forth in Sections 3(a), 3(b) or 3(c) above may be purchased until the earlier of: (i) the Date of Expiration of this Option; or (ii) the ninetieth (90
th
) day following the date of the Participant’s employment termination.
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(e)
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Transfer
: For the purposes of this Agreement, a transfer of the Participant’s employment between the Company and any Subsidiary (or between Subsidiaries) shall not be deemed a termination of employment.
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(f)
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Death or Disability Following Termination of Employment.
If the Participant dies or incurs a Disability after termination of employment but before this option otherwise expires in accordance with Sections 3(a), (b) or (d) above, then to the extent that this Option is still exercisable on the date of death or Disability, Shares may be purchased hereunder until the earlier of: (i) the first (1
st
) anniversary of the Participant’s date of death or Disability (or, if later, in the case of death or Disability following termination by reason of Retirement, the fifth (5
th
) anniversary of such termination) or (ii) the Date of Expiration of this Option. Except in the case of death or Disability following termination by reason of Retirement, this Option shall not be exercisable for more Shares than it was immediately before the date of death or Disability.
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4.
Change in Control.
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(a)
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Possible Acceleration on Certain Terminations
: The following provisions of this Section 4(a) apply notwithstanding anything to the contrary in this Agreement or in the Program, but only to the event that Section 4(b) does not apply in the circumstances. In the event that, at any time during the Protected Period, the Participant ceases to be employed by the Company or one of its Subsidiaries and such termination is the result of a termination of employment either by the Company or such Subsidiary without Cause or by the Participant for Good Reason, this Option, to the extent then outstanding and unvested, shall immediately vest and become exercisable in full for the applicable timeframe set forth in Section 3; provided, however, that to the extent such a termination of the Participant’s employment occurs prior to a Change in Control, this Option shall:
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(i)
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remain outstanding and unvested for a period of six (6) months following such termination of employment (or, if less, until the Date of Expiration of this Option) and, should a Change in Control occur during such period of time, vest and become exercisable in full upon the Change in Control for the applicable timeframe specified in Section 3 above as if the date of the Change in Control was the date of the Participant’s termination of employment; and
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(ii)
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terminate and be forfeited at the end of such six-month period should no Change in Control occur during such period (or, if earlier, on the Date of Expiration of this Option).
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(b)
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Possible Acceleration on Certain Terminations - CIC Agreement
: In the event that the Participant ceases to be employed by the Company or one of its Subsidiaries and, at the time of such cessation of employment, the Participant is a party to a CIC Agreement, the extent (if any) to which this Option, to the extent then outstanding and unvested, would become vested in connection with such cessation of employment shall be determined in accordance with and subject to the terms and conditions of such CIC Agreement.
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(c)
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Possible Acceleration and Early Termination on Change in Control
: Article 13 of the Plan provides, in general, that in connection with certain Change in Control events the Company may provide for either the assumption and continuation of the Option or for the termination of the Option. The
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Option remains subject to termination pursuant to Article 13 of the Plan even if such termination occurs earlier than the Date of Expiration or any other termination date otherwise provided for in this Agreement. If the Option is to be terminated pursuant to Article 13 of the Plan, however, the outstanding and otherwise unvested portion of the Option will vest to the extent provided by Article 13 of the Plan.
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(d)
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Definitions
: For the purposes of this Agreement and notwithstanding anything to the contrary in the Program, the following definitions will apply:
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(i)
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"CIC Agreement" means a Change in Control Severance Agreement (or any similar or successor written agreement) between the Participant and the Company that provides for the accelerated vesting (or all or a portion) of the equity awards granted by the Company to the Participant (to the extent then outstanding and otherwise unvested) in connection with certain terminations of the Participant's employment and which, by its terms, would apply to the Option (subject to any applicable release or other conditions on such accelerated vesting as set forth in such agreement).
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(ii)
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The terms “Cause”, “Change in Control”, “Good Reason”, and “Protected Period” have the respective meanings ascribed to such terms in the Additional Defined Terms Appendix.
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5.
Notice of Termination.
Any termination of the Participant’s employment by the Company for Cause or by the Participant for Good Reason shall be communicated by a written notice to the other party indicating the specific termination provision in this Agreement relied upon, and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated.
6.
Restrictions on Transfer.
This Option may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, this Option shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s legal representative.
7.
Recapitalization.
In the event there is any change in the Company’s Shares through the declaration of stock dividends or through recapitalization resulting in stock split-ups or through merger, consolidation, exchange of Shares, or otherwise, the number and class of Shares subject to this Option, as well as the Option Price, shall be equitably adjusted by the Committee, in the manner determined in its sole discretion, to prevent dilution or enlargement of rights.
8.
Procedure for Exercise of Option.
This Option may be exercised any time prior to its expiration or forfeiture in accordance with the exercise procedures established by the Committee. Payment of the Option Price may be made by any of the methods set forth in Section 6.6 of the Plan, except that if the Participant resides outside the U.S., he or she may not pay the Option Price by tendering previously acquired Shares (by either actual delivery or attestation) having an aggregate Fair Market Value at the time of exercise equal to the total Option Price and may be subject to other restrictions set forth in the Non-U.S. Countries Additional Terms Appendix.
9.
Responsibility for Taxes.
Regardless of any action the Company or the Participant’s employer (if different) (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Program that are legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains his or her responsibility and that such liability may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant becomes subject to tax and/or social security contributions in more than one jurisdiction between the Date of Grant and the date of any relevant taxable, tax and/or social security contribution withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer
(or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to any relevant taxable, tax and/or social security contribution withholding event, the Participant shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, at their sole discretion, to satisfy the obligations with respect to Tax-Related Items by one or a combination of the following: (i) withholding from the Participant’s wages or other cash compensation paid to him or her by the Company and/or the Employer; or (ii) withholding from the proceeds of the sale of Shares acquired upon exercise of the Option, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) subject to any insider trading policies implemented by the Company and applicable to the Participant and to the insider trading rules set forth under Section 10(b) and Rule 10b-5 of the U.S. Securities Exchange Act of 1934; or (iii) withholding in Shares to be issued upon exercise of the Option. In the event any Tax-Related Items are recovered by withholding in Shares, to avoid negative accounting treatment, the Company will withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant will be deemed to have been issued the full number of Shares subject to the exercised Option, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Program. In the event Tax-Related Items are recovered by any of the other methods described in this Section 9, the Company or the Employer may withhold or account for Tax-Related Items by considering maximum applicable rates.
Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Program or Participant’s purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to issue or deliver the Shares or the proceeds of the sale of the Shares to the Participant if the Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items.
10.
Beneficiary Designation.
This Section 10 applies only if the Participant resides in the U.S. The Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Agreement is to be paid in case of his or her death before he or she receives any or all such benefit. Each such designation shall revoke all prior designations by the Participant, shall be in a form prescribed by the Company, and will be effective only when completed by the Participant in accordance with any instructions provided by the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
11.
Rights as a Stockholder.
The Participant shall have no rights as a stockholder of the Company until the Option is exercised and the Participant has obtained an ownership interest in the Shares.
12.
Continuation of Employment.
This Agreement shall not confer upon the Participant any right to continuation of employment by the Employer, nor shall this Agreement interfere in any way with the Employer’s right to terminate the Participant’s employment at any time with or without cause.
13.
Miscellaneous.
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(a)
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This Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Program, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Program. The Committee shall have the right to impose such restrictions on any Shares acquired pursuant to the exercise of this Option, as it may deem advisable for regulatory compliance, including, without limitation, restrictions under applicable U.S. federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any state or foreign securities laws applicable to such Shares. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or
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appropriate to the administration of the Program and this Agreement, all of which shall be binding upon the Participant.
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(b)
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The Board may terminate, suspend, amend, or modify the Program and the Committee may amend this Option at anytime; provided, however, that except for the Company’s right to cash out this Option under certain circumstances pursuant to Section 6.10 of the Program, no such termination, amendment, suspension or modification of the Program or amendment of this Option may in any material way adversely affect the Participant’s rights under this Agreement, without the express consent of the Participant.
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(c)
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The Participant agrees to take all steps necessary to comply with all applicable provisions of U.S. federal, state and foreign securities law in exercising his or her rights under this Agreement.
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(d)
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This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
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(e)
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All obligations of the Company under the Program and this Agreement, with respect to this Option, shall, to the extent legally permissible, be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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14.
Nature of Grant.
In accepting the Option, the Participant acknowledges, understands and agrees that:
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(a)
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the Program is established voluntarily by the Company and is discretionary in nature;
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(b)
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the grant of the Option by the Company is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;
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(c)
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all decisions with respect to future option grants, if any, will be at the sole discretion of the Company;
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(d)
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the Participant is voluntarily participating in the Program;
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(e)
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the Option and any Shares acquired under the Program are not part of normal or expected compensation or salary;
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(f)
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unless otherwise agreed with the Company, the Option and any Shares acquired under the Program, and the income and value of the same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary or affiliate of the Company;
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(g)
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the Option grant and the Participant’s participation in the Program shall not be interpreted to form an employment contract or relationship with the Company or the Employer or any Subsidiary or affiliate of the Company;
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(h)
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the future value of the underlying Shares is unknown and cannot be predicted with certainty;
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(i)
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if the underlying Shares do not increase in value, the Option will have no value;
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(j)
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for purposes of the Option, the Participant’s employment will be considered terminated as of the date the Participant is no longer actively providing services to the Company or the Employer (regardless of the reason for such termination and whether or not later found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise provided in this Agreement or decided by the Committee, the Participant’s right to vest in the Option under the Program, if any, will terminate effective as of such date and the Participant’s right to exercise the Option after such date, if any, will be as set forth in Section 3 above and measured from such date, and such rights to vest in and exercise the Option will not be extended by any notice period (e.g., active employment would not include a period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); furthermore, the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Option;
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(k)
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for Participants who reside outside the U.S., the following additional provisions shall apply:
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(i)
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the Option and any Shares acquired under the Program are not intended to replace any pension rights or compensation;
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(ii)
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the Option and the Shares acquired under the Program are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company
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or to the Employer and are outside the scope of Participant’s employment agreement, if any; such items shall not be included in or part of any calculation of any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Employer;
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(iii)
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no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from termination of the Participant’s employment by the Company or the Employer (whether or not in breach of local labor laws) and in consideration of the grant of the Option to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim and releases the Company and the Employer from any such claim if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Program, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
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(iv)
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the Participant acknowledges and agrees that neither the Company, the Employer or any Subsidiary or affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to the Participant pursuant to the Option or the subsequent sale of any Shares acquired upon exercise of the Option.
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15.
No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Program, or his or her acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding the Participant’s participation in the Program before taking any action related to the Program.
16.
Data Privacy Notice and Consent
.
This Section 16 applies if the Participant resides outside the U.S. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer in electronic or other form, of his or her personal data as described in this Agreement and any other grant materials, by and among, as applicable, the Employer, the Company and any Subsidiary or affiliate of the Company, for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Program.
The Participant understands that the Company and the Employer may hold certain personal information about him or her, including, but not limited to, his or her name, home address and telephone number, date of birth, social insurance number or other identification numbers, salary, nationality, job title, any Shares or directorships held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor, for the purpose of implementing, administering and managing the Program (“Data”). The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Program (presently or in the future), that these recipients may be located in Participant’s country or elsewhere (e.g., the United States), and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative.
The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing Participant’s participation in the Program, including any requisite transfer of such Data as may be required to a broker or other third party with whom Participant may elect to deposit any Shares received upon exercise of the Option. The Participant understands that he or she is providing the consents herein on a purely voluntary basis. The Participant further understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Program. Participant understands that he or she may, at any time, view Data, request additional information
about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Participant’s local human resources representative. Participant understands, however, that refusing or withdrawing his or her consent may affect his or her ability to participate in the Program, but will not adversely affect his or her employment status or service or career with the Employer. For more information on the consequences of his or her refusal to consent or withdrawal of consent, Participant understands that he or she may contact the Company’s human resources representative.
17.
Severability.
The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
18.
Dispute Resolution.
The Participant shall have the right and option to elect to have any good faith dispute or controversy arising under or in connection with this Agreement settled by litigation or arbitration. If arbitration is selected, such proceeding shall be conducted by final and binding arbitration before a panel of three (3) arbitrators in accordance with the rules and under the administration of the American Arbitration Association.
19.
Governing Law and Venue.
To the extent not preempted by U.S. federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, U.S.A. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Option, the Program or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Orange County, California or the federal courts for the United States for the Central District of California, and no other courts, where this grant is made and/or to be performed.
20.
Language.
If Participant has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
21.
Electronic Delivery.
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an online or electronic system established and maintained by the Company or a third party designated by the Company.
22.
Insider Trading Restrictions/Market Abuse Laws.
The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including the United States and the Participant’s country of residence (if different), which may affect his or her ability to acquire or sell Shares or rights to Shares (
e.g.
, Options) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions, including the United States and the Participant’s country of residence). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
23.
Foreign Asset/Account, Exchange Control and Tax Reporting.
The Participant acknowledges that, depending on his or her country, the Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from his or her participation in the Program, in, to and/or from a brokerage/bank account or legal entity located outside the Participant’s country. The applicable laws of the Participant’s country may require that the Participant reports such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. The Participant acknowledges that he or she is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and is advised to consult his or her personal legal advisor on this matter.
24.
Non-U.S. Countries Additional Terms Appendix.
Notwithstanding any provisions in this Agreement, the Option shall be subject to any special terms and conditions for the Participant’s country set forth in the Non-U.S. Countries Additional Terms Appendix. Moreover, if the Participant relocates to one of the countries included in the Non-U.S. Countries Additional Terms Appendix, the special terms and conditions for such country shall apply to the Participant, to the extent that the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate administration of the Program.
25.
Imposition of Other Requirements.
The Company reserves the right to impose other requirements on the Participant’s participation in the Program, on the Option and on any Shares acquired under the Option, to the extent the Company determines it is necessary or advisable to comply with local law or facilitate the administration of the Program, and to require the Participant to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.
26.
Waiver.
The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
27.
Benefit Limit.
Notwithstanding anything else contained herein or in the Program to the contrary, in the event that any payments or benefits to which the Participant becomes entitled in accordance with the provisions of this Agreement (or any other agreement with the Company) would otherwise constitute a parachute payment under Code Section 280G(b)(2), then such payments and/or benefits will be subject to reduction to the extent necessary to assure that the Participant receives only the greater of (i) the amount of those payments which would not constitute such a parachute payment or (ii) the amount which yields the Participant the greatest after-tax amount of benefits after taking into account any excise tax imposed under Code Section 4999 on the payments and benefits provided the Participant under this Agreement (or on any other payments or benefits to which the Participant may become entitled in connection with any change in control or ownership of the Company or the subsequent termination of his or her employment with the Company).
Should a reduction in benefits be required to satisfy the benefit limit of this Section 27, then the portion of any parachute payment otherwise payable in cash to the Participant shall be reduced to the extent necessary to comply with such benefit limit. Should such benefit limit still be exceeded following such reduction, then the number of shares which would otherwise vest on an accelerated basis under each of the Participant’s options or other equity awards (based on the amount of the parachute payment attributable to each such option or equity award under Code Section 280G) shall be reduced to the extent necessary to eliminate such excess, with such reduction to be made in the same chronological order in which those awards were made.
In the event there is any disagreement between the Participant and the Company as to whether one or more payments or benefits to which the Participant becomes entitled constitute a parachute payment under Code Section 280G or as to the determination of the present value thereof, such dispute will be resolved as follows:
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(a)
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In the event the Treasury Regulations under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or benefit or the method of valuation therefor, the characterization afforded to such payment or benefit by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling.
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(b)
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In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent auditors selected and paid for by the Company. The resolution reached by the independent auditors will be final and controlling; provided, however, that if in the judgment of the independent auditors, the status of the payment in dispute can be resolved through the obtainment of a private letter ruling from the Internal Revenue Service, a formal and proper request for such ruling will be prepared and submitted by the independent auditors, and the determination made by the Internal Revenue Service in the issued ruling will be controlling. All expenses incurred in connection with the preparation and submission of the ruling request shall be paid by the Company.
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(c)
|
In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the present value thereof will, at the independent auditor’s election, be determined through an independent third-party appraisal, and the expenses incurred in obtaining such appraisal shall be paid by the Company.
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28.
Compliance with Code Section 409A.
This Section 28 applies only to the extent that the Participant is a U.S. taxpayer. It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Code Section 409A (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Participant to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Participant. This Agreement may be amended at any time, without the consent of any party, to avoid the application of Code Section 409A, but the Company shall not be under any obligation to make any such amendment. Nothing in this Agreement shall provide a basis for any person to take action against the Company or any affiliate based on matters covered by Code Section 409A, including the tax treatment of any amount paid or Option granted under the Agreement, and neither the Company nor any of its Subsidiaries or affiliates shall under any circumstances have any liability to any Participant or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties or interest imposed under Code Section 409A.
* * * *
By the Participant’s electronic acceptance of the Agreement and participation in the Program, the Participant agrees that this Option is granted under and governed by the terms and conditions of the Program and this Agreement, including the Appendices and the Statement.
NON-U.S. COUNTRIES ADDITIONAL TERMS APPENDIX
ADDITIONAL TERMS AND CONDITIONS OF THE
EDWARDS LIFESCIENCES CORPORATION
GLOBAL NON-QUALIFIED STOCK OPTION AGREEMENT
Terms and Conditions
This Non-U.S. Countries Additional Terms Appendix includes additional terms and conditions that govern the Option granted to the Participant under the Program if the Participant resides in one of the non-U.S. countries listed below. Certain capitalized terms used but not defined in this Non-U.S. Countries Additional Terms Appendix have the meanings set forth in the Program and/or the Agreement.
Notifications
This Non-U.S. Countries Additional Terms Appendix also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to his or her participation in the Program. The information is based on the securities, exchange control and other laws in effect in the respective countries as of March 2015. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Non-U.S. Countries Additional Terms Appendix as the only source of information relating to the consequences of his or her participation in the Program because the information may be out of date at the time that the Participant exercises the Option or sell Shares acquired under the Program.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to his or her situation.
Finally, the Participant understands that if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working, transfers employment after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to the Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.
AUSTRIA
Notifications
Exchange Control Notification
. If the Participant holds Shares purchased under the Program outside of Austria (
e.g
., in a U.S. brokerage account), a reporting obligation to the Austrian National Bank will apply. An exemption applies if the value of the securities held outside Austria as of December 31 does not exceed €5,000,000 or the value of the securities as of any quarter does not exceed €30,000,000. If the former threshold is exceeded, the annual reporting obligations are imposed, whereas if the latter threshold is exceeded, then quarterly reports must be submitted. The annual reporting date is December 31; the deadline for filing the annual report is January 31 of the following year. If the quarterly reporting is required, the reports must be filed on or before the 15th day of the month following the last day of the quarter.
If the Participant holds cash (
e.g
., dividends or proceeds from the sale of Shares) outside of Austria (
e.g
., in a U.S. brokerage or bank account), he or she will be subject to monthly reporting if the transaction value of all cash accounts abroad is €3,000,000 or greater. In this case, transfers of cash into or out of the cash accounts and the balance of such accounts must be reported monthly, as of the last day of the month, on or before the 15th day of the following month, using the form “
Meldungen SI-Forderungen und/oder SI-Verpflichtungen
.”
BELGIUM
Terms and Conditions
Taxation of Option
.
Please be advised that if the Participant does not accept the Option within 60 days after the offer date, the Participant will not be subject to tax on the Option. However, the Participant’s option will be cancelled and he or she will not be entitled to any benefits from the Option.
Notifications
Tax Compliance
.
The Participant is required to report any taxable income attributable to the Option on his or her annual tax return.
Foreign Asset and Account Reporting
. The Participant is required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return. In a separate report, the Participant is required to report to the National Bank of Belgium any bank accounts opened and maintained outside Belgium.
BRAZIL
Terms and Conditions
Compliance with Law
. By accepting the Option, the Participant agrees to comply with applicable Brazilian laws and to report and pay any and all Tax-Related Items associated with the vesting of the Option, the exercise of the Option and the sale of Shares obtained pursuant to the Option.
Labor Law Acknowledgment
. By accepting the Option, the Participant agrees that he or she is (i) making an investment decision, (ii) the Shares will be issued to the Participant only if the vesting conditions are met and the Option is exercised by the Participant, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to the Participant.
Notifications
Foreign Asset and Account Reporting
. If the Participant holds assets and rights outside Brazil with an aggregate value exceeding US$100,000, then the Participant will be required to prepare and submit to the Central Bank of Brazil an annual declaration of such assets and rights, including Shares acquired under the Program. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil.
CANADA
Terms and Conditions
Termination of Employment
. This provision supplements Section 14(j) of the Agreement.
In the event of termination of his or her employment (regardless of the reason for such termination and whether or not later found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant's employment agreement, if any), the Participant’s right to receive any Option and vest under the Program, if any, will terminate effective as of (1) the date the Participant is no longer actively employed by the Company or the Employer, or at the discretion of the Committee, (2) the date the Participant receives notice of termination of employment from the Employer if earlier than (1), regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to statutory law, regulatory law and/or common law). The Participant’s right, if any, to acquire Shares pursuant to an Option after termination of employment will be measured by the date of termination of the his or her active employment and will not be extended by any notice period mandated under the employment laws in the jurisdiction where the Participant is employed or the terms of the Participant's
employment agreement, if any; the Company shall have the exclusive discretion to determine when the Participant is no longer employed for purposes of the Option.
Data Privacy
. The following provision will apply if the Participant is a resident of Quebec and supplements Section 16 of the Agreement:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Program. The Participant further authorizes the Company and any Subsidiary or affiliate and the Program administrator to disclose and discuss the Program with their advisors. The Participant further authorizes the Employer to record such information and to keep such information in the Participant’s employee file.
French Language Provision
. The following provision will apply if the Participant is a resident of Quebec:
The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la
rédaction en anglais de cette convention
,
ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement à la présente convention.
Notification
Securities Law Notice
.
The Participant is permitted to sell Shares acquired through the Program through the designated broker appointed under the Program, if any, provided the resale of Shares acquired under the Program takes place outside of Canada through the facilities of a stock exchange on which the shares are listed. The Company’s Shares are currently listed on the New York Stock Exchange.
CHINA
Terms and Conditions
Exercise
. The following supplements Section 8 of the Agreement:
Due to regulatory requirements in the PRC, the Participant will be required to exercise the Option using the cashless sell-all exercise method pursuant to which all Shares subject to the exercised Option will be sold immediately upon exercise and the proceeds of sale, less any broker’s fees or commissions, will be remitted to the Participant in accordance with any applicable exchange control laws and regulations and provided any liability for Tax-Related Items resulting from the exercise has been satisfied. The Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares pursuant to the cashless sell-all exercise method at any particular price. The Company reserves the right to provide additional methods of exercise depending on the development of local law.
Termination of Employment
. The following supplements Section 3 of the Agreement:
Due to exchange control laws in the PRC, in no event can any exercise period following termination of employment exceed six months from the date of termination. Therefore, notwithstanding Sections 3(a), (b) and (f) of the Agreement, in the event of the Participant’s termination of employment due to death or Disability, Retirement or if the Participant dies or incurs a Disability after termination of employment but before the Option expires in accordance with Section 3(a), (b) or (d), any Option that is vested under the terms of Section 3(a), (b) and (f) may be exercised to purchase Shares until the earlier of: (i) the Date of Expiration of the Option; or (ii) the six month anniversary of the Participant’s date of termination by reason of death, Disability or Retirement or date of death or Disability following termination of employment.
Exchange Control Requirements
. Due to exchange control laws in the PRC, if the Participant is a PRC national, he or she will be required to repatriate the proceeds from the cashless sell-all exercise to the PRC. The Participant
understands and agrees that such cash proceeds may need to be repatriated to the PRC through a special exchange control account established by the Company, a Subsidiary, or the Employer, and the Participant hereby consents and agrees that any proceeds from the sale of Shares may be transferred to such special account prior to being delivered to him or her.
The Participant further understands and agrees that there will be a delay between the date the Shares are sold and the date the cash proceeds are distributed to him or her. The Participant also understands and agrees that the Company is not responsible for any currency fluctuation that may occur between the date the Shares are sold and the date the cash proceeds are received by the Participant.
The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.
Notifications
Foreign Asset and Account Reporting
. The Participant may be required to report to the State Administration of Foreign Exchange all details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-PRC residents. The Participant should consult with his or her personal advisor in order to ensure compliance with applicable reporting requirements.
COLOMBIA
Terms and Conditions
Labor Law Acknowledgment
. This provision supplements the acknowledgment contained in Section 14 of the Agreement:
The Participant acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the Program and related benefits do not constitute a component of his or her “salary” for any legal purpose.
CZECH REPUBLIC
Notifications
Exchange Control Information
. The Czech National Bank may require the Participant to fulfill certain notification duties in relation to the purchase of Shares and the opening and maintenance of a foreign account. However, because exchange control regulations change frequently and without notice, the Participant should consult his or her personal legal advisor prior to the exercise of the Option and the sale of Shares to ensure compliance with current regulations. It is the Participant’s responsibility to comply with any applicable Czech exchange control laws.
DENMARK
Terms and Conditions
Nature of Grant
. This provision supplements Section 14 of the Agreement:
By accepting the Option, the Participant acknowledges, understands, and agrees that this grant relates to future services to be performed and is not a bonus or compensation for past services.
Notifications
Exchange Control and Tax Notification
. The Participant may hold Shares acquired under the Program in a safety-deposit account (
e.g.
, a brokerage account) either with a Danish bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, then the Participant is required to inform the Danish Tax Administration about the safety-deposit account. For this purpose, the Participant must file a Form V (Erklaering V) with the Danish
Tax Administration. Both the Participant and the broker or bank must sign the Form V. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the Shares in the account. If the applicable broker or bank does not sign the Form V for any reason, the Participant is solely responsible for providing the necessary information to the Danish Tax Administration. By signing the Form V, the Participant authorizes the Danish Tax Administration to examine the account.
In addition, if the Participant opens a brokerage account or a deposit account with a U.S. bank, then because the account can hold cash, it will be treated as a deposit account. Therefore, the Participant must also file a Form K (Erklaering K) with the Danish Tax Administration. Both the Participant and the broker must sign the Form K. By signing the Form K, the broker undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the deposit account. The Danish Tax Administration may grant an exemption from the requirement for the broker or bank to sign the Form K. A request can be made as part of the Form K. If the applicable broker or bank does not sign the Form K for any reason, the Participant is solely responsible for providing the necessary information to the Danish Tax Administration. By signing the Form K, the Participant authorizes the Danish Tax Administration to examine the account.
If the Participant exercises the Option using cashless sell-all method of exercise, then a Form V will not be required because the Participant will not hold Shares.
DOMINICAN REPUBLIC
There are no country-specific provisions.
FINLAND
There are no country-specific provisions.
FRANCE
Terms and Conditions
Language Consent
. By accepting the Option, the Participant confirms having read and understood the Agreement and the Program, including all terms and conditions included therein, that were provided in the English language. The Participant accepts the terms of these documents accordingly.
En acceptant l'Option, vous confirmez avoir lu et compris ce Contrat et le Program, inclutant tous leur termes et conditions, qui lui ont été transmis en langue anglaise. Vous acceptez les dispositions de ces documents en connaissance de cause.
Notifications
Foreign Asset and Account Reporting
. If the Participant holds cash or Shares outside of France, he or she must declare all foreign bank and brokerage accounts (including any accounts that were opened or closed during the tax year) on an annual basis on form No. 3916, together with their income tax return. Failure to complete this reporting triggers penalties for a French resident Participant. Further, the Participant with foreign account balances exceeding €1,000,000 may have additional monthly reporting obligations. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
GERMANY
Notifications
Exchange Control Information
. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If the Participant makes or receives a cross-border payment in excess of €12,500 (
e.g
., proceeds from
the sale of Shares acquired under the Program), he or she must report the payment to the German Federal Bank electronically using the “General Statistics Reporting Portal” available via the Bank’s website (
www.bundesbank.de
).
GREECE
There are no country-specific provisions.
HONG KONG
Terms and Conditions
Share Sale Restriction
. Shares received at exercise are accepted as a personal investment. In the event that the Option is exercised and Shares are issued to the Participant (or his or her heirs) within six months of the Date of Grant, the Participant (or his or her heirs) agree that the Shares will not be offered to the public or otherwise disposed of prior to the six-month anniversary of the Date of Grant.
Notifications
Securities Law Information
.
WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. The Participant is advised to exercise caution in relation to the offer. If the Participant is in any doubt about any of the contents of this document, he or she should obtain independent professional advice. Neither the grant of the Option nor the issuance of Shares upon exercise of the Option constitutes a public offering of securities under Hong Kong law and is available only to employees of the Company and its Subsidiaries. The Agreement, including the Appendices, the Program and other incidental communication materials distributed in connection with the Option (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, and (ii) are intended only for the personal use of each eligible employee of the Company or its Subsidiaries and may not be distributed to any other person.
Nature of Scheme
. The Company specifically intends that the Program will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
INDIA
Terms and Conditions
Method of Exercise
. The following provision supplements Section 8 of the Agreement:
The Participant will
not
be permitted to pay the Option Price through a cashless sell-to-cover method of exercise, whereby the Participant issues instructions to his or her broker to exercise the Option and to effect the immediate sale of the number of Shares necessary to cover the aggregate Option Price payable for the purchased Shares, plus applicable Tax-Related Items and brokerage fees, if any, and remit the remaining Shares to the Participant.
Depending on the development of local laws or the Participant’s country of residence, the Company reserves the right to modify the methods of exercising the Option and, in its sole discretion, to permit cashless sell-to-cover exercise, or any other method of exercise and payment of Tax‑Related Items permitted under the Program.
Notifications
Exchange Control Information
. The Participant understands that he or she must repatriate any proceeds from the sale of Shares acquired under the Program to India within 90 days of receipt. The Participant will receive a foreign inward remittance certificate (“FIRC”) from the bank where the Participant deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation.
Foreign Account and Asset Reporting
. The Participant is required to declare any foreign bank accounts and assets (including Shares acquired under the Program) on his or her annual tax return. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
IRELAND
Notifications
Director Notification
. If the Participant is a director, shadow director or secretary of an Irish Subsidiary of the Company, then the Participant is subject to certain notification requirements under Section 53 of the Companies Act. Among these requirements is an obligation to notify the Irish Subsidiary in writing within five (5) business days when the Participant receives an interest (
e.g.
, Options, Shares) in the Company and the number and class of shares or rights to which the interest relates. In addition, the Participant must notify the Irish Subsidiary within five (5) business days when the Participant sells Shares acquired under the Program. This notification requirement also applies to any rights or Shares acquired by the Participant’s spouse or children (under the age of 18).
ITALY
Terms and Conditions
Method of Exercise
. The following provision supplements Section 8 of the Agreement:
Due to Italian financial services law restrictions, the Participant understands that he or she will be restricted to the cashless sell-all method of exercise pursuant to which all Shares subject to the exercised Option will be sold immediately upon exercise and the proceeds of sale, less any broker’s fees or commissions and Tax-Related Items, will be remitted to the Participant. The Participant will not be permitted to hold Shares after exercise. The Company reserves the right to modify the methods of exercising the Option and, in its sole discretion, to permit other methods of exercise and payment permitted under the Program should Italian financial services law restrictions change.
Data Privacy
. This provision replaces in its entirety Section 16 of the Agreement:
Data Privacy Notice. The Participant understands that the Employer and/or the Company holds certain personal information about the Participant, including, but not limited to, his or her name, home address and telephone number, date of birth, national insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Options or other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in his or her favor (“Data”), for the purpose of implementing, administering and managing the Program. The Participant is aware that providing the Company with his or her Data is necessary for the performance of the Agreement and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Program.
The Controller of personal data processing is Edwards Lifesciences Corporation, One Edwards Way, Irvine, California 92614, U.S.A., and, pursuant to D.lgs 196/2003, its representative in Italy is Marianna Lupo with registered office at Edwards Lifesciences Italia SpA Via Patecchio, 4, 20141 Milan Italy. The Participant understands that Data may be transferred to third parties assisting in the implementation, administration and management of the Program, including any transfer required to a broker or other third party with whom cash from the sale of Shares acquired pursuant to this Option may be deposited. Furthermore, the recipients that may receive, possess, use, retain and transfer such Data for the above mentioned purposes may be located in the Participant’s country, or elsewhere, including outside of the European Union and the recipient’s country may have different data privacy laws and protections than his or her country. The processing activity, including the transfer of the Participant’s personal data abroad, out of the European Union, as herein specified and pursuant to applicable laws and regulations, does not require the Participant’s consent thereto as the processing is necessary for the performance of contractual obligations related to the implementation, administration and management of the Program. The Participant understands that Data processing relating to the purposes above specified shall take place under
automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to D.lgs. 196/2003.
The Participant understands that Data will be held only as long as is required by law or as necessary to implement, administer and manage his or her participation in the Program. The Participant understands that, pursuant to art 7 of D.lgs 196/2003, the Participant has the right, including but not limited to, access, delete, update, request the rectification of his or her Data and cease, for legitimate reasons, the Data processing. Furthermore, the Participant is aware that his or her Data will not be used for direct marketing purposes. In addition, the Data provided can be reviewed and questions or complaints can be addressed by contacting the Participant’s local human resources representative.
Grant Terms Acknowledgment
. By accepting the Option, the Participant acknowledges that the Participant has received a copy of the Program and the Agreement and has reviewed the Program and the Agreement, including the Appendices, in their entirety and fully understands and accepts all provisions of the Program and the Agreement, including the Appendices. The Participant further acknowledges having read and specifically approves the following sections of the Agreement: Section 9 (Responsibility for Taxes), Section 13 (Miscellaneous), Section 14 (Nature of Grant), Section 19 (Governing Law and Venue), Section 25 (Imposition of Other Requirements), and the Data Privacy provision contained in this Non-U.S. Countries Additional Terms Appendix.
Notifications
Foreign Asset and Account Reporting
. The Participant is required to report in the Participant’s annual tax return (on UNICO Form, RW Schedule, or on a special form if the Participant is not required to file a tax return) any investments or assets (including Shares or proceeds from the sale of Shares acquired under the Program) held outside of Italy if the investment or asset may give rise to income in Italy.
JAPAN
Notifications
Foreign Asset and Account Reporting
. If the Participant holds assets outside of Japan with a value exceeding €50,000,000 (as of December 31 each year), he or she is required to comply annual tax reporting obligations with respect to such assets. The Participant is advised to consult with his or her personal tax advisor to ensure that he or she is properly complying with applicable reporting obligations.
KOREA
Notifications
Exchange Control Information
. To remit funds out of Korea to exercise the Option by means of a cash exercise method, the Participant must obtain a confirmation of the remittance by a foreign exchange bank in Korea. This is an automatic procedure, (
i.e.
, the bank does not need to approve the remittance and the process should not take more than a single day). The Participant likely will need to present to the bank processing the transaction supporting documentation evidencing the nature of the remittance. If the Participant receives US$500,000 or more from the sale of Shares in a single transaction, Korean exchange control laws require the Participant to repatriate the proceeds to Korea within 18 months of the sale.
Foreign Asset and Account Reporting
. Korean residents must declare all foreign financial accounts (
i.e
., non-Korean bank accounts, brokerage accounts, etc.) they hold in any foreign country that does not enter into an “inter-governmental agreement for automatic exchange of tax information” with Korea, to the Korean tax authority and file a report with respect to such accounts if the value of such accounts exceeds KRW 1 billion (or an equivalent amount in foreign currency) on any month-end date during a calendar year. Korean residents should consult their personal tax advisor to determine their personal reporting obligations.
MEXICO
Terms and Conditions
Labor Law Acknowledgement
. In accepting the Option, the Participant expressly recognizes that the Company with registered offices at One Edwards Way, Irvine, California 92614, U.S.A., is solely responsible for the administration of the Program and that his or her participation in the Program and acquisition of Shares does not constitute an employment relationship between the Participant and the Company since the Participant is participating in the Program on a wholly commercial basis and his or her sole Employer is
Edwards Lifesciences México S.A. de C.V.
(“Edwards Mexico”) with registered offices at
Av. Santa Fé 505 - Oficina 203, Col. Cruz Manca Santa Fé, Cuajimalpa, México D.F. C.P. 05349
. Based on the foregoing, the Participant expressly recognizes that the Program and the benefits that the Participant may derive from participating in the Program do not establish any rights between the Participant and the Employer, Edwards Mexico, and do not form part of the employment conditions and/or benefits provided by Edwards Mexico and any modification of the Program or its termination shall not constitute a change or impairment of the terms and conditions of his or her employment.
The Participant further understands that his or her participation in the Program is as a result of a unilateral and discretionary decision of the Company; therefore, the Company reserves the absolute right to amend and/or discontinue the Participant’s participation at any time without any liability to the Participant.
Finally, the Participant hereby declares that the Participant does not reserve any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Program or the benefits derived under the Program, and the Participant therefore grants a full and broad release to the Company, its Subsidiaries, branches, representation offices, shareholders, officers, agents or legal representatives with respect to any claim that may arise.
Reconocimiento de Ausencia de Relación Laboral y Declaración de la Política
Al aceptar el Opción, usted expresamente recononce que la Compañía y sus oficinas registradas en One Edwards Way, Irvine, California 92614, U.S.A., es el único responsable de la administración del Program y que su participación en el mismo y la compra de Acciones no constituye de ninguna manera una relación laboral entre usted y la Compañía, toda vez que su participación en el Program deriva únicamente de una relación comercial con
Edwards Lifesciences México S.A. de C.V.
(«Edwards México») y sus oficinas registradas en
Av. Santa Fé 505 - Oficina 203, Col. Cruz Manca Santa Fé, Cuajimalpa, México D.F. C.P. 05349
, Derivado de lo anterior, usted expresamente reconoce que el Program y los beneficios que pudieran derivar del mismo no establecen ningún derecho entre usted y su Empleador, Edwards México, y no forman parte de las condiciones laborales y/o prestaciones otorgadas por Edwards México, y expresamente usted reconoce que cualquier modificación al Program o la terminación del mismo de manera alguna podrá ser interpretada como una modificación de sus condiciones de trabajo.
Asimismo, usted entiende que su participación en el Program es el resultado de una decisión unilateral y discrecional de la Compañía, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o terminar su participación en cualquier momento, sin ninguna responsabilidad hacia usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía, por cualquier compensación o daño en relación con cualquier disposición del Program o de los beneficios derivados del mismo, y en consecuencia usted otorga un amplio y total finiquito a la Compañía, sus afiliadas, sucursales, oficinas de representación, accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.
NETHERLANDS
Terms and Conditions
Labor Law Acknowledgment
. By accepting the Option, the Participant acknowledges that: (i) the Option is intended as an incentive to remain employed with the Employer and is not intended as remuneration for labor performed; and (ii) the Option is not intended to replace any pension rights or compensation.
Data Privacy
. This provision replaces in its entirety Section 16 of the Agreement:
The Participant understands that the Employer, the Company and any Subsidiary or affiliate may hold certain personal information about him or her, including, without limitation, the Participant’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any shares or directorships held in the Company or Subsidiary, details of all Options, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, managing and administering his or her participation in the Program.
The Participant also understands that providing the Company with the Data is necessary for the performance of the Program and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Program, but will not adversely affect his or her employment status or service or career with the Employer.
The Controller of the processing activities under the Program is Edwards Lifesciences Corporation with registered offices at One Edwards Way, Irvine, California 92614, U.S.A., and its representative in the Netherlands is Edwards Lifesciences B.V. or BMEYE BV, depending on the Participant's Employer, with registered offices at Verlengde Poolseweg 16, 4818 CL Breda, The Netherlands, and Hoogoorddreef 60, 1101 BE Amsterdam, The Netherlands, respectively.
The Participant understands that the Data will be transferred to the broker designated by the Company or such other stock plan service provider as may be selected in the future, or other third parties involved in the implementation, management and administration of the Program. These service providers only act upon the explicit instructions of the Controller and do not process the Data for any other purpose. In addition, the Company has ensured that these service providers have appropriate technical and organizational security measures in place to guarantee an adequate level of protection. Likewise, as part of the processing operations, the Company will from time to time need to make some of the Data available to judicial and regulatory authorities (including the tax authorities), and to the Company’s accountants, auditors, lawyers and other outside professional advisers, to implement, administer and manage the Participant’s participation in the Program. The Participant understands that the recipients of the Data may be located in the United States or elsewhere and that the recipients’ country (e.g., the United States) may not have or have different data privacy laws and protection than the Participant’s country. When appropriate, the Controller will take the appropriate steps to guarantee an adequate level of protection similar to the level of protection of the Participant’s country.
The Controller will take steps to ensure the Data is accurate and up to date. From time to time the Participant will be requested to review and update the Data. The Data will only be held for as long as it is appropriate for the implementation, administration and management of the Participant’s participation in the Program. The Participant understands that he or she has the right to, without limitation, access, delete, update, correct, or block the Data processing.
In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the local human resources representative.
NEW ZEALAND
There are no country-specific provisions.
NORWAY
There are no country-specific provisions.
POLAND
Notifications
Foreign Asset and Account Reporting
. Polish residents holding foreign securities (including Shares) and/or maintaining accounts abroad must report information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts if the value of such transactions or balances (when combined with all other assets held abroad) exceeds PLN 7 million. If required, the reports are due on a quarterly basis by the 20th day following the end of each quarter. The reports are filed on special forms available on the website of the National Bank of Poland.
Exchange Control Information
. If a Polish resident transfers funds in excess of €15,000 into or out of Poland, the funds must be transferred via a Polish bank account or financial institution. Polish residents are required to retain the documents connected with a foreign exchange transaction for a period of five years measured from the end of the year in which the relevant transaction occurred.
PORTUGAL
Terms and Conditions
English Language Consent
. The Participant hereby expressly declares that he or she has full knowledge of the English language and has read, understood and fully accepts and agrees with the terms and conditions established in the Program and the Agreement.
Consentimento de Lingua Inglesa
. O beneficiário pelo presente declara expressamente que tem pleno conhecimento da língua Inglesa e que leu, compreendeu e totalmente aceitou e concordou com os termos e condições estabelecidas no Plano e no Acordo.
Notifications
Exchange Control Information
. Residents of Portugal who acquire Shares under the Program may be required to file a report with the Portuguese Central Bank for statistical purposes (unless the Participant arranges to have the Shares deposited with a Portuguese financial intermediary, in which case the intermediary will file the report).
PUERTO RICO
There are no country-specific provisions.
SINGAPORE
Notifications
Securities Law Notification
. The Option was granted to the Participant pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). Neither the Agreement nor the Program have been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that his or her Option is subject to section 257 of the SFA and the Participant will not be able to make any subsequent sale of the Shares in Singapore, or any offer of such subsequent sale of the Shares underlying the Option unless such sale or offer in Singapore is made (i) after six months from the Date of Grant, or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).
Chief Executive Officer and Director Notification
. If the Participant is the Chief Executive Officer
(“CEO”) or
a director, associate director or shadow director of a Singapore Subsidiary or other related company in Singapore, then the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singapore Subsidiary in writing when the Participant receives an interest
(
e.g.
, Options, Shares) in the Company or any related company. In addition, the Participant must notify the Singapore Subsidiary when he or she sells Shares of the Company or any related company (including when the Participant sells Shares acquired under the Program). These notifications must be made within two (2) business days of acquiring or disposing of any interest in the Company or any related company. In addition, a notification must be made of the Participant’s interests in the Company or any related company within two (2) business days of becoming the CEO/a director.
SOUTH AFRICA
Terms and Conditions
Responsibility for Taxes
. The following provision supplements Section 9 of the Agreement:
By accepting the Option, the Participant agrees that, immediately upon exercise of the Option, he or she will notify the Employer of the amount of any gain realized. If the Participant fails to advise the Employer of the gain realized upon exercise, the Participant may be liable for a fine. The Participant will be solely responsible for paying any difference between the actual tax liability and the amount withheld by the Employer.
Notifications
Tax Clearance Certificate for Cash Exercises
. If the Participant exercises the Option using a cash exercise method, he or she must obtain and provide to the Employer, or any third party designated by the Employer or the Company, a Tax Clearance Certificate (with respect to Foreign Investments) bearing the official stamp and signature of the Exchange Control Department of the South African Revenue Service (“SARS”). The Participant must renew this Tax Clearance Certificate every twelve months, or such other period as may be required by the SARS. If the Participant exercises the Option by a cashless exercise method whereby no funds are remitted out of South Africa, no Tax Clearance Certificate is required.
Exchange Control Information
. To participate in the Program, the Participant must comply with exchange control regulations and rulings in South Africa and neither the Company nor the Employer will be liable for any fines or penalties resulting from the Participant’s failure to comply with applicable laws. Because the Exchange Control Regulations change frequently and without notice, the Participant understands that he or she should consult a legal advisor prior to the purchase or sale of Shares under the Program to ensure compliance with current regulations.
Under current South African exchange control regulations, the Participant may annually invest a maximum of ZAR4,000,000 in offshore investments, including in Shares. It is the Participant’s responsibility to ensure that he or she does not exceed this limit. Please note that this is a cumulative allowance; therefore, the Participant’s ability to remit funds for the purchase of shares will be reduced if his or her foreign investment limit is utilized to make a transfer of funds offshore that is unrelated to the Program. If the Participant wishes to exercise the Option through a cash purchase exercise and the ZAR4,000,000 limit will be exceeded upon the exercise of the option, the Participant may still transfer funds for payment of the Shares provided that he or she immediately sells the Shares and repatriates the full proceeds to South Africa. There is no repatriation requirement on the sale proceeds if the ZAR4,000,000 limit is not exceeded. If the Participant exercises the Option using a cashless exercise method, the value of the Shares thus purchased will not be counted against the Participant’s lifetime offshore investment allowance.
SPAIN
Terms and Conditions
Nature of Grant
. The following provision supplements Section 14 of the Agreement:
In accepting the Option, the Participant consents to participate in the Program and acknowledges that the Participant has received a copy of the Program.
The Participant understands that the Company has unilaterally, gratuitously and discretionally decided to grant stock options under the Program to individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any Subsidiary. Consequently, the Participant understands that the Option is granted on the assumption and condition that the Option and any Shares acquired upon exercise of the Option are not part of any employment contract (either with the Company or any Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the Participant understands that the Option would not be granted to him or her but for the assumptions and conditions referred to herein; thus, the Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then the grant of this Option shall be null and void.
Further, this Option is a conditional right to Shares and can be forfeited in the case of, or affected by, the Participant’s termination of employment. This will be the case, for example, even if (1) the Participant is considered to be unfairly dismissed without good cause (
i.e
., subject to a “despido improcedente”); (2) the Participant is dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) the Participant terminates employment due to a change of work location, duties or any other employment or contractual condition; (4) the Participant terminates employment due to unilateral breach of contract of the Company or any of its Subsidiaries; or (5) the Participant’s employment terminates for any other reason whatsoever, except for Cause. Consequently, upon termination of the Participant’s employment for any of the reasons set forth above, the Participant may automatically lose any rights to the unvested Options granted to the Participant as of the date of his or her termination of employment, as described in the Program and the Agreement.
Notifications
Foreign Asset and Account Reporting
. To the extent that Spanish residents hold rights or assets (
e.g.
, Shares, cash, etc.) in a bank or brokerage account outside of Spain with a value in excess of €50,000 per type of right or asset as of December 31 each year, such residents are required to report information on such rights and assets on their tax return for such year. Shares constitute securities for purposes of this requirement, but the Options (regardless of vesting status) are not considered assets or rights for purposes of this requirement.
If applicable, Spanish residents must report the assets or rights on Form 720 by no later than March 31 following the end of the relevant year. After such assets or rights are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported assets or rights increases by more than €20,000. Failure to comply with this reporting requirement may result in penalties.
Spanish residents are also required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities held in such accounts, if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €1,000,000.
Spanish residents should consult with their personal tax and legal advisors to ensure compliance with their personal reporting obligations.
Exchange Control Information
. The Participant must declare the acquisition of Shares to the
Dirección General de Política Comercial e Inversiones
(“
DGCI
”) of the Ministry of Economy and Competitiveness for statistical purposes. The Participant must also declare the ownership of any Shares with the Directorate of Foreign Transactions, on Form D-6, each January while the Shares are owned. In addition, the sale of Shares must be declared on Form D-6 filed with the DGCI in January, unless the sale proceeds exceed the applicable threshold (currently €1,501,530), in which case, the filing is due within one month after the sale.
Securities Law Notification
. The grant of Options and the Shares issued pursuant to the exercise of the Option are considered a private placement outside of the scope of Spanish laws on public offerings and issuances of securities.
SWEDEN
There are no country specific provisions.
SWITZERLAND
Notifications
Securities Law Notification
. The Option offered is considered a private offering in Switzerland; therefore, it is not subject to registration in Switzerland. Neither this document nor any other materials relating to the Option constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither this document nor any other materials relating to the Option may be publicly distributed nor otherwise made publicly available in Switzerland.
TAIWAN
Notifications
Securities Law Notification
. The offer of participation in the Program is made only to employees of the Company and its Subsidiaries. The offer of participation in the Program is not a public offer of securities by a Taiwanese company.
Exchange Control Information
. The Participant may acquire and remit foreign currency (including proceeds from the sale of Shares) into and out of Taiwan up to US$5,000,000 per year. If the transaction amount is TWD$500,000 or more in a single transaction, the Participant must submit a foreign exchange transaction form and also provide supporting documentation to the satisfaction of the remitting bank.
If the transaction amount is US$500,000 or more, the Participant may be required to provide additional supporting documentation to the satisfaction of the remitting bank. The Participant should consult his or her personal advisor to ensure compliance with applicable exchange control laws in Taiwan.
THAILAND
Notifications
Exchange Control Information
. If the Participant remits funds out of Thailand to purchase Shares, it is the Participant’s responsibility to comply with any applicable exchange control laws. Under current exchange control regulations, the Participant may remit funds out of Thailand up to US$1,000,000 per year to purchase Shares (and otherwise invest in securities abroad) by submitting an application to an authorized agent, (
i.e.
, a commercial bank authorized by the Bank of Thailand to engage in the purchase, exchange and withdrawal of foreign currency). The application includes the Foreign Exchange Transaction Form, a letter describing the Option, a copy of the Program and related documents, and evidence showing the nexus between the Corporation and the Employer.
In addition, Thai resident Participants realizing US$50,000 or more in a single transaction from the sale of Shares must immediately repatriate the proceeds from the sale of Shares to Thailand and convert the funds to Thai Baht or deposit the proceeds into a foreign currency account opened with any commercial bank in Thailand within 360 days of repatriation. If the repatriated amount is US$50,000 or more, the Participant must report the inward remittance to the Bank of Thailand on a Foreign Exchange Transaction Form.
TURKEY
Notifications
Securities Law Information.
Turkish residents are not permitted to sell Shares acquired under the Program in Turkey. The Shares are currently traded on the New York Stock Exchange, which is located outside of Turkey, under the ticker symbol “EW” and the Shares may be sold through this exchange.
Exchange Control Information.
In certain circumstances, Turkish residents are permitted to sell shares traded on a non-Turkish stock exchange only through a financial intermediary licensed in Turkey. Therefore, Turkish residents may be required to appoint a Turkish broker to assist with the sale of the Shares acquired under the Program. Turkish residents should consult their personal legal advisor before selling any Shares acquired under the Program to confirm the applicability of this requirement.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes
. The following supplements Section 9 of the Agreement:
If payment or withholding of the income tax due is not made within ninety (90) days after the end of the U.K. tax year in which the event giving rise to the liability occurs or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax liability shall constitute a loan owed by the Participant to the Employer, effective as of the Due Date. The Participant agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 9 of the Agreement.
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the Participant shall not be eligible for a loan from the Company to cover the Tax-Related Items. In the event that the Participant is a director or executive officer and Tax-Related Items are not collected from or paid by the Participant by the Due Date, the amount of any uncollected tax liability will constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) will be payable. The Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit, which may be recovered by the Company or the Employer at any time thereafter by any of the means referred to in the Agreement.
ADDITIONAL DEFINED TERMS APPENDIX
When used in this Agreement, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:
“Cause”
shall mean the occurrence of any one or more of the following (provided that the determination of whether “Cause” exists at any time prior to the occurrence of a Change in Control shall be determined solely by the Company, in the exercise of the Company’s good faith and reasonable judgment, and any such determination shall be final and binding upon the parties):
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(a)
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A continuing material breach by the Participant of the duties and responsibilities of the Participant, which duties shall not differ in any material respect from the duties and responsibilities during the 90-day period immediately prior to a Change in Control (other than as a result of incapacity due to a physical or mental condition or illness), which breach is demonstrably willful and deliberate on the Participant’s part, is committed in bad faith and without a reasonable belief that such a breach is in the best interests of the Company; or
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(b)
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The Participant has engaged in conduct that is willfully, demonstrably and materially injurious to the Company, monetarily or otherwise; or
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(c)
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The Participant is convicted of, or pled guilty or
nolo contendere
to a felony (under the laws of the United States or any relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction) that adversely affects the reputation of the Participant or the Company;
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provided, that no act or failure to act on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.
“Change in Control”
of the Company shall mean the first to occur of any one of the following events after the Date of Grant set forth on the Statement:
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(a)
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Any “Person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (as amended) (other than the Company, any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and any trustee or other fiduciary holding securities under an employee benefit plan of the Company or such proportionately owned corporation), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or
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(b)
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During any period of not more than twenty-four (24) months, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a transaction described in (a), (c), or (d) of this definition) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or
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(c)
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The consummation of a merger or consolidation of the Company with any other entity, other than: (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty percent (60%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than thirty percent (30%) of the combined voting power of the Company’s then outstanding securities; or
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(d)
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The Company’s stockholders approve a plan of complete liquidation or dissolution of the Company, or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).
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“Good Reason”
means, without the Participant’s express written consent, the occurrence of any one or more of the following conditions during the Protected Period:
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(a)
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The assignment of the Participant to duties materially inconsistent with the Participant’s authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements) as an employee, executive and/or officer of the Company, or a material reduction or alteration in the nature or status of the Participant’s authorities, duties, or responsibilities, other than an insubstantial or inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Participant;
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(b)
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The Company’s requiring the Participant to be based at a location in excess of fifty (50) miles from the location of the Participant’s principal job location or office immediately prior to such change, except for required travel on the Company’s business to an extent substantially consistent with the Participant’s then present business travel obligations;
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(c)
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A reduction by the Company of the Participant’s base salary or base rate of compensation, as applicable; or
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(d)
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The failure of the Company to continue in effect any of the Company’s short- and long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or other compensation arrangements in which the Participant participates, unless the Participant is permitted to participate in other plans that provide the Participant with substantially comparable benefits; or the failure by the Company to continue the Participant’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of the Participant’s participation relative to other participants;
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provided, however, that any such condition shall not constitute “Good Reason” unless the following requirements are satisfied: (x) the Participant provides the Company the written notice which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination by the Participation for Good Reason within sixty (60) days following the initial existence of the event giving rise to the condition claimed to constitute “Good Reason,” (y) the Company fails to remedy such condition within thirty (30) days after receiving such notice (the “Cure Period”), and (z) the Participant resigns in writing from his or her employment, citing failure to remedy the condition giving rise to Good Reason, within thirty (30) days following the expiration of such thirty (30) day cure period.
The Participant’s right to terminate employment for Good Reason shall not be affected by the Participant’s incapacity due to physical or mental illness. The Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein.
“Protected Period”
means, with respect to a Change in Control, the period commencing the date that is six (6) months prior to the date of such Change in Control and ending on the date that is twenty four (24) months following such Change in Control.
Exhibit 10.4
Edwards Lifesciences Corporation
Long-Term Stock Incentive Compensation Program
Global Restricted Stock Unit Award Agreement
THIS AGREEMENT, including any appendix for the Participant’s country (the “Non-U.S. Countries Additional Terms Appendix”), the appendix containing additional defined terms related to a change in control (the “Additional Defined Terms Appendix” and, together with the Non-U.S. Countries Additional Terms Appendix, the “Appendices”) and the Participant Restricted Stock Unit Statement attached to the front of this agreement (the “Statement”) sets forth the terms and conditions of the restricted stock unit (the “RSU”) granted by Edwards Lifesciences Corporation, a Delaware corporation (the “Company”), to the Participant named on the Statement, pursuant to the provisions of the Company’s Long-Term Stock Incentive Compensation Program (the “Program”). This agreement, the Appendices and the Statement shall be considered one agreement and are referred to herein as the “Agreement.”
The Program provides additional terms and conditions governing the RSU and is incorporated herein by reference. If there is any inconsistency between the terms of this Agreement and the terms of the Program, the Program’s terms shall completely supersede and replace the conflicting terms of this Agreement. All capitalized terms shall have the meanings ascribed to them in the Program, unless specifically set forth otherwise herein. The parties hereto agree as follows:
1.
Grant of RSU.
Effective as of the Date of Grant set forth in the Statement, the Company hereby grants to the Participant an RSU in the manner and subject to the terms and conditions of the Program and this Agreement.
The grant of this RSU to the Participant shall not confer any right to such Participant (or any other Participant) to be granted any RSU or other Awards in the future under the Program.
2.
Vesting of RSU and Issuance of Shares.
Except as may otherwise be provided in Sections 3, 4 and 6 below, the RSU will vest according to the vesting schedule set forth on the Statement (“Normal Vesting Schedule”), provided the Participant continues to be employed by the Company or one of its Subsidiaries through the applicable vesting date. Except as expressly provided herein, shares shall be issued to the Participant as soon as practicable after (and in all events within 74 days after) the applicable vesting date, subject to satisfaction of all Tax-Related Items (as defined in Section 13 below) and to the provisions for U.S. taxpayers set forth in Sections 4 and 10 below.
3.
Termination of Employment:
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(a)
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By Death or Disability
: All unvested Shares under this RSU shall immediately vest as of the Participant’s date of termination by death or Disability.
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(b)
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By Retirement
: Regardless of the vesting schedule set forth in the Statement, in the event of the Participant’s termination by retirement after age fifty-five (55) and with at least ten (10) years of service with the Company or any Subsidiary, the Participant shall immediately vest in 25% of the RSU for each full year of employment with the Company or a Subsidiary measured from the Date of Grant. All remaining unvested Shares under this RSU shall immediately terminate and be forfeited to the Company as of the date of the Participant’s termination of employment by Retirement. (For example, if the Participant retires after the first anniversary of the Date of Grant, the Participant will vest in 25% of the RSU with the remainder forfeited; if the Participant retires after the second anniversary of the Date of Grant, the Participant will vest in 50% of the RSU with the remainder forfeited; if the Participant retires after the third anniversary, the Participant will be entitled to an additional 25% vesting as he or she would have already vested in 50% with the remainder forfeited; and if the Participant retires after the fourth anniversary, the Participant shall not receive any additional vesting as he or she would have already vested in 100% of the RSU.)
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(c)
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For Other Reasons
:
Subject to Section 6, all unvested Shares under this RSU shall immediately terminate and be forfeited to the Company as of the date of the Participant’s termination of employment for any reason other than the reasons set forth in Sections 3(a) and (b).
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(d)
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Transfer
: For the purposes of this Agreement, a transfer of the Participant’s employment between the Company and any Subsidiary (or between Subsidiaries) shall not be deemed a termination of employment.
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4.
Issuance of Shares for RSUs Subject to Code Section 409A.
This Section 4 applies only to the extent that the Participant is a U.S. taxpayer and the RSUs are treated as deferred compensation under Code Section 409A (for instance, if the Participant becomes eligible for retirement vesting acceleration benefits under Section 3(b) hereof prior to the date the RSUs are scheduled to fully vest according to the Normal Vesting Schedule). Except as provided in this Section and Section 6(a), the Shares will be issued on the date they vest in accordance with the Normal Vesting Schedule, provided the Participant continues to be employed by the Company or one of its Subsidiaries through the applicable vesting date. If this Section 4 applies, the following rules set forth in Sections 4(a), (b) and (c) also apply notwithstanding any provision to the contrary in this Agreement.
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(a)
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Separation from Service
. Any Shares that vest prior to the date that they were otherwise scheduled to vest as set forth in the Normal Vesting Schedule by reason of the Participant’s Separation from Service pursuant to Section 3(a), 3(b), 6(b), or 6(c) shall be issued or distributed to the Participant on or within thirty (30) days following the earlier of (i) the first day of the seventh (7th) month following the date of the Participant’s Separation from Service or (ii) the date of the Participant’s death. Upon the expiration of such period, all such Shares or other amounts shall be issued or distributed in a lump sum to the Participant. For purposes of this Agreement, “Separation from Service” means the Participant’s separation from service as determined in accordance with Code Section 409A and the applicable standards of the Treasury Regulations issued thereunder.
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(b)
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Change in Control
. Any Shares that vest upon a termination of the RSU pursuant to Section 6(a) hereof in connection with a 409A Change in Control shall be issued or distributed in accordance with the plan-termination rules set forth in Treasury Regulation Section 1.409A-3(j)(4)(ix) or, in the event the Company is not able to make issuance or distribution in accordance with such regulation, shall be issued or distributed on or within thirty (30) days following the applicable date set forth in the Normal Vesting Schedule on which such Shares were otherwise scheduled to become vested or, if the Participant dies or has a Separation from Service before the applicable date set forth in the Normal Vesting Schedule, any remaining Shares subject to the RSU that have not previously been paid will be issued or distributed on or within thirty (30) days following the first to occur of (i) the first day of the seventh (7th) month following the date of the Participant’s Separation from Service or (ii) the date of the Participant’s death. In the event that any issuance of vested Shares is delayed until after a 409A Change in Control, instead of the issuance of Shares, such portion of the RSU shall be settled in cash in an amount equal to the Fair Market Value of such vested Shares, determined as of the date of the 409A Change in Control.
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(c)
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Employment Taxes
. In the event the employee portion of the U.S. federal, state and local employment taxes required to be withheld by the Company (the “Employment Taxes”) becomes due in a calendar year that precedes the year in which the Shares are scheduled to be issued based on the Normal Vesting Schedule (such as in the case where the Participant becomes eligible for retirement vesting acceleration benefits under Section 3(b) hereof before the RSUs are scheduled to fully vest according to the Normal Vesting Schedule), the Participant shall, on or before the last business day of the calendar year in which the Employment Taxes become due, deliver to the Company a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those Shares. Alternatively, the Company is vested with the authority, in its sole discretion, to collect the Employment Taxes from the Participant by any of the other methods authorized in Section 13 hereof.
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5.
No Fractional Shares.
In no event shall any fractional Shares be issued. Accordingly, the total number of Shares to be issued at the time this RSU vests shall, to the extent necessary, be rounded down to the next whole Share in order to avoid the issuance of a fractional share.
6.
Change in Control.
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(a)
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Possible Acceleration on 409A Change in Control
: Notwithstanding anything to the contrary in this Agreement or in the Program, if a 409A Change in Control occurs, the Board or the Committee may provide for either (i) the assumption, substitution or exchange of this RSU by the acquiring or successor entity (or a parent thereof) based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Shares upon or in respect of such event, or (ii) the termination of this RSU upon such event; provided, however, that if this RSU will terminate upon such event as provided in clause (ii), this RSU, to the extent then outstanding and unvested, will fully vest upon (or, to the extent necessary to give effect to this acceleration, immediately prior to) such event.
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(b)
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Possible Acceleration on Certain Terminations
: The following provisions of this Section 6(b) apply notwithstanding anything to the contrary in this Agreement or in the Program, but only to the extent that Section 6(c) does not apply in the circumstances. In the event that, at any time during the Protected Period, the Participant ceases to be employed by the Company or one of its Subsidiaries and such termination is the result of a termination of employment either by the Company or such Subsidiary without Cause or by the Participant for Good Reason, this RSU, to the extent then outstanding and unvested, shall immediately vest in full and be paid as provided in Section 2 or 4(a), as applicable; provided, however, that in the case of such a termination of the Participant’s employment that occurs prior to a 409A Change in Control, this RSU shall:
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(i)
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remain outstanding and unvested for a period of six (6) months following such termination of employment and, should a 409A Change in Control occur during such six-month period, shall vest in full upon the 409A Change in Control and shall be paid as provided in Section 2 or 4(a), as applicable; and
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(ii)
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terminate and be forfeited at the end of such six-month period should no 409A Change in Control occur during such six-month period.
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For purposes of clarity, the accelerated vesting and any alternative timing of payment provisions provided in Article 13 of the Program shall not apply to this RSU.
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(c)
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Possible Acceleration on Certain Terminations - CIC Agreement
: In the event that the Participant ceases to be employed by the Company or one of its Subsidiaries and, at the time of such cessation of employment, the Participant is a party to a CIC Agreement, the extent (if any) to which this RSU, to the extent then outstanding and unvested, would become vested in connection with such cessation of employment shall be determined in accordance with and subject to the terms and conditions of such CIC Agreement.
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(d)
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Definitions
: For the purposes of this Agreement and notwithstanding any to the contrary in the Program, the following definitions will apply:
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(i)
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“409A Change in Control” means a Change in Control; provided, however, that a transaction shall not constitute a 409A Change in Control unless it is a “change in the ownership or effective control” of the Company, or a change “in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.
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(ii)
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“CIC Agreement” means a Change in Control Severance Agreement (or any similar or successor written agreement) between the Participant and the Company that provides for the accelerated vesting (or all or a portion) of the equity awards granted by the Company to the Participant (to the extent then outstanding and otherwise unvested) in connection with certain terminations of the Participant’s employment and which, by its terms, would apply to the RSU (subject to any applicable release or other conditions on such accelerated vesting as set forth in such agreement).
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(iii)
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The terms “Cause”, “Change in Control”, “Good Reason”, “Protected Period”, and “Separation Benefits” have the respective meanings ascribed to such terms in the Additional Defined Terms Appendix.
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7.
Notice of Termination.
Any termination of the Participant’s employment by the Company for Cause or by the Participant for Good Reason shall be communicated by a written notice to the other party indicating the specific termination provision in this Agreement relied upon, and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated.
8.
Restrictions on Transfer.
This RSU may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
9.
Recapitalization.
In the event there is any change in the Company’s Shares through the declaration of stock dividends or through recapitalization resulting in stock split-ups or through merger, consolidation, exchange of Shares, or otherwise, the number and class of Shares subject to this RSU shall be equitably adjusted by the Committee, in the manner determined in its sole discretion, to prevent dilution or enlargement of rights.
10.
Section 409A.
This Section 10 applies only to the extent that the Participant is a U.S. taxpayer. This Agreement is intended to either be exempt from or comply with the requirements of Section 409A of the Code so as not to subject the Participant to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Participant. This Agreement may be amended at any time, without the consent of any party, to avoid the application of Code Section 409A in a particular circumstance or that is necessary or desirable to satisfy any of the requirements under Code Section 409A, but the Company shall not be under any obligation to make any such amendment. Nothing in the Agreement shall provide a basis for any person to take action against the Company or any affiliate based on matters covered by Code Section 409A, including the tax treatment of any amount paid or RSU granted under the Agreement, and neither the Company nor any of its Subsidiaries or affiliates shall under any circumstances have any liability to any Participant or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under the this Agreement, including taxes, penalties or interest imposed under Code Section 409A.
11.
Beneficiary Designation
. This Section 11 applies only if the Participant resides in the U.S. The Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Agreement is to be paid in case of his or her death before he or she receives any or all such benefit. Each such designation shall revoke all prior designations by the Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Secretary of the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
12.
Rights as a Stockholder.
The Participant shall have no rights as a stockholder of the Company until the Participant has obtained an ownership interest in the Shares.
13.
Responsibility for Taxes.
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(a)
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Regardless of any action the Company or the Participant’s employer (if different) (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Program that are legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains his or her responsibility and that such liability may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this RSU, including the grant or vesting of this RSU, the issuance of Shares on the applicable vesting date,
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the subsequent sale of any Shares acquired at vesting of the RSU and the receipt of any dividends; and (2) do not commit and are under no obligation to structure the terms of the grant or any aspect of the RSU to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant becomes subject to tax and/or social security contributions in more than one jurisdiction between the Date of Grant and the date of any relevant taxable, tax and/or social security contribution withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
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(b)
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Prior to any relevant taxable, tax and/or social security contribution withholding event, the Participant shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, at their sole discretion, to satisfy the obligations with respect to Tax-Related Items by one or a combination of the following: (i) withholding from the Participant’s wages or other cash compensation paid to him or her by the Company and/or the Employer or from any equivalent cash payment received upon vesting of the RSU; or (ii) withholding from the proceeds of the sale of Shares acquired at vesting of the RSU, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization); or (iii) withholding in Shares to be issued upon vesting of the RSU. In the event Tax-Related Items are recovered by withholding in Shares, to avoid negative accounting treatment, the Company will withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant will be deemed to have been issued the full number of Shares subject to the vested RSU, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Program. In the event Tax-Related Items are recovered by any of the other methods described in this Section 13, the Company or the Employer may withhold or account for Tax-Related Items by considering maximum applicable rates.
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(c)
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Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items and/or Employment Taxes that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Program that cannot be satisfied by the means described in this Section 13 or in Section 4(c). The Company may refuse to issue or deliver Shares or the proceeds of the sale of Shares to the Participant if the Participant fails to comply with Participant’s obligation in connection with the Tax-Related Items and/or Employment Taxes.
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14.
Continuation of Employment.
This Agreement shall not confer upon the Participant any right to continuation of employment with the Employer, nor shall this Agreement interfere in any way with the Employer’s right to terminate the Participant’s employment at any time with or without cause.
15.
Miscellaneous.
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(a)
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This Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Program, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Program. The Committee shall have the right to impose such restrictions on any Shares acquired pursuant to this Award, as it may deem advisable for regulatory compliance, including, without limitation, restrictions under applicable U.S. federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any state or foreign securities laws applicable to such Shares. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Program and this Agreement, all of which shall be binding upon the Participant.
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(b)
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The Board may terminate, amend, suspend or modify the Program and the Committee may amend this RSU at anytime; provided, however, that no such termination, amendment, suspension or
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modification of the Program or amendment of this Award may in any material way adversely affect the Participant’s rights under this Agreement, without the express consent of the Participant.
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(c)
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The Participant agrees to take all steps necessary to comply with all applicable provisions of U.S. federal, state and foreign securities law in exercising his or her rights under this Agreement.
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(d)
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This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
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(e)
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All obligations of the Company under the Program and this Agreement, with respect to this Award, shall, to the extent legally permissible, be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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16.
Nature of Grant.
In accepting the RSU, the Participant acknowledges, understands and agrees that:
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(a)
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the Program is established voluntarily by the Company and is discretionary in nature;
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(b)
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the grant of the RSU by the Company is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;
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(c)
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all decisions with respect to future RSU grants, if any, will be at the sole discretion of the Company;
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(d)
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the Participant is voluntarily participating in the Program;
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(e)
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the RSU and any Shares acquired under the Program are not part of normal or expected compensation or salary;
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(f)
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unless otherwise agreed with the Company, the RSU and any Shares acquired under the Program, and the income and value of the same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary or affiliate of the Company;
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(g)
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the RSU grant and the Participant’s participation in the Program shall not be interpreted to form an employment contract or relationship with the Company or the Employer or any Subsidiary or affiliate of the Company;
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(h)
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the future value of the underlying Shares is unknown and cannot be predicted with certainty;
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(i)
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for purposes of the RSU, the Participant’s employment will be considered terminated as of the date the Participant is no longer actively providing services to the Company or the Employer (regardless of the reason for such termination and whether or not later found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise provided in this Agreement or decided by the Committee, the Participant’s right to vest in the RSU under the Program, if any, will terminate effective as of such date and will not be extended by any notice period (e.g., active employment would not include a period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); furthermore, the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSU;
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(j)
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for Participants who reside outside the U.S., the following additional provisions shall apply:
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(i)
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the RSU and any Shares acquired under the Program are not intended to replace any pension rights or compensation;
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(ii)
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RSU and the underlying Shares are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or to the Employer and are outside the scope of Participant’s employment agreement, if any; such items shall not be included in or part of any for any calculation of any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Employer;
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(iii)
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no claim or entitlement to compensation or damages shall arise from forfeiture of the RSU resulting from termination of the Participant’s employment by the Company or the Employer (whether or not in breach of local labor laws) and in consideration of the grant
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of the RSU to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim and releases the Company and the Employer from any such claim, if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Program, the Participant shall be deemed to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
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(iv)
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the Participant acknowledges and agrees that neither the Company, the Employer or any Subsidiary or affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSU or of any amounts due to the Participant pursuant to the vesting of the RSU or the subsequent sale of any Shares acquired upon settlement.
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17.
No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Program, or his or her acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding the Participant’s participation in the Program before taking any action related to the Program.
18.
Data Privacy Notice and Consent.
This Section 18 applies if the Participant resides outside the U.S. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement and any other grant materials, by and among, as applicable, the Employer, the Company and any Subsidiary or affiliate of the Company for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Program.
The Participant understands that the Company and the Employer hold certain personal information about him or her, including, but not limited to, his or her name, home address and telephone number, date of birth, social insurance number or other identification numbers, salary, nationality, job title, any Shares or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Program (“Data”). The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Program (presently or in the future), that these recipients may be located in Participant’s country or elsewhere (e.g., the United States), and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative.
The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Participant’s participation in the Program, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Shares received upon vesting of the RSUs may be deposited. The Participant understands that he or she is providing the consents herein on a purely voluntary basis. The Participant further understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Program. Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Participant understands, however, that refusing or withdrawing his or her consent may affect his or her ability to participate in the Program, but will not adversely affect his or her employment status or service or career with the Employer. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
19.
Severability.
The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
20.
Dispute Resolution.
The Participant shall have the right and option to elect to have any good faith dispute or controversy arising under or in connection with this Agreement settled by litigation or arbitration. If arbitration is selected, such proceeding shall be conducted by final and binding arbitration before a panel of three (3) arbitrators in accordance with the rules and under the administration of the American Arbitration Association.
21.
Governing Law and Venue.
To the extent not preempted by U.S. federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, U.S.A.
For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award, the Program or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of
California and agree that such litigation shall be conducted in the courts of Orange County, California, or the federal courts for the United States for the Central District of California, and no other courts, where this grant is made and/or to be performed.
22.
Language.
If Participant has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
23.
Electronic Delivery.
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an online or electronic system established and maintained by the Company or a third party designated by the Company.
24.
Insider Trading Restrictions/Market Abuse Laws.
The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including the United States and the Participant’s country of residence (if different), which may affect his or her ability to acquire or sell Shares or rights to Shares (
e.g.
, Options) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions, including the United States and the Participant’s country of residence). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
25.
Foreign Asset/Account, Exchange Control and Tax Reporting.
The Participant acknowledges that, depending on his or her country, the Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from his or her participation in the Program, in, to and/or from a brokerage/bank account or legal entity located outside the Participant’s country. The applicable laws of the Participant’s country may require that the Participant reports such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. The Participant acknowledges that he or she is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and is advised to consult his or her personal legal advisor on this matter.
26.
Non-U.S. Countries Additional Terms Appendix.
Notwithstanding any provisions in this Agreement, the RSU shall be subject to any special terms and conditions for the Participant’s country set forth in the Non-U.S. Countries Additional Terms Appendix. Moreover, if the Participant relocates to one of the countries included in the Non-U.S. Countries Additional Terms Appendix, the special terms and conditions for such country shall apply to the Participant, to the extent that the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate administration of the Program.
27.
Imposition of Other Requirements.
The Company reserves the right to impose other requirements on the Participant’s participation in the Program, on the RSU and on any Shares acquired at vesting of the RSU, to the extent the Company determines it is necessary or advisable to comply with local law or facilitate the administration of the
Program, and to require the Participant to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.
28.
Waiver.
The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
29.
Benefit Limit.
Notwithstanding anything else contained herein or in the Program to the contrary, in the event that any payments or benefits to which the Participant becomes entitled in accordance with the provisions of this Agreement (or any other agreement with the Company) would otherwise constitute a parachute payment under Code Section 280G(b)(2), then such payments and/or benefits will be subject to reduction to the extent necessary to assure that the Participant receives only the greater of (i) the amount of those payments which would not constitute such a parachute payment or (ii) the amount which yields the Participant the greatest after-tax amount of benefits after taking into account any excise tax imposed under Code Section 4999 on the payments and benefits provided the Participant under this Agreement (or on any other payments or benefits to which the Participant may become entitled in connection with any change in control or ownership of the Company or the subsequent termination of his or her employment with the Company).
Should a reduction in benefits be required to satisfy the benefit limit of this Section 29, then the portion of any parachute payment otherwise payable in cash to the Participant shall be reduced to the extent necessary to comply with such benefit limit. Should such benefit limit still be exceeded following such reduction, then the number of shares which would otherwise vest on an accelerated basis under each of the Participant’s options or other equity awards (based on the amount of the parachute payment attributable to each such option or equity award under Code Section 280G) shall be reduced to the extent necessary to eliminate such excess, with such reduction to be made in the same chronological order in which those awards were made.
In the event there is any disagreement between the Participant and the Company as to whether one or more payments or benefits to which the Participant becomes entitled constitute a parachute payment under Code Section 280G or as to the determination of the present value thereof, such dispute will be resolved as follows:
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(a)
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In the event the Treasury Regulations under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or benefit or the method of valuation therefor, the characterization afforded to such payment or benefit by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling.
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(b)
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In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent auditors selected and paid for by the Company. The resolution reached by the independent auditors will be final and controlling; provided, however, that if in the judgment of the independent auditors, the status of the payment in dispute can be resolved through the obtainment of a private letter ruling from the Internal Revenue Service, a formal and proper request for such ruling will be prepared and submitted by the independent auditors, and the determination made by the Internal Revenue Service in the issued ruling will be controlling. All expenses incurred in connection with the preparation and submission of the ruling request shall be paid by the Company.
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(c)
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In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the present value thereof will, at the independent auditor’s election, be determined through an independent third-party appraisal, and the expenses incurred in obtaining such appraisal shall be paid by the Company.
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*
*
*
*
By the Participant’s electronic acceptance of the Agreement and participation in the Program, the Participant agrees that this RSU is granted under and governed by the terms and conditions of the Program and this Agreement, including the Appendices and the Statement.
NON-U.S. COUNTRIES ADDITIONAL TERMS APPENDIX
ADDITIONAL TERMS AND CONDITIONS OF THE
EDWARDS LIFESCIENCES CORPORATION
GLOBAL RESTRICTED STOCK UNIT AGREEMENT
Terms and Conditions
This Non-U.S. Countries Additional Terms Appendix includes additional terms and conditions that govern the RSU granted to the Participant under the Program if the Participant resides in one of the non-U.S. countries listed below. Certain capitalized terms used but not defined in this Non-U.S. Countries Additional Terms Appendix have the meanings set forth in the Program and/or the Agreement.
Notifications
This Non-U.S. Countries Additional Terms Appendix also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to his or her participation in the Program. The information is based on the securities, exchange control and other laws in effect in the respective countries as of March 2015. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Non-U.S. Countries Additional Terms Appendix as the only source of information relating to the consequences of his or her participation in the Program because the information may be out of date at the time that the RSU vests or the Participant sells Shares acquired under the Program.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to his or her situation.
Finally, the Participant understands that if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working, transfers employment after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to the Participant and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.
AUSTRALIA
Terms and Conditions
Award Payable Only in Shares
. The grant of this RSU does not provide the Participant with a right to receive a cash payment; this RSU is payable only in Shares.
Australian Addendum
. The RSU is subject to the terms of this Agreement, the Program, the Australian Addendum to the Program and the specific relief granted by the Australian Securities and Investment Commission under ASIC Instrument 13-0478. As a condition of the specific relief, the Participant will receive an Offer Document which sets forth certain key terms of the RSU, as well as the risks inherent in investment in Shares and a summary of the Australian tax consequences of the RSU.
Notifications
Securities Law Information
. If the Participant acquires Shares pursuant to the RSU and offers the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. The Participant should obtain legal advice on disclosure obligations prior to making any such offer.
AUSTRIA
Notifications
Exchange Control Notification
. If the Participant holds Shares acquired under the Program outside of Austria (
e.g
., in a U.S. brokerage account), a reporting obligation to the Austrian National Bank will apply. An exemption applies if the value of the securities held outside Austria as of December 31 does not exceed €5,000,000 or the value of the securities as of any quarter does not exceed €30,000,000. If the former threshold is exceeded, the annual reporting obligations are imposed, whereas if the latter threshold is exceeded, then quarterly reports must be submitted. The annual reporting date is December 31; the deadline for filing the annual report is January 31 of the following year. If the quarterly reporting is required, the reports must be filed on or before the 15th day of the month following the last day of the quarter.
If the Participant holds cash (
e.g
., dividends or proceeds from the sale of Shares) outside of Austria (
e.g
., in a U.S. brokerage or bank account), he or she will be subject to monthly reporting if the transaction volume of all cash accounts abroad is €3,000,000 or greater. In this case, transfers of cash into or out of the cash accounts and the balances of such accounts must be reported monthly, as of the last day of the month, on or before the 15th day of the following month, using the form “
Meldungen SI-Forderungen und/oder SI-Verpflichtungen
.”
BELGIUM
Notifications
Tax Compliance
. The Participant is required to report any taxable income attributable to the RSU on the Participant’s annual tax return.
Foreign Asset and Account Reporting
. The Participant is required to report any bank accounts opened and maintained outside Belgium on the Participant’s annual tax return. In a separate report, the Participant is required to report to the National Bank of Belgium any bank accounts opened and maintained outside Belgium.
BRAZIL
Terms and Conditions
Compliance with Law
. By accepting the RSU, the Participant agrees to comply with applicable Brazilian laws and to report and pay any and all Tax-Related Items associated with the vesting of the RSU and the sale of Shares obtained pursuant to the RSU.
Labor Law Acknowledgment
. By accepting the RSU, the Participant agrees that he or she is (i) making an investment decision, (ii) the Shares will be issued to the Participant only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to the Participant.
Notifications
Foreign Asset and Account Reporting
. If the Participant holds assets and rights outside Brazil with an aggregate value equal to exceeding US$100,000, then the Participant will be required to prepare and submit to the Central Bank of Brazil an annual declaration of such assets and rights. Assets and rights that must be reported include Shares acquired under the Program. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil.
CANADA
Terms and Conditions
Termination of Employment
. This provision supplements Section 16(i) of the Agreement.
In the event of termination of his or her employment (regardless of the reason for such termination and whether or not later found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant's employment agreement, if any), the Participant’s right to receive any RSU and vest under the Program, if any, will terminate effective as of (1) the date that the Participant is no longer actively employed by the Company or the Employer, or at the discretion of the Committee, (2) the date the Participant receives notice of termination of employment from the Employer, if earlier than (1), regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to statutory law, regulatory law and/or common law); the Company shall have the exclusive discretion to determine when the Participant is no longer employed for purposes of the RSU.
Data Privacy
. The following provision will apply if the Participant is a resident of Quebec and supplements Section 18 of the Agreement:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Program. The Participant further authorizes the Company and any Subsidiary or affiliate and the Program administrator to disclose and discuss the Program with their advisors. The Participant further authorizes the Employer to record such information and to keep such information in the Participant’s employee file.
French Language Provision
. The following provision will apply if the Participant is a resident of Quebec:
The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la
rédaction en anglais de cette convention
,
ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement à la présente convention.
Notification
Securities Law Notice
.
The Participant is permitted to sell Shares acquired through the Program through the designated broker appointed under the Program, if any, provided the resale of Shares acquired under the Program takes place outside of Canada through the facilities of a stock exchange on which the shares are listed. The Company’s Shares are currently listed on the New York Stock Exchange.
CHINA
Terms and Conditions
Immediate Sale of Shares
. This provision supplements Section 2 of the Agreement:
Due to regulatory requirements in the PRC, upon the vesting and settlement of the RSU, the Participant agrees to the immediate sale of any Shares to be issued. The Participant further agrees that the Company is authorized to instruct its designated broker to assist with the mandatory sale of such Shares (on the Participant’s behalf pursuant to this authorization), and the Participant expressly authorizes the Company’s designated broker to complete the sale of such Shares. The Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay the cash proceeds from the sale, less any brokerage fees or commissions, to the Participant in accordance with any applicable exchange
control laws and regulations and provided any liability for Tax-Related Items resulting from the vesting of the RSU has been satisfied.
Exchange Control Requirements
. Due to exchange control laws in the PRC, if the Participant is a PRC national, he or she will be required to immediately repatriate the cash proceeds from the sale of the Shares to the PRC. The Participant understands and agrees that such cash proceeds will need to be repatriated to the PRC through a special exchange control account established by the Company, a Subsidiary, or the Employer, and the Participant hereby consents and agrees that any proceeds from the sale of Shares may be transferred to such special account prior to being received by him or her.
The Participant further understands and agrees that there will be a delay between the date the Shares are sold and the date the cash proceeds are distributed to the Participant. The Participant also understands and agrees that the Company is not responsible for any currency fluctuation that may occur between the date the Shares are sold and the date the cash proceeds are distributed to the Participant.
The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.
Notifications
Foreign Asset and Account Reporting
. The Participant may be required to report to the State Administration of Foreign Exchange all details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-PRC residents. The Participant should consult with his or her personal advisor in order to ensure compliance with applicable reporting requirements.
COLOMBIA
Terms and Conditions
Labor Law Acknowledgment
. This provision supplements the acknowledgment contained in Section 16 of the Agreement:
The Participant acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the Program and related benefits do not constitute a component of his or her “salary” for any legal purpose.
CZECH REPUBLIC
Notifications
Exchange Control Information
. The Czech National Bank may require the Participant to fulfill certain notification duties in relation to the RSU and the opening and maintenance of a foreign account. However, because exchange control regulations change frequently and without notice, the Participant should consult the Participant’s personal legal advisor prior to the vesting of the RSU to ensure compliance with current regulations. It is the Participant’s responsibility to comply with applicable Czech exchange control laws.
DENMARK
Terms and Conditions
Nature of Grant
. This provisions supplements Section 16 of the Agreement:
By accepting the RSU, the Participant acknowledges, understands and agrees that this grant relates to future services to be performed and is not a bonus or compensation for past services.
Notifications
Exchange Control and Tax Notification
. The Participant may hold Shares acquired under the Program in a safety-deposit account (
e.g.
, a brokerage account) either with a Danish bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, then the Participant is required to inform the Danish Tax Administration about the safety-deposit account. For this purpose, the Participant must file a Form V (Erklaering V) with the Danish Tax Administration. Both the Participant and the broker or bank must sign the Form V. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the Shares in the account. If the applicable broker or bank does not sign the Form V for any reason, the Participant is solely responsible for providing the necessary information to the Danish Tax Administration. By signing the Form V, the Participant authorizes the Danish Tax Administration to examine the account.
In addition, if the Participant opens a brokerage account or a deposit account with a U.S. bank, then because the account can hold cash, it will be treated as a deposit account. Therefore, the Participant must also file a Form K (Erklaering K) with the Danish Tax Administration. Both the Participant and the broker must sign the Form K. By signing the Form K, the broker undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the deposit account. The Danish Tax Administration may grant an exemption from the requirement for the broker or bank to sign the Form K. A request can be made as part of the Form K. If the applicable broker or bank does not sign the Form K for any reason, the Participant is solely responsible for providing the necessary information to the Danish Tax Administration. By signing the Form K, the Participant authorizes the Danish Tax Administration to examine the account.
DOMINICAN REPUBLIC
There are no country-specific provisions.
FINLAND
There are no country-specific provisions.
FRANCE
Terms and Conditions
Language Consent
. By accepting the RSU, the Participant confirms having read and understood the Agreement and the Program, including all terms and conditions included therein, that were provided in the English language. The Participant accepts the terms of these documents accordingly.
En acceptant le RSU, vous confirmez avoir lu et compris ce Contrat et le Program, inclutant tous leur termes et conditions, qui lui ont été transmis en langue anglaise. Vous acceptez les dispositions de ces documents en connaissance de cause.
Notifications
Foreign Asset and Account Reporting
. If the Participant holds cash or Shares outside of France, he or she must declare all foreign bank and brokerage accounts (including any accounts that were opened or closed during the tax year) on an annual basis on form No. 3916, together with their income tax return. Failure to complete this reporting triggers penalties for a French resident Participant. Further, the Participant with foreign account balances exceeding €1,000,000 may have additional monthly reporting obligations. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
GERMANY
Notifications
Exchange Control Information
. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If the Participant makes or receives a cross-border payment in excess of €12,500 (
e.g
., proceeds from the sale of Shares acquired under the Program), he or she must report the payment to the German Federal Bank electronically using the “General Statistics Reporting Portal” available via the Bank’s website (
www.bundesbank.de
).
GREECE
There are no country-specific provisions.
HONG KONG
Terms and Conditions
Form of Payment
. Notwithstanding any discretion contained in the Program, vested RSUs shall be paid in whole Shares only.
Share Sale Restriction
. Shares received at vesting are accepted as a personal investment. In the event that the RSU vests and Shares are issued to the Participant (or his or her heirs) within six months of the Date of Grant, the Participant (or his or her heirs) agree that the Shares will not be offered to the public or otherwise disposed of prior to the six-month anniversary of the Date of Grant.
Notifications
Securities Law Information
.
WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. The Participant is advised to exercise caution in relation to the offer. If the Participant is in any doubt about any of the contents of this document, he or she should obtain independent professional advice. Neither the grant of the RSU nor the issuance of Shares upon vesting of the RSU constitutes a public offering of securities under Hong Kong law and is available only to employees of the Company and its Subsidiaries. The Agreement, including the Appendices, the Program and other incidental communication materials distributed in connection with the RSU (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public
offering of securities under the applicable securities legislation in Hong Kong, and (ii) are intended only for the personal use of each eligible employee of the Company or its Subsidiaries and may not be distributed to any other person.
Nature of Scheme
. The Company specifically intends that the Program will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
INDIA
Notifications
Exchange Control Information
. The Participant understands that he or she must repatriate any proceeds from the sale of Shares acquired under the Program to India within 90 days of receipt. The Participant will receive a foreign inward remittance certificate (“FIRC”) from the bank where the Participant deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation.
Foreign Account and Asset Reporting
. The Participant is required to declare any foreign bank accounts and assets (including Shares acquired under the Program) on his or her annual tax return. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
IRELAND
Notifications
Director Notification Obligation
. If the Participant is a director, shadow director or secretary of an Irish Subsidiary of the Company, then the Participant is subject to certain notification requirements under Section 53 of the Companies Act. Among these requirements is an obligation to notify the Irish Subsidiary in writing within five (5) business days when the Participant receives an interest (
e.g.
, RSUs, Shares) in the Company and the number and class of shares or rights to which the interest relates. In addition, the Participant must notify the Irish Subsidiary within five (5) business days when the Participant sells Shares acquired under the Program. This notification requirement also applies to any rights or Shares acquired by the Participant’s spouse or children (under the age of 18).
ITALY
Terms and Conditions
Data Privacy
. This provision replaces in its entirety Section 18 of the Agreement:
Data Privacy Notice. The Participant understands that the Employer and/or the Company holds certain personal information about the Participant, including, but not limited to, his or her name, home address and telephone number, date of birth, national insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all RSUs or other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in his or her favor (“Data”), for the purpose of implementing, administering and managing the Program.
The Participant is aware that providing the Company with his or her Data is necessary for the performance of the Agreement and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Program. The Controller of personal data processing is Edwards Lifesciences Corporation, One Edwards Way, Irvine, California 92614, U.S.A., and, pursuant to D.lgs 196/2003, its representative in Italy is Marianna Lupo with registered office at Edwards Lifesciences Italia SpA Via Patecchio, 4, 20141 Milan Italy.
The Participant understands that Data may be transferred to third parties assisting in the implementation, administration and management of the Program, including any transfer required to a broker or other third party
with whom cash from the sale of Shares acquired pursuant to this RSU may be deposited. Furthermore, the recipients that may receive, possess, use, retain and transfer such Data for the above mentioned purposes may be located in the Participant’s country, or elsewhere, including outside of the European Union and the recipient’s country may have different data privacy laws and protections than his or her country. The processing activity, including the transfer of the Participant’s personal data abroad, out of the European Union, as herein specified and pursuant to applicable laws and regulations, does not require the Participant’s consent thereto as the processing is necessary for the performance of contractual obligations related to the implementation, administration and management of the Program. The Participant understands that Data processing relating to the purposes above specified shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to D.lgs. 196/2003.
The Participant understands that Data will be held only as long as is required by law or as necessary to implement, administer and manage his or her participation in the Program. The Participant understands that, pursuant to art 7 of D.lgs 196/2003, the Participant has the right, including but not limited to, access, delete, update, request the rectification of his or her Data and cease, for legitimate reasons, the Data processing. Furthermore, the Participant is aware that his or her Data will not be used for direct marketing purposes. In addition, the Data provided can be reviewed and questions or complaints can be addressed by contacting the Participant’s local human resources representative.
Grant Terms Acknowledgment
. By accepting the RSU, the Participant acknowledges that the Participant has received a copy of the Program and the Agreement and has reviewed the Program and the Agreement, including the Appendices, in their entirety and fully understands and accepts all provisions of the Program and the Agreement, including the Appendices. The Participant further acknowledges having read and specifically approves the following sections of the Agreement: Section 13 (Responsibility for Taxes), Section 15 (Miscellaneous), Section 16 (Nature of Grant), Section 21 (Governing Law and Venue), Section 27 (Imposition of Other Requirements), and the Data Privacy provision contained in this Non-U.S. Countries Additional Terms Appendix.
Notifications
Foreign Asset and Account Reporting
. The Participant is required to report in the Participant’s annual tax return (on UNICO Form, RW Schedule, or on a special form if the Participant is not required to file a tax return) any investments or assets (including Shares or proceeds from the sale of Shares acquired under the Program) held outside of Italy if the investment or asset may give rise to income in Italy.
JAPAN
Notifications
Foreign Asset and Account Reporting
. If the Participant holds assets outside of Japan with a value exceeding €50,000,000 (as of December 31 each year), he or she is required to comply annual tax reporting obligations with respect to such assets. The Participant is advised to consult with his or her personal tax advisor to ensure that he or she is properly complying with applicable reporting obligations.
KOREA
Notifications
Foreign Asset and Account Reporting
. Korean residents must declare all foreign financial accounts (
i.e
., non-Korean bank accounts, brokerage accounts, etc.) they hold in any foreign country that does not enter into an “inter-governmental agreement for automatic exchange of tax information” with Korea, to the Korean tax authority and file a report with respect to such accounts if the value of such accounts exceeds KRW 1 billion (or an equivalent amount in foreign currency) on any month-end date during a calendar year. Korean residents should consult their personal tax advisor to determine their personal reporting obligations.
MEXICO
Terms and Conditions
Labor Law Acknowledgement
. In accepting the RSU, the Participant expressly recognizes that the Company with registered offices at One Edwards Way, Irvine, California 92614, U.S.A., is solely responsible for the administration of the Program and that his or her participation in the Program and acquisition of Shares does not constitute an employment relationship between the Participant and the Company since the Participant is participating in the Program on a wholly commercial basis and his or her sole Employer is
Edwards Lifesciences México S.A. de C.V.
(“Edwards Mexico”) with registered offices at
Av. Santa Fé 505 - Oficina 203, Col. Cruz Manca Santa Fé, Cuajimalpa, México D.F. C.P. 05349
. Based on the foregoing, the Participant expressly recognizes that the Program and the benefits that the Participant may derive from participating in the Program do not establish any rights between the Participant and the Employer, Edwards Mexico, and do not form part of the employment conditions and/or benefits provided by Edwards Mexico and any modification of the Program or its termination shall not constitute a change or impairment of the terms and conditions of his or her employment.
The Participant further understands that his or her participation in the Program is as a result of a unilateral and discretionary decision of the Company; therefore, the Company reserves the absolute right to amend and/or discontinue the Participant’s participation at any time without any liability to the Participant.
Finally, the Participant hereby declares that the Participant does not reserve any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Program or the benefits derived under the Program, and the Participant therefore grants a full and broad release to the Company, its Subsidiaries, branches, representation offices, shareholders, officers, agents or legal representatives with respect to any claim that may arise.
Reconocimiento de Ausencia de Relación Laboral y Declaración de la Política
Al aceptar el RSU, usted expresamente recononce que la Compañía y sus oficinas registradas en One Edwards Way, Irvine, California 92614, U.S.A., es el único responsable de la administración del Program y que su participación en el mismo y la compra de Acciones no constituye de ninguna manera una relación laboral entre usted y la Compañía, toda vez que su participación en el Program deriva únicamente de una relación comercial con
Edwards Lifesciences México S.A. de C.V.
(«Edwards México») y sus oficinas registradas en
Av. Santa Fé 505 - Oficina 203, Col. Cruz Manca Santa Fé, Cuajimalpa, México D.F. C.P. 05349
. Derivado de lo anterior, usted expresamente reconoce que el Program y los beneficios que pudieran derivar del mismo no establecen ningún derecho entre usted y su Empleador, Edwards México, y no forman parte de las condiciones laborales y/o prestaciones otorgadas por Edwards México, y expresamente usted reconoce que cualquier modificación al Program o la terminación del mismo de manera alguna podrá ser interpretada como una modificación de sus condiciones de trabajo.
Asimismo, usted entiende que su participación en el Program es el resultado de una decisión unilateral y discrecional de la Compañía, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o terminar su participación en cualquier momento, sin ninguna responsabilidad hacia usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía, por cualquier compensación o daño en relación con cualquier disposición del Program o de los beneficios derivados del mismo, y en consecuencia usted otorga un amplio y total finiquito a la Compañía, sus afiliadas, sucursales, oficinas de representación, accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.
NETHERLANDS
Terms and Conditions
Labor Law Acknowledgment
. By accepting the RSU, the Participant acknowledges that: (i) the RSU is intended as an incentive to remain employed with the Employer and is not intended as remuneration for labor performed; and (ii) the RSU is not intended to replace any pension rights or compensation.
Data Privacy
. This provision replaces in its entirety Section 18 of the Agreement:
The Participant understands that the Employer, the Company and any Subsidiary or affiliate may hold certain personal information about him or her, including, without limitation, the Participant’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any shares or directorships held in the Company or Subsidiary, details of all RSUs, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, managing and administering his or her participation in the Program.
The Participant also understands that providing the Company with the Data is necessary for the performance of the Program and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Program, but will not adversely affect his or her employment status or service or career with the Employer.
The Controller of the processing activities under the Program is Edwards Lifesciences Corporation with registered offices at One Edwards Way, Irvine, California 92614, U.S.A., and its representative in the Netherlands is Edwards Lifesciences B.V. or BMEYE BV, depending on the Participant's Employer, with registered offices at Verlengde Poolseweg 16, 4818 CL Breda, The Netherlands, and Hoogoorddreef 60, 1101 BE Amsterdam, The Netherlands, respectively.
The Participant understands that the Data will be transferred to the broker designated by the Company or such other stock plan service provider as may be selected in the future, or other third parties involved in the implementation, management and administration of the Program. These service providers only act upon the explicit instructions of the Controller and do not process the Data for any other purpose. In addition, the Company has ensured that these service providers have appropriate technical and organizational security measures in place to guarantee an adequate level of protection. Likewise, as part of the processing operations, the Company will from time to time need to make some of the Data available to judicial and regulatory authorities (including the tax authorities), and to the Company’s accountants, auditors, lawyers and other outside professional advisers, to implement, administer and manage the Participant’s participation in the Program. The Participant understands that the recipients of the Data may be located in the United States or elsewhere and that the recipients’ country (e.g., the United States) may not have or have different data privacy laws and protection than the Participant’s country. When appropriate, the Controller will take the appropriate steps to guarantee an adequate level of protection similar to the level of protection of the Participant’s country.
The Controller will take steps to ensure the Data is accurate and up to date. From time to time the Participant will be requested to review and update the Data. The Data will only be held for as long as it is appropriate for the implementation, administration and management of the Participant’s participation in the Program. The Participant understands that he or she has the right to, without limitation, access, delete, update, correct, or block the Data processing.
In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the local human resources representative.
NEW ZEALAND
There are no country-specific provisions.
NORWAY
There are no country-specific provisions.
POLAND
Notifications
Foreign Asset and Account Reporting
. Polish residents holding foreign securities (including Shares) and/or maintaining accounts abroad must report information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts if the value of such transactions or balances (when combined with all other assets held abroad) exceeds PLN 7 million. If required, the reports are due on a quarterly basis by the 20th day following the end of each quarter. The reports are filed on special forms available on the website of the National Bank of Poland.
Exchange Control Information
. If a Polish resident transfers funds in excess of €15,000 into or out of Poland, the funds must be transferred via a Polish bank account or financial institution. Polish residents are required to retain the documents connected with a foreign exchange transaction for a period of five years measured from the end of the year in which the relevant transaction occurred.
PORTUGAL
Terms and Conditions
English Language Consent
. The Participant hereby expressly declares that he or she has full knowledge of the English language and has read, understood and fully accepts and agrees with the terms and conditions established in the Program and the Agreement.
Consentimento de Lingua Inglesa
. O beneficiário pelo presente declara expressamente que tem pleno conhecimento da língua Inglesa e que leu, compreendeu e totalmente aceitou e concordou com os termos e condições estabelecidas no Plano e no Acordo.
Notifications
Exchange Control Information
. Residents of Portugal who acquire Shares under the Program may be required to file a report with the Portuguese Central Bank for statistical purposes (unless the Participant arranges to have the Shares deposited with a Portuguese financial intermediary, in which case the intermediary will file the report).
PUERTO RICO
There are no country-specific provisions.
SINGAPORE
Notifications
Securities Law Notification
. The RSU was granted to the Participant pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). Neither the Agreement nor the Program have been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that his or her RSU is subject to section 257 of the SFA and the Participant will not be able to make any subsequent sale of the Shares in Singapore, or any offer of such subsequent sale of the Shares underlying the RSU unless such sale or offer in Singapore is made (i) after six months from the Date of Grant of the RSU, or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).
Chief Executive Officer and Director Notification
. If the Participant is the Chief Executive Officer (“CEO”) or a director, associate director or shadow director of a Singapore Subsidiary, then the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singapore Subsidiary in writing when the Participant receives an interest (
e.g
., RSUs, Shares) in the Company or
any related company. In addition, the Participant must notify the Singapore Subsidiary when the Participant sells Shares of the Company or any related company (including when the Participant sells Shares acquired under the Program). These notifications must be made within two (2) business days of acquiring or disposing of any interest in the Company or any related company. In addition, a notification must be made of the Participant’s interests in the Company or any related company within two (2) business days of becoming the CEO/a director.
SOUTH AFRICA
Terms and Conditions
Responsibility for Taxes
. The following provision supplements Section 13 of the Agreement:
By accepting the RSU, the Participant agrees that, immediately upon vesting and settlement of the RSU, the Participant will notify the Employer of the amount of any gain realized. If the Participant fails to advise the Employer of the gain realized upon vesting and settlement, the Participant may be liable for a fine. The Participant will be solely responsible for paying any difference between the actual tax liability and the amount withheld by the Employer.
Notifications
Exchange Control Information
. To participate in the Program, the Participant must comply with exchange control regulations and rulings in South Africa and neither the Company nor the Employer will be liable for any fines or penalties resulting from the Participant’s failure to comply with applicable laws. Because no transfer of funds from South Africa is required under the RSU, no filing or reporting requirements should apply when the RSU is granted or when Shares are issued upon vesting and settlement of the RSU, nor should the RSU or the underlying Shares count towards the ZAR4,000,000 annual offshore investment limit. However, because the exchange control regulations are subject to change, the Participant should consult the Participant’s personal advisor prior to vesting and settlement of the RSU to ensure compliance with current regulations.
SPAIN
Terms and Conditions
Nature of Grant
. The following provision supplements Section 16 of the Agreement:
By accepting the RSU, the Participant consents to participation in the Program and acknowledge that the Participant has received a copy of the Program.
The Participant understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant RSUs under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world. The decision is limited and entered into based upon the express assumption and condition that any RSUs will not economically or otherwise bind the Company or any parent, Subsidiary or affiliate, including the Employer, on an ongoing basis, other than as expressly set forth in the Agreement. Consequently, the Participant understands that the RSU is granted on the assumption and condition that the RSU shall not become part of any employment contract (whether with the Company or any parent, Subsidiary or affiliate, including the Employer) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. Furthermore, the Participant understands and freely accepts that there is no guarantee that any benefit whatsoever shall arise from the RSU, which is gratuitous and discretionary, since the future value of the RSU and the underlying Shares is unknown and unpredictable. The Participant also understands that this grant of RSUs would not be made but for the assumptions and conditions set forth hereinabove; thus, the Participant understands, acknowledges and freely accepts that, should any or all of the assumptions be mistaken or any of the conditions not be met for any reason, then the grant of this RSU shall be null and void.
Further, this RSU is a conditional right to Shares and can be forfeited in the case of, or affected by, the Participant’s termination of employment. This will be the case, for example, even if (1) the Participant is considered to be unfairly
dismissed without good cause (
i.e
., subject to a “despido improcedente”); (2) the Participant is dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) the Participant terminates employment due to a change of work location, duties or any other employment or contractual condition; (4) the Participant terminates employment due to unilateral breach of contract of the Company or any of its Subsidiaries; or (5) the Participant’s employment terminates for any other reason whatsoever, except for Cause. Consequently, upon termination of the Participant’s employment for any of the reasons set forth above, the Participant may automatically lose any rights to the unvested RSU granted to the Participant as of the date of his or her termination of employment, as described in the Program and the Agreement.
Notifications
Foreign Asset and Account Reporting
. To the extent that Spanish residents hold rights or assets (
e.g.
, Shares, cash, etc.) in a bank or brokerage account outside of Spain with a value in excess of €50,000 per type of right or asset as of December 31 each year, such residents are required to report information on such rights and assets on their tax return for such year. Shares constitute securities for purposes of this requirement, but unvested rights (
e.g.
, RSUs) are not considered assets or rights for purposes of this requirement.
If applicable, Spanish residents must report the assets or rights on Form 720 by no later than March 31 following the end of the relevant year. After such assets or rights are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported assets or rights increases by more than €20,000. Failure to comply with this reporting requirement may result in penalties.
Spanish residents are also required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities held in such accounts, if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €1,000,000.
Spanish residents should consult with their personal tax and legal advisors to ensure compliance with their personal reporting obligations.
Exchange Control Information
. The Participant must declare the acquisition of Shares to the
Dirección General de Política Comercial e Inversiones
(“
DGCI
”) of the Ministry of Economy and Competitiveness for statistical purposes. The Participant must also declare the ownership of any Shares with the Directorate of Foreign Transactions, on Form D-6, each January while the Shares are owned. In addition, the sale of Shares must be declared on Form D-6 filed with the DGCI in January, unless the sale proceeds exceed the applicable threshold (currently €1,501,530), in which case, the filing is due within one month after the sale.
Securities Law Notification
. The grant of the RSU and the Shares issued pursuant to the vesting of the RSU are considered a private placement outside of the scope of Spanish laws on public offerings and issuances of securities.
SWEDEN
There are no country-specific provisions.
SWITZERLAND
Notifications
Securities Law Notification
. The grant of the RSU is considered a private offering in Switzerland; therefore, it is not subject to registration in Switzerland. Neither this document nor any other materials relating to the RSU constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither this document nor any other materials relating to the RSU may be publicly distributed nor otherwise made publicly available in Switzerland.
TAIWAN
Notifications
Securities Law Notification
. The offer of participation in the Program is made only to employees of the Company and its Subsidiaries. The offer of participation in the Program is not a public offer of securities by a Taiwanese company.
Exchange Control Information
. The Participant may acquire and remit foreign currency (including proceeds from the sale of Shares) into Taiwan up to US$5,000,000 per year. If the transaction amount is TWD$500,000 or more in a single transaction, the Participant must submit a foreign exchange transaction form and also provide supporting documentation to the satisfaction of the remitting bank.
If the transaction amount is US$500,000 or more, the Participant may be required to provide additional supporting documentation to the satisfaction of the remitting bank. The Participant should consult his or her personal advisor to ensure compliance with applicable exchange control laws in Taiwan.
THAILAND
Notifications
Exchange Control Information
. Thai resident Participants realizing US$50,000 or more in a single transaction from the sale of Shares must immediately repatriate the proceeds from the sale of Shares to Thailand and convert the funds to Thai Baht or deposit the proceeds into a foreign currency account opened with any commercial bank in Thailand within 360 days of repatriation. If the repatriated amount is US$50,000 or more, the Participant must report the inward remittance to the Bank of Thailand on a Foreign Exchange Transaction Form.
TURKEY
Notifications
Securities Law Information.
Turkish residents are not permitted to sell Shares acquired under the Program in Turkey. The Shares are currently traded on the New York Stock Exchange, which is located outside of Turkey, under the ticker symbol “EW” and the Shares may be sold through this exchange.
Exchange Control Information.
In certain circumstances, Turkish residents are permitted to sell shares traded on a non-Turkish stock exchange only through a financial intermediary licensed in Turkey. Therefore, Turkish residents may be required to appoint a Turkish broker to assist with the sale of the Shares acquired under the Program. Turkish residents should consult their personal legal advisor before selling any Shares acquired under the Program to confirm the applicability of this requirement.
UNITED KINGDOM
Terms and Conditions
Award Payable Only in Shares
. The grant of the RSU does not provide the Participant with a right to receive a cash payment; the RSU is payable only in Shares.
Responsibility for Taxes
. The following supplements Section 13 of the Agreement:
If payment or withholding of the income tax due is not made within ninety (90) days after the end of the U.K. tax year in which the event giving rise to the liability occurs or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax liability shall constitute a loan owed by the Participant to the Employer, effective as of the Due Date. The Participant agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it will
be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 13 of the Agreement.
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the Participant shall not be eligible for a loan from the Company to cover the Tax-Related Items. In the event that the Participant is a director or executive officer and Tax-Related Items are not collected from or paid by the Participant by the Due Date, the amount of any uncollected tax liability will constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) will be payable. The Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit, which may be recovered by the Company or the Employer at any time thereafter by any of the means referred to in the Agreement.
ADDITIONAL DEFINED TERMS APPENDIX
When used in this Agreement, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:
“Cause”
shall mean the occurrence of any one or more of the following (provided that the determination of whether “Cause” exists at any time prior to the occurrence of a Change in Control shall be determined solely by the Company, in the exercise of the Company’s good faith and reasonable judgment, and any such determination shall be final and binding upon the parties):
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(a)
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A continuing material breach by the Participant of the duties and responsibilities of the Participant, which duties shall not differ in any material respect from the duties and responsibilities during the 90-day period immediately prior to a Change in Control (other than as a result of incapacity due to a physical or mental condition or illness), which breach is demonstrably willful and deliberate on the Participant’s part, is committed in bad faith and without a reasonable belief that such a breach is in the best interests of the Company; or
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(b)
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The Participant has engaged in conduct that is willfully, demonstrably and materially injurious to the Company, monetarily or otherwise; or
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(c)
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The Participant is convicted of, or pled guilty or
nolo contendere
to a felony (under the laws of the United States or any relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction) that adversely affects the reputation of the Participant or the Company;
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provided, that no act or failure to act on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.
“Change in Control”
of the Company shall mean the first to occur of any one of the following events after the Date of Grant set forth on the Statement:
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(a)
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Any “Person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (as amended) (other than the Company, any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and any trustee or other fiduciary holding securities under an employee benefit plan of the Company or such proportionately owned corporation), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or
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(b)
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During any period of not more than twenty-four (24) months, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a transaction described in (a), (c), or (d) of this definition) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or
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(c)
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The consummation of a merger or consolidation of the Company with any other entity, other than: (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty percent (60%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than thirty percent (30%) of the combined voting power of the Company’s then outstanding securities; or
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(d)
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The Company’s stockholders approve a plan of complete liquidation or dissolution of the Company, or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).
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“Good Reason”
means, without the Participant’s express written consent, the occurrence of any one or more of the following conditions during the Protected Period:
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(a)
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The assignment of the Participant to duties materially inconsistent with the Participant’s authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements) as an employee, executive and/or officer of the Company, or a material reduction or alteration in the nature or status of the Participant’s authorities, duties, or responsibilities, other than an insubstantial or inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Participant;
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(b)
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The Company’s requiring the Participant to be based at a location in excess of fifty (50) miles from the location of the Participant’s principal job location or office immediately prior to such change, except for required travel on the Company’s business to an extent substantially consistent with the Participant’s then present business travel obligations;
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(c)
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A reduction by the Company of the Participant’s base salary or base rate of compensation, as applicable; or
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(d)
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The failure of the Company to continue in effect any of the Company’s short- and long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or other compensation arrangements in which the Participant participates, unless the Participant is permitted to participate in other plans that provide the Participant with substantially comparable benefits; or the failure by the Company to continue the Participant’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of the Participant’s participation relative to other participants;
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provided, however, that any such condition shall not constitute “Good Reason” unless the following requirements are satisfied: (x) the Participant provides the Company the written notice which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination by the Participation for Good Reason within sixty (60) days following the initial existence of the event giving rise to the condition claimed to constitute “Good Reason,” (y) the Company fails to remedy such condition within thirty (30) days after receiving such notice (the “Cure Period”), and (z) the Participant resigns in writing from his or her employment, citing failure to remedy the condition giving rise to Good Reason, within thirty (30) days following the expiration of such thirty (30) day cure period.
The Participant’s right to terminate employment for Good Reason shall not be affected by the Participant’s incapacity due to physical or mental illness. The Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein.
“Protected Period”
means, with respect to a Change in Control, the period commencing the date that is six (6) months prior to the date of such Change in Control and ending on the date that is twenty four (24) months following such Change in Control.
Exhibit 10.5
Performance-Based Restricted Stock Unit Award Statement
Participant:
ID:
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Date of Grant
:
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Target Award
:
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Vesting Schedule:
The PRSU (as defined below) will vest on ____________ (the “
Vesting Date
”). The Committee (as defined below) will determine the exact number of shares issuable pursuant to the PRSU in May after the end of the Performance Period (the date of such determination, the “
Determination Date
”). The number of shares issuable upon vesting will depend upon achievement of the applicable performance goals and will range from zero percent (0%) of the Target Award to one hundred seventy five percent (175%) of the Target Award, as per the Performance Matrix below.
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Performance Period:
Three years beginning April 30, ____(30-day average price) and ending April 30, ______ (30-day average price)
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This certifies that on ___________
Edwards Lifesciences Corporation (the “
Company
”) granted to the Participant shown above a Performance-Based Restricted Stock Unit award (“
PRSU
”) to receive a number of shares of its common stock based on the target number of shares (“
Target Award
”) as indicated above upon the terms and conditions of the Long-Term Stock Incentive Compensation Program, this Statement and the attached Global Performance-Based Restricted Stock Unit Award Agreement (the “
Award Agreement
”).
The number of shares issuable pursuant to the PRSU upon vesting shall depend upon the relative performance of the Company’s Total Shareholder Return for the Performance Period when measured against the Total Shareholder Return of a subset of the companies in the S&P Healthcare Equipment Index that are also in the S&P 500 or S&P 400 Midcap indices (“
Subset
”) for the Performance Period and shall be determined in accordance with the Performance Matrix below. As used herein, “
Total Shareholder Return
” (or “
TSR
”) shall mean, as to both the Company and the companies included in the Subset, as the case may be, a comparison of the 30-day average daily closing stock price ending April 30 at the beginning and at the ending of the Performance Period. Furthermore, the Administrator shall equitably and proportionately adjust the determination of Total Shareholder Return to include the effects of any stock split, reverse stock split, stock dividend or cash dividend paid during the Performance Period. For these purposes, in the event that the common stock (or similar equity security) of a member of the Subset is not listed or traded on a national securities exchange at the end of the Performance Period, such entity shall be excluded from the Subset used to determine the Company’s relative Total Shareholder Return compared to the Total Shareholder Return of the Subset over the Performance Period. Furthermore, any company not included in the Subset on the first day of the Performance Period but added to the Subset during the Performance Period shall be excluded for such purposes, unless such company is the successor to a company that had theretofore been included in the Subset.
Performance Matrix - Target Award Earned
:
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Payout (% of target)
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Performance Goal
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Maximum
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175%
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+7.5% points from median
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Target
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100%
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Median
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Threshold
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25%
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-7.5% points from median
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The applicable percentage of the Target Award earned will be interpolated on a linear basis between the levels stated in the table above and fractional shares shall be rounded down to the nearest whole share. In all events, the maximum percentage of the Target Award that may vest is one hundred seventy five percent (175%) of the Target Award. Any shares issuable pursuant to the PRSU that do not vest based on the performance requirements set forth above (and which have not previously vested or terminated pursuant to the terms of this Statement and the Award Agreement) will automatically terminate as of the last day of the Performance Period. The number of shares issuable shall be determined by the Compensation and Governance Committee of the Board of Directors (the “Committee”) on the Determination Date, and shall be certified by the Committee at that time. The earned shares shall be issued to the Participant upon vesting, subject to the terms and conditions set forth in the Award Agreement.
Edwards Lifesciences Corporation
Michael A. Mussallem
Chairman and Chief Executive Officer
Edwards Lifesciences Corporation
Long-Term Stock Incentive Compensation Program
Global Performance-Based Restricted Stock Unit Award Agreement
THIS AGREEMENT, including any appendix for the Participant’s country (the “Appendix”) and the Performance-Based Restricted Stock Unit Statement attached to the front of this agreement (the “Statement”), sets forth the terms and conditions of the performance-based restricted stock unit award (the “PRSU”) granted by Edwards Lifesciences Corporation, a Delaware corporation (the “Company”), to the Participant named on the Statement, pursuant to the provisions of the Company’s Long-Term Stock Incentive Compensation Program (the “Program”). This agreement, the Appendix and the Statement shall be considered one agreement and are referred to herein as the “Agreement.”
The Program provides additional terms and conditions governing the PRSU and is incorporated herein by reference. If there is any inconsistency between the terms of this Agreement and the terms of the Program, the Program’s terms shall completely supersede and replace the conflicting terms of this Agreement. All capitalized terms shall have the meanings ascribed to them in the Program, unless specifically set forth otherwise herein. The parties hereto agree as follows:
1.
Grant of PRSU.
Effective as of the Date of Grant set forth in the Statement, the Company hereby grants to the Participant a PRSU award with respect to the target number of Shares set forth in the Statement (the “Target Award”) in the manner and subject to the terms and conditions of the Program and this Agreement. The grant of this PRSU to the Participant shall not confer any right to the Participant (or any other Participant) to be granted any Awards in the future under the Program.
2.
Vesting of PRSU and Issuance of Shares.
Except as may otherwise be provided in Sections 3 and 6 below, the PRSU will vest on the Vesting Date set forth in the Statement, provided the Participant continues to be employed by the Company or one of its Subsidiaries through the Vesting Date and subject to the attainment of certain performance goals set forth in the Statement. Except as expressly provided in Section 4 below, the earned Shares shall be issued to the Participant as soon as practicable (and in all events within sixty (60) days) after the Vesting Date, subject to satisfaction of all Tax-Related Items (as defined in Section 13 below) and to the provisions for U.S. taxpayers set forth in Sections 4 and 10 below.
3.
Termination of Employment:
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(a)
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By Death or Disability
. In the event that, prior to the Vesting Date set forth in the Statement, the Participant ceases to be employed by the Company or one of its Subsidiaries due to the Participant’s death or Disability, the PRSU shall remain eligible to vest on the Vesting Date (subject to the attainment of the performance goals set forth in the Statement) and, except as expressly provided in Section 6 if a Change in Control occurs during the Performance Period, the Participant shall vest in the number of Shares subject to the PRSU that would otherwise vest based on performance on the Vesting Date.
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(b)
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By Retirement
. In the event that, prior to the Vesting Date set forth in the Statement, the Participant ceases to be employed by the Company or one of its Subsidiaries due to the Participant’s retirement after attaining age fifty-five (55) and with at least ten (10) years of service with the Company or any Subsidiary (“Retirement”), the PRSU shall remain eligible to vest on the Vesting Date (subject to the attainment of the performance goals set forth in the Statement) and, except as expressly provided in Section 6 if a Change in Control occurs during the Performance Period, the Participant shall vest in a pro-rated portion of the Shares subject to the PRSU that would otherwise vest based on performance on the Vesting Date, with the pro-rated portion based on the Participant’s whole months of service with the Company or any Subsidiary during the Performance Period prior to the date of such Retirement; provided that a partial month of employment will be considered a whole “month of service” for purposes of this Agreement only if the Participant
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was employed by the Company or any Subsidiary for at least fifteen (15) days during such month. Any portion of the PRSU that remains unvested on the Vesting Date (after giving effect to such pro-ration) shall be considered to have terminated on the Vesting Date.
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(c)
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For Other Reasons
. Subject to Section 6, the entire PRSU award shall immediately terminate and be forfeited to the Company as of the date of the Participant’s termination of employment with the Company or any Subsidiary prior to the Vesting Date for any reason other than one of the reasons expressly covered by Sections 3(a) and 3(b).
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(d)
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Transfer
. For the purposes of this Agreement, a transfer of the Participant’s employment between the Company and any Subsidiary (or between Subsidiaries) shall not be deemed a termination of employment.
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4.
Issuance of Shares for RSUs Subject to Code Section 409A.
This Section 4 applies only to the extent that the Participant is a U.S. taxpayer and the RSUs are treated as deferred compensation under Code Section 409A. Except as provided in this Section 4, the Shares that vest pursuant to the terms of this Agreement will be issued on or within sixty (60) days after the Vesting Date. If this Section 4 applies, the following rules set forth in Sections 4(a) and (b) also apply notwithstanding any provision to the contrary in this Agreement.
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(a)
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Change in Control
. If this PRSU is terminated pursuant to Section 6(c) hereof in connection with a 409A Change in Control, any vested Shares hereunder shall be issued or distributed in accordance with the plan-termination rules set forth in Treasury Regulation Section 1.409A-3(j)(4)(ix) or, in the event the Company is not able to make issuance or distribution in accordance with such regulation, shall be issued or distributed on or within thirty (30) days following the Vesting Date. In the event that any issuance of vested Shares is delayed until after a 409A Change in Control, instead of the issuance of Shares, such portion of the RSU shall be settled in cash in an amount equal to the Fair Market Value of such vested Shares, determined as of the date of the 409A Change in Control.
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(b)
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Employment Taxes
. In the event the employee portion of the U.S. federal, state and local employment taxes required to be withheld by the Company (the “Employment Taxes”) becomes due in a calendar year that precedes the year in which the Vesting Date occurs, the Participant shall, on or before the last business day of the calendar year in which the Employment Taxes become due, deliver to the Company a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those Shares. Alternatively, the Company is vested with the authority, in its sole discretion, to collect the Employment Taxes from the Participant by any of the other methods authorized in Section 13 hereof.
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5.
No Fractional Shares.
In no event shall any fractional Shares subject to the PRSU be issued. Accordingly, the total number of Shares to be issued at the time this PRSU vests (if any) shall, to the extent necessary, be rounded down to the next whole Share in order to avoid the issuance of a fractional share.
6.
Change in Control.
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(a)
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Change in Control During the Performance Period
. Notwithstanding anything to the contrary in this Agreement, in the event of a Change in Control of the Company during the Performance Period, the following provisions shall apply:
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(i)
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If the Participant’s employment with the Company or any of its Subsidiaries continues through the Vesting Date, the Participant shall vest in 100% of the Target Award set forth in the Statement. Except as expressly provided below in this Section 6, the entire PRSU award shall immediately terminate and be forfeited to the Company if the Participant’s employment with the Company or any Subsidiary terminates prior to the Vesting Date.
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(ii)
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If the Participant’s employment with the Company or any Subsidiary terminates at any time prior to the Vesting Date (whether before or after the Change in Control) due to the Participant’s death or Disability, the vesting provided for in Section 3(a) shall be based on the Target Award set forth in the Statement. If the Participant’s employment with the Company or any Subsidiary terminates at any time prior to the Vesting Date (whether before or after the Change in Control) due to the Participant’s Retirement, the pro-rata
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vesting provided for in Section 3(b) shall be based on the Target Award set forth in the Statement.
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(iii)
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If, at any time during the Protected Period and prior to the Vesting Date, the Participant ceases to be employed by the Company or one of its Subsidiaries and such termination is the result of (x) a termination of employment either by the Company or such Subsidiary without Cause or by the Participant for Good Reason, and (y) the Participant is entitled to receive (and the Participant satisfies any applicable conditions for) Separation Benefits under the CIC Agreement in connection with such termination of employment, the Participant shall vest in the Target Award set forth in the Statement.
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(b)
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Change in Control After the Performance Period
. In the event of a Change in Control of the Company after the Performance Period and prior to the Vesting Date, the vesting of the PRSU shall be determined based on the attainment of the performance goals set forth in the Statement and the applicable termination of employment rules set forth in Section 3; provided, however, that if, at any time during the Protected Period and prior to the Vesting Date, the Participant ceases to be employed by the Company or one of its Subsidiaries and such termination is the result of (x) a termination of employment either by the Company or such Subsidiary without Cause or by the Participant for Good Reason, and (y) the Participant is entitled to receive (and the Participant satisfies any applicable conditions for) Separation Benefits under the CIC Agreement in connection with such termination of employment, the Participant shall vest in the number of Shares subject to the PRSU that would otherwise vest based on performance on the Vesting Date.
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(c)
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Possible Acceleration on 409A Change in Control
. Notwithstanding anything to the contrary in this Agreement or in the Program, if a 409A Change in Control occurs, the Board or the Committee may provide for either (i) the assumption, substitution or exchange of this PRSU by the acquiring or successor entity (or a parent thereof) based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Shares upon or in respect of such event, or (ii) the termination of this PRSU upon such event (in each case, after giving effect to any applicable vesting provisions herein); provided, however, that if this PRSU will terminate upon such event as provided in clause (ii) and the Participant’s employment with the Company or any of its Subsidiaries continues through such event, the vesting of the PRSU will be determined hereunder as though the Participant’s employment had continued through the Vesting Date.
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(d)
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Application of Other Agreements
.
For purposes of clarity, the accelerated vesting and any alternative timing of payment provisions provided in Article 13 of the Program and Section 2.3(e) of the CIC Agreement shall not apply to this PRSU.
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(e)
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Certain Terminations Prior to Change in Control
. If the Participant’s employment terminates prior to a Change in Control in the circumstances contemplated by Section 6(a)(iii) or Section 6(b), this PRSU shall (i) remain outstanding and unvested for a period of six (6) months following such termination of employment and, should a Change in Control occur during such six-month period, shall vest as provided in Section 6(a)(iii) or 6(b), as applicable; and (B) terminate and be forfeited at the end of such six-month period should no Change in Control occur during such six-month period.
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(f)
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Definitions
. For purposes of this Agreement and notwithstanding any to the contrary in the Program, the following definitions shall apply:
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(i)
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“409A Change in Control” means a Change in Control; provided, however, that a transaction shall not constitute a 409A Change in Control unless it is a “change in the ownership or effective control” of the Company, or a change “in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.
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(ii)
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“CIC Agreement” means the Change-in-Control Severance Agreement between the Participant and the Company as in effect on the Date of Grant and as it may thereafter be amended from time to time.
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(iii)
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The terms “Cause”, “Change in Control”, “Good Reason”, “Protected Period”, and “Separation Benefits” have the respective meanings ascribed to such terms in the CIC Agreement.
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7.
Notice of Termination.
Any termination of the Participant’s employment by the Company for Cause or by the Participant for Good Reason shall be communicated by a written notice to the other party indicating the specific termination provision in this Agreement relied upon, and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated.
8.
Restrictions on Transfer.
This PRSU may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
9.
Recapitalization.
In the event there is any change in the Company’s Shares through the declaration of stock dividends or through recapitalization resulting in stock split-ups or through merger, consolidation, exchange of Shares, or otherwise, the number and class of Shares subject to this PRSU shall be equitably adjusted by the Committee, in the manner determined in its sole discretion, to prevent dilution or enlargement of rights.
10.
Section 409A.
This Section 10 applies only to the extent that the Participant is a U.S. taxpayer. This Agreement is intended to either be exempt from or comply with the requirements of Section 409A of the Code so as not to subject the Participant to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Participant. This Agreement may be amended at any time, without the consent of any party, to avoid the application of Code Section 409A in a particular circumstance or that is necessary or desirable to satisfy any of the requirements under Code Section 409A, but the Company shall not be under any obligation to make any such amendment. Nothing in the Agreement shall provide a basis for any person to take action against the Company or any affiliate based on matters covered by Code Section 409A, including the tax treatment of any amount paid or RSU granted under the Agreement, and neither the Company nor any of its Subsidiaries or affiliates shall under any circumstances have any liability to any Participant or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under the this Agreement, including taxes, penalties or interest imposed under Code Section 409A.
11.
Beneficiary Designation.
This Section 11 applies only if the Participant resides in the U.S. The Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Agreement is to be paid in case of his or her death before he or she receives any or all such benefit. Each such designation shall revoke all prior designations by the Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Secretary of the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
12.
Rights as a Stockholder.
The Participant shall have no rights as a stockholder of the Company until the Participant has obtained an ownership interest in the Shares.
13.
Responsibility for Taxes.
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(a)
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Regardless of any action the Company or the Participant’s employer (if different) (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Program that are legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains his or her responsibility and that such liability may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this PRSU, including the grant or vesting of this PRSU, the issuance of Shares, the subsequent sale of any Shares acquired at vesting of the PRSU and the receipt of any dividends;
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and (2) do not commit and are under no obligation to structure the terms of the grant or any aspect of the PRSU to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant becomes subject to tax and/or social security contributions in more than one jurisdiction between the Date of Grant and the date of any relevant taxable, tax and/or social security contribution withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
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(b)
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Prior to any relevant taxable, tax and/or social security contribution withholding event, the Participant shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, at their sole discretion, to satisfy the obligations with respect to Tax-Related Items by one or a combination of the following: (i) withholding from the Participant’s wages or other cash compensation paid to him or her by the Company and/or the Employer or from any equivalent cash payment received upon vesting of the PRSU; or (ii) withholding from the proceeds of the sale of Shares acquired at vesting of the PRSU, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization); or (iii) withholding in Shares to be issued upon vesting of the PRSU. In the event Tax-Related Items are recovered by withholding in Shares, to avoid negative accounting treatment, the Company will withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant will be deemed to have been issued the full number of Shares subject to the vested PRSU, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Program. In the event Tax-Related Items are recovered by any of the other methods described in this Section 13, the Company or the Employer may withhold or account for Tax-Related Items by considering maximum applicable rates.
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(c)
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Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items and/or Employment Taxes that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Program that cannot be satisfied by the means described in this Section 13. The Company may refuse to issue or deliver Shares or the proceeds of the sale of Shares to the Participant if the Participant fails to comply with Participant’s obligation in connection with the Tax-Related Items and/or Employment Taxes.
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14.
Continuation of Employment.
This Agreement shall not confer upon the Participant any right to continuation of employment with the Employer, nor shall this Agreement interfere in any way with the Employer’s right to terminate the Participant’s employment at any time with or without cause.
15.
Miscellaneous.
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(a)
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This Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Program, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Program. The Committee shall have the right to impose such restrictions on any Shares acquired pursuant to this Award, as it may deem advisable for regulatory compliance, including, without limitation, restrictions under applicable U.S. federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any state or foreign securities laws applicable to such Shares. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Program and this Agreement, all of which shall be binding upon the Participant.
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(b)
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The Board may terminate, amend, suspend or modify the Program and the Committee may amend this PRSU at anytime; provided, however, that no such termination, amendment, suspension or
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modification of the Program or amendment of this Award may in any material way adversely affect the Participant’s rights under this Agreement, without the express consent of the Participant.
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(c)
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The Participant agrees to take all steps necessary to comply with all applicable provisions of U.S. federal, state and foreign securities law in exercising his or her rights under this Agreement.
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(d)
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This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
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(e)
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All obligations of the Company under the Program and this Agreement, with respect to this Award, shall, to the extent legally permissible, be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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16.
Nature of Grant.
In accepting the PRSU, the Participant acknowledges, understands and agrees that:
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(a)
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the Program is established voluntarily by the Company and is discretionary in nature;
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(b)
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the grant of the PRSU by the Company is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;
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(c)
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all decisions with respect to future Restricted Stock Units grants, if any, will be at the sole discretion of the Company;
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(d)
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the Participant is voluntarily participating in the Program;
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(e)
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the PRSU and any Shares acquired under the Program are not part of normal or expected compensation or salary;
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(f)
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unless otherwise agreed with the Company, the PRSU and any Shares acquired under the Program, and the income and value of the same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary or affiliate of the Company;
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(g)
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the PRSU grant and the Participant’s participation in the Program shall not be interpreted to form an employment contract or relationship with the Company or the Employer or any Subsidiary or affiliate of the Company;
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(h)
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the future value of the Shares subject to the PRSU is unknown and cannot be predicted with certainty;
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(i)
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for purposes of the PRSU, the Participant’s employment will be considered terminated as of the date the Participant is no longer actively providing services to the Company or the Employer (regardless of the reason for such termination and whether or not later found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise provided in this Agreement or decided by the Committee, the Participant’s right to vest in the PRSU under the Program, if any, will terminate effective as of such date and will not be extended by any notice period (e.g., active employment would not include a period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); furthermore, the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the PRSU;
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(j)
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for Participants who reside outside the U.S., the following additional provisions shall apply:
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(i)
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the PRSU and any Shares acquired under the Program are not intended to replace any pension rights or compensation;
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(ii)
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PRSU and the underlying Shares are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or to the Employer and are outside the scope of Participant’s employment agreement, if any; such items shall not be included in or part of any for any calculation of any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Employer;
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(iii)
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no claim or entitlement to compensation or damages shall arise from forfeiture of the PRSU resulting from termination of the Participant’s employment by the Company or the Employer (whether or not in breach of local labor laws) and in consideration of the grant of the PRSU to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim and releases the Company and the Employer from any such claim, if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Program, the Participant shall be deemed to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
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(iv)
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the Participant acknowledges and agrees that neither the Company, the Employer or any Subsidiary or affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the PRSU or of any amounts due to the Participant pursuant to the vesting of the PRSU or the subsequent sale of any Shares acquired upon settlement.
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17.
No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Program, or his or her acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding the Participant’s participation in the Program before taking any action related to the Program.
18.
Data Privacy Notice and Consent.
This Section 18 applies if the Participant resides outside the U.S. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement and any other grant materials, by and among, as applicable, the Employer, the Company and any Subsidiary or affiliate of the Company for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Program.
The Participant understands that the Company and the Employer hold certain personal information about him or her, including, but not limited to, his or her name, home address and telephone number, date of birth, social insurance number or other identification numbers, salary, nationality, job title, any Shares or directorships held in the Company, details of all PRSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Program (“Data”). The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Program (presently or in the future), that these recipients may be located in Participant’s country or elsewhere (e.g., the United States), and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative.
The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Participant’s participation in the Program, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Shares received upon vesting of the PRSUs may be deposited. The Participant understands that he or she is providing the consents herein on a purely voluntary basis. The Participant further understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Program. Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Participant understands, however, that refusing or withdrawing his or her consent may affect his or her ability to participate in the Program, but will not adversely affect his or her employment status or service or career with the Employer. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
19.
Severability.
The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
20.
Dispute Resolution.
The Participant shall have the right and option to elect to have any good faith dispute or controversy arising under or in connection with this Agreement settled by litigation or arbitration. If arbitration is selected, such proceeding shall be conducted by final and binding arbitration before a panel of three (3) arbitrators in accordance with the rules and under the administration of the American Arbitration Association.
21.
Governing Law and Venue.
To the extent not preempted by U.S. federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, U.S.A. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award, the Program or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of
California and agree that such litigation shall be conducted in the courts of Orange County, California, or the federal courts for the United States for the Central District of California, and no other courts, where this grant is made and/or to be performed.
22.
Language.
If the Participant has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
23.
Electronic Delivery.
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an online or electronic system established and maintained by the Company or a third party designated by the Company.
24.
Insider Trading Restrictions/Market Abuse Laws.
The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including the United States and the Participant’s country of residence (if different), which may affect his or her ability to acquire or sell Shares or rights to Shares (
e.g.
, Options) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions, including the United States and the Participant’s country of residence). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
25.
Foreign Asset/Account, Exchange Control and Tax Reporting.
The Participant acknowledges that, depending on his or her country, the Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from his or her participation in the Program, in, to and/or from a brokerage/bank account or legal entity located outside the Participant’s country. The applicable laws of the Participant’s country may require that the Participant reports such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. The Participant acknowledges that he or she is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and is advised to consult his or her personal legal advisor on this matter.
26.
Appendix.
Notwithstanding any provisions in this Agreement, the PRSU shall be subject to any special terms and conditions for the Participant’s country set forth in the Appendix. Moreover, if the Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country shall apply to the Participant, to the extent that the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate administration of the Program.
27.
I
mposition of Other Requirements.
The Company reserves the right to impose other requirements on the Participant’s participation in the Program, on the PRSU and on any Shares acquired at vesting of the PRSU, to the
extent the Company determines it is necessary or advisable to comply with local law or facilitate the administration of the Program, and to require the Participant to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.
28.
Waiver.
The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
29.
Benefit Limit.
Notwithstanding anything else contained herein or in the Program to the contrary, in the event that any payments or benefits to which the Participant becomes entitled in accordance with the provisions of this Agreement (or any other agreement with the Company) would otherwise constitute a parachute payment under Code Section 280G(b)(2), then such payments and/or benefits will be subject to reduction to the extent necessary to assure that the Participant receives only the greater of (i) the amount of those payments which would not constitute such a parachute payment or (ii) the amount which yields the Participant the greatest after-tax amount of benefits after taking into account any excise tax imposed under Code Section 4999 on the payments and benefits provided the Participant under this Agreement (or on any other payments or benefits to which the Participant may become entitled in connection with any change in control or ownership of the Company or the subsequent termination of his or her employment with the Company).
Should a reduction in benefits be required to satisfy the benefit limit of this Section 29, then the portion of any parachute payment otherwise payable in cash to the Participant shall be reduced to the extent necessary to comply with such benefit limit. Should such benefit limit still be exceeded following such reduction, then the number of shares which would otherwise vest on an accelerated basis under each of the Participant’s options or other equity awards (based on the amount of the parachute payment attributable to each such option or equity award under Code Section 280G) shall be reduced to the extent necessary to eliminate such excess, with such reduction to be made in the same chronological order in which those awards were made.
In the event there is any disagreement between the Participant and the Company as to whether one or more payments or benefits to which the Participant becomes entitled constitute a parachute payment under Code Section 280G or as to the determination of the present value thereof, such dispute will be resolved as follows:
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(a)
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In the event the Treasury Regulations under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or benefit or the method of valuation therefor, the characterization afforded to such payment or benefit by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling.
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(b)
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In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent auditors selected and paid for by the Company. The resolution reached by the independent auditors will be final and controlling; provided, however, that if in the judgment of the independent auditors, the status of the payment in dispute can be resolved through the obtainment of a private letter ruling from the Internal Revenue Service, a formal and proper request for such ruling will be prepared and submitted by the independent auditors, and the determination made by the Internal Revenue Service in the issued ruling will be controlling. All expenses incurred in connection with the preparation and submission of the ruling request shall be paid by the Company.
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(c)
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In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the present value thereof will, at the independent auditor’s election, be determined through an independent third-party appraisal, and the expenses incurred in obtaining such appraisal shall be paid by the Company.
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*
*
* *
By the Participant’s electronic acceptance of the Agreement and participation in the Program, the Participant agrees that this PRSU is granted under and governed by the terms and conditions of the Program and this Agreement, including the Appendix and the Statement.
APPENDIX
ADDITIONAL TERMS AND CONDITIONS OF THE
EDWARDS LIFESCIENCES CORPORATION
GLOBAL PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
Terms and Conditions
This Appendix includes additional terms and conditions that govern the PRSU granted to the Participant under the Program if the Participant resides in one of the non-U.S. countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Program and/or the Agreement.
Notifications
This Appendix also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to his or her participation in the Program. The information is based on the securities, exchange control and other laws in effect in the respective countries as of March 2015. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix as the only source of information relating to the consequences of his or her participation in the Program because the information may be out of date at the time that the PRSU vests or the Participant sells Shares acquired under the Program.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to his or her situation.
Finally, the Participant understands that if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working, transfers employment after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to the Participant and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.
AUSTRALIA
Terms and Conditions
Award Payable Only in Shares
. The grant of this PRSU does not provide the Participant with a right to receive a cash payment; this PRSU is payable only in Shares.
Australian Addendum
. The PRSU is subject to the terms of this Agreement, the Program, the Australian Addendum to the Program and the specific relief granted by the Australian Securities and Investment Commission under ASIC Instrument 13-0478. As a condition of the specific relief, the Participant will receive an Offer Document which sets forth certain key terms of the PRSU, as well as the risks inherent in investment in Shares and a summary of the Australian tax consequences of the PRSU.
Notifications
Securities Law Information
. If the Participant acquires Shares pursuant to the PRSU and offers the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. The Participant should obtain legal advice on disclosure obligations prior to making any such offer.
AUSTRIA
Notifications
Exchange Control Notification
. If the Participant holds Shares acquired under the Program outside of Austria (
e.g.
, in a U.S. brokerage account), a reporting obligation to the Austrian National Bank will apply. An exemption applies if the value of the securities held outside Austria as of December 31 does not exceed €5,000,000 or the value of the securities as of any quarter does not exceed €30,000,000. If the former threshold is exceeded, the annual reporting obligations are imposed, whereas if the latter threshold is exceeded, then quarterly reports must be submitted. The annual reporting date is December 31; the deadline for filing the annual report is January 31 of the following year. If the quarterly reporting is required, the reports must be filed on or before the 15th day of the month following the last day of the quarter.
If the Participant holds cash (
e.g
., dividends or proceeds from the sale of Shares) outside of Austria (
e.g
., in a U.S. brokerage or bank account), he or she will be subject to monthly reporting if the transaction volume of all cash accounts abroad is €3,000,000 or greater. In this case, transfers of cash into or out of the cash accounts and the balances of such accounts must be reported monthly, as of the last day of the month, on or before the 15th day of the following month, using the form “
Meldungen SI-Forderungen und/oder SI-Verpflichtungen
.”
BELGIUM
Notifications
Tax Compliance
. The Participant is required to report any taxable income attributable to the PRSU on the Participant’s annual tax return.
Foreign Asset and Account Reporting
. The Participant is required to report any bank accounts opened and maintained outside Belgium on the Participant’s annual tax return. In a separate report, the Participant is required to report to the National Bank of Belgium any bank accounts opened and maintained outside Belgium.
BRAZIL
Terms and Conditions
Compliance with Law
. By accepting the PRSU, the Participant agrees to comply with applicable Brazilian laws and to report and pay any and all Tax-Related Items associated with the vesting of the PRSU and the sale of Shares obtained pursuant to the PRSU.
Labor Law Acknowledgment
. By accepting the PRSU, the Participant agrees that he or she is (i) making an investment decision, (ii) the Shares will be issued to the Participant only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to the Participant.
Notifications
Foreign Asset and Account Reporting
. If the Participant holds assets and rights outside Brazil with an aggregate value equal to exceeding US$100,000, then the Participant will be required to prepare and submit to the Central Bank of Brazil an annual declaration of such assets and rights. Assets and rights that must be reported include Shares acquired under the Program. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil.
CANADA
Terms and Conditions
Termination of Employment
. This provision supplements Section 16(i) of the Agreement.
In the event of termination of his or her employment (regardless of the reason for such termination and whether or not later found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of
the Participant’s employment agreement, if any), the Participant’s right to receive any PRSU and vest under the Program, if any, will terminate effective as of (1) the date that the Participant is no longer actively employed by the Company or the Employer, or at the discretion of the Committee, (2) the date the Participant receives notice of termination of employment from the Employer, if earlier than (1), regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to statutory law, regulatory law and/or common law); the Company shall have the exclusive discretion to determine when the Participant is no longer employed for purposes of the PRSU.
Data Privacy
. The following provision will apply if the Participant is a resident of Quebec and supplements Section 18 of the Agreement:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Program. The Participant further authorizes the Company and any Subsidiary or affiliate and the Program administrator to disclose and discuss the Program with their advisors. The Participant further authorizes the Employer to record such information and to keep such information in the Participant’s employee file.
French Language Provision
. The following provision will apply if the Participant is a resident of Quebec:
The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la
rédaction en anglais de cette convention
,
ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement à la présente convention.
Notification
Securities Law Notice
.
The Participant is permitted to sell Shares acquired through the Program through the designated broker appointed under the Program, if any, provided the resale of Shares acquired under the Program takes place outside of Canada through the facilities of a stock exchange on which the shares are listed. The Company’s Shares are currently listed on the New York Stock Exchange.
CHINA
Terms and Conditions
Immediate Sale of Shares
. This provision supplements Section 2 of the Agreement:
Due to regulatory requirements in the PRC, upon the vesting and settlement of the PRSU, the Participant agrees to the immediate sale of any Shares to be issued. The Participant further agrees that the Company is authorized to instruct its designated broker to assist with the mandatory sale of such Shares (on the Participant’s behalf pursuant to this authorization), and the Participant expressly authorizes the Company’s designated broker to complete the sale of such Shares. The Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay the cash proceeds from the sale, less any brokerage fees or commissions, to the Participant in accordance with any applicable exchange control laws and regulations and provided any liability for Tax-Related Items resulting from the vesting of the PRSU has been satisfied.
Exchange Control Requirements
. Due to exchange control laws in the PRC, if the Participant is a PRC national, he or she will be required to immediately repatriate the cash proceeds from the sale of the Shares to the PRC. The Participant understands and agrees that such cash proceeds will need to be repatriated to the PRC through a special exchange control account established by the Company, a Subsidiary, or the Employer, and the Participant hereby consents and agrees that any proceeds from the sale of Shares may be transferred to such special account prior to being received by him or her.
The Participant further understands and agrees that there will be a delay between the date the Shares are sold and the date the cash proceeds are distributed to the Participant. The Participant also understands and agrees that the Company is not responsible for any currency fluctuation that may occur between the date the Shares are sold and the date the cash proceeds are distributed to the Participant.
The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.
Notifications
Foreign Asset and Account Reporting
. The Participant may be required to report to the State Administration of Foreign Exchange all details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-PRC residents. The Participant should consult with his or her personal advisor in order to ensure compliance with applicable reporting requirements.
COLOMBIA
Terms and Conditions
Labor Law Acknowledgment
. This provision supplements the acknowledgment contained in Section 16 of the Agreement:
The Participant acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the Program and related benefits do not constitute a component of his or her “salary” for any legal purpose.
CZECH REPUBLIC
Notifications
Exchange Control Information
. The Czech National Bank may require the Participant to fulfill certain notification duties in relation to the PRSU and the opening and maintenance of a foreign account. However, because exchange control regulations change frequently and without notice, the Participant should consult the Participant’s personal legal advisor prior to the vesting of the PRSU to ensure compliance with current regulations. It is the Participant’s responsibility to comply with applicable Czech exchange control laws.
DENMARK
Terms and Conditions
Nature of Grant
. This provisions supplements Section 16 of the Agreement:
By accepting the PRSU, the Participant acknowledges, understands and agrees that this grant relates to future services to be performed and is not a bonus or compensation for past services.
Notifications
Exchange Control and Tax Notification
. The Participant may hold Shares acquired under the Program in a safety-deposit account (
e.g.
, a brokerage account) either with a Danish bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, then the Participant is required to inform the Danish Tax Administration about the safety-deposit account. For this purpose, the Participant must file a Form V (Erklaering V) with the Danish Tax Administration. Both the Participant and the broker or bank must sign the Form V. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the Shares in the account. If the applicable broker or bank does not sign the Form V for any reason, the Participant is solely responsible for providing the necessary information to the Danish Tax Administration. By signing the Form V, the Participant authorizes the Danish Tax Administration to examine the account.
In addition, if the Participant opens a brokerage account or a deposit account with a U.S. bank, then because the account can hold cash, it will be treated as a deposit account. Therefore, the Participant must also file a Form K (Erklaering K) with the Danish Tax Administration. Both the Participant and the broker must sign the Form K. By signing the Form K, the broker undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the deposit account. The Danish Tax Administration may grant an exemption from the requirement for the broker or bank to sign the Form K. A request can be made as part of the Form K. If the applicable broker or bank does not sign the Form K for any reason, the Participant is solely responsible for providing the necessary information to the Danish Tax Administration. By signing the Form K, the Participant authorizes the Danish Tax Administration to examine the account.
DOMINICAN REPUBLIC
There are no country-specific provisions.
FINLAND
There are no country-specific provisions.
FRANCE
Terms and Conditions
Language Consent
. By accepting the PRSU, the Participant confirms having read and understood the Agreement and the Program, including all terms and conditions included therein, that were provided in the English language. The Participant accepts the terms of these documents accordingly.
En acceptant le PRSU, vous confirmez avoir lu et compris ce Contrat et le Program, inclutant tous leur termes et conditions, qui lui ont été transmis en langue anglaise. Vous acceptez les dispositions de ces documents en connaissance de cause.
Notifications
Foreign Asset and Account Reporting
. If the Participant holds cash or Shares outside of France, he or she must declare all foreign bank and brokerage accounts (including any accounts that were opened or closed during the tax year) on an annual basis on form No. 3916, together with their income tax return. Failure to complete this reporting triggers penalties for a French resident Participant. Further, the Participant with foreign account balances exceeding €1,000,000 may have additional monthly reporting obligations. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
GERMANY
Notifications
Exchange Control Information
. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If the Participant makes or receives a cross-border payment in excess of €12,500 (
e.g
., proceeds from the sale of Shares acquired under the Program), he or she must report the payment to the German Federal Bank electronically using the “General Statistics Reporting Portal” available via the Bank’s website (
www.bundesbank.de
).
GREECE
There are no country-specific provisions.
HONG KONG
Terms and Conditions
Form of Payment
. Notwithstanding any discretion contained in the Program, vested PRSUs shall be paid in whole Shares only.
Share Sale Restriction
. Shares received at vesting are accepted as a personal investment. In the event that the PRSU vests and Shares are issued to the Participant (or his or her heirs) within six months of the Date of Grant, the Participant (or his or her heirs) agree that the Shares will not be offered to the public or otherwise disposed of prior to the six-month anniversary of the Date of Grant.
Notifications
Securities Law Information
.
WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. The Participant is advised to exercise caution in relation to the offer. If the Participant is in any doubt about any of the contents of this document, he or she should obtain independent professional advice. Neither the grant of the PRSU nor the issuance of Shares upon vesting of the PRSU constitutes a public offering of securities under Hong Kong law and is available only to employees of the Company and its Subsidiaries. The Agreement, including this Appendix, the Program and other incidental communication materials distributed in connection with the PRSU (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, and (ii) are intended only for the personal use of each eligible employee of the Company or its Subsidiaries and may not be distributed to any other person.
Nature of Scheme
. The Company specifically intends that the Program will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
INDIA
Notifications
Exchange Control Information
. The Participant understands that he or she must repatriate any proceeds from the sale of Shares acquired under the Program to India within 90 days of receipt. The Participant will receive a foreign inward remittance certificate (“FIRC”) from the bank where the Participant deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation.
Foreign Account and Asset Reporting
. The Participant is required to declare any foreign bank accounts and assets (including Shares acquired under the Program) on his or her annual tax return. The Participant should consult with his or her personal tax advisor to ensure compliance with applicable reporting obligations.
IRELAND
Notifications
Director Notification Obligation
. If the Participant is a director, shadow director or secretary of an Irish Subsidiary of the Company, then the Participant is subject to certain notification requirements under Section 53 of the Companies Act. Among these requirements is an obligation to notify the Irish Subsidiary in writing within five (5) business days when the Participant receives an interest (
e.g.
, PRSUs, Shares) in the Company and the number and class of shares or rights to which the interest relates. In addition, the Participant must notify the Irish Subsidiary within five (5) business days when
the Participant sells Shares acquired under the Program. This notification requirement also applies to any rights or Shares acquired by the Participant’s spouse or children (under the age of 18).
ITALY
Terms and Conditions
Data Privacy
. This provision replaces in its entirety Section 18 of the Agreement:
Data Privacy Notice. The Participant understands that the Employer and/or the Company holds certain personal information about the Participant, including, but not limited to, his or her name, home address and telephone number, date of birth, national insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all PRSUs or other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in his or her favor (“Data”), for the purpose of implementing, administering and managing the Program. The Participant is aware that providing the Company with his or her Data is necessary for the performance of the Agreement and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Program.
The Controller of personal data processing is Edwards Lifesciences Corporation, One Edwards Way, Irvine, California 92614, U.S.A., and, pursuant to D.lgs 196/2003, its representative in Italy is Marianna Lupo with registered office at Edwards Lifesciences Italia SpA Via Patecchio, 4, 20141 Milan Italy. The Participant understands that Data may be transferred to third parties assisting in the implementation, administration and management of the Program, including any transfer required to a broker or other third party with whom cash from the sale of Shares acquired pursuant to this PRSU may be deposited. Furthermore, the recipients that may receive, possess, use, retain and transfer such Data for the above mentioned purposes may be located in the Participant’s country, or elsewhere, including outside of the European Union and the recipient’s country may have different data privacy laws and protections than his or her country. The processing activity, including the transfer of the Participant’s personal data abroad, out of the European Union, as herein specified and pursuant to applicable laws and regulations, does not require the Participant’s consent thereto as the processing is necessary for the performance of contractual obligations related to the implementation, administration and management of the Program. The Participant understands that Data processing relating to the purposes above specified shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to D.lgs. 196/2003.
The Participant understands that Data will be held only as long as is required by law or as necessary to implement, administer and manage his or her participation in the Program. The Participant understands that, pursuant to art 7 of D.lgs 196/2003, the Participant has the right, including but not limited to, access, delete, update, request the rectification of his or her Data and cease, for legitimate reasons, the Data processing. Furthermore, the Participant is aware that his or her Data will not be used for direct marketing purposes. In addition, the Data provided can be reviewed and questions or complaints can be addressed by contacting the Participant’s local human resources representative.
Grant Terms Acknowledgment
. By accepting the PRSU, the Participant acknowledges that the Participant has received a copy of the Program and the Agreement and has reviewed the Program and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Program and the Agreement, including this Appendix. The Participant further acknowledges having read and specifically approves the following sections of the Agreement: Section 13 (Responsibility for Taxes), Section 15 (Miscellaneous), Section 16 (Nature of Grant), Section 21 (Governing Law and Venue), Section 27 (Imposition of Other Requirements), and the Data Privacy provision contained in this Appendix.
Notifications
Foreign Asset and Account Reporting
. The Participant is required to report in the Participant’s annual tax return (on UNICO Form, RW Schedule, or on a special form if the Participant is not required to file a tax return) any investments
or assets (including Shares or proceeds from the sale of Shares acquired under the Program) held outside of Italy if the investment or asset may give rise to income in Italy.
JAPAN
Notifications
Foreign Asset and Account Reporting
. If the Participant holds assets outside of Japan with a value exceeding €50,000,000 (as of December 31 each year), he or she is required to comply annual tax reporting obligations with respect to such assets. The Participant is advised to consult with his or her personal tax advisor to ensure that he or she is properly complying with applicable reporting obligations.
KOREA
Notifications
Foreign Asset and Account Reporting
. Korean residents must declare all foreign financial accounts (
i.e
., non-Korean bank accounts, brokerage accounts, etc.) they hold in any foreign country that does not enter into an “inter-governmental agreement for automatic exchange of tax information” with Korea, to the Korean tax authority and file a report with respect to such accounts if the value of such accounts exceeds KRW 1 billion (or an equivalent amount in foreign currency) on any month-end date during a calendar year. Korean residents should consult their personal tax advisor to determine their personal reporting obligations.
MEXICO
Terms and Conditions
Labor Law Acknowledgement
. In accepting the PRSU, the Participant expressly recognizes that the Company with registered offices at One Edwards Way, Irvine, California 92614, U.S.A., is solely responsible for the administration of the Program and that his or her participation in the Program and acquisition of Shares does not constitute an employment relationship between the Participant and the Company since the Participant is participating in the Program on a wholly commercial basis and his or her sole Employer is
Edwards Lifesciences México S.A. de C.V.
(“Edwards Mexico”) with registered offices at
Av. Santa Fé 505 - Oficina 203, Col. Cruz Manca Santa Fé, Cuajimalpa, México D.F. C.P. 05349
. Based on the foregoing, the Participant expressly recognizes that the Program and the benefits that the Participant may derive from participating in the Program do not establish any rights between the Participant and the Employer, Edwards Mexico, and do not form part of the employment conditions and/or benefits provided by Edwards Mexico and any modification of the Program or its termination shall not constitute a change or impairment of the terms and conditions of his or her employment.
The Participant further understands that his or her participation in the Program is as a result of a unilateral and discretionary decision of the Company; therefore, the Company reserves the absolute right to amend and/or discontinue the Participant’s participation at any time without any liability to the Participant.
Finally, the Participant hereby declares that the Participant does not reserve any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Program or the benefits derived under the Program, and the Participant therefore grants a full and broad release to the Company, its Subsidiaries, branches, representation offices, shareholders, officers, agents or legal representatives with respect to any claim that may arise.
Reconocimiento de Ausencia de Relación Laboral y Declaración de la Política
Al aceptar el PRSU, usted expresamente recononce que la Compañía y sus oficinas registradas en One Edwards Way, Irvine, California 92614, U.S.A., es el único responsable de la administración del Program y que su participación en el mismo y la compra de Acciones no constituye de ninguna manera una relación laboral entre usted y la Compañía, toda vez que su participación en el Program deriva únicamente de una relación comercial con
Edwards Lifesciences México
S.A. de C.V.
(«Edwards México») y sus oficinas registradas en
Av. Santa Fé 505 - Oficina 203, Col. Cruz Manca Santa Fé, Cuajimalpa, México D.F. C.P. 05349
. Derivado de lo anterior, usted expresamente reconoce que el Program y los beneficios que pudieran derivar del mismo no establecen ningún derecho entre usted y su Empleador, Edwards México, y no forman parte de las condiciones laborales y/o prestaciones otorgadas por Edwards México, y expresamente usted reconoce que cualquier modificación al Program o la terminación del mismo de manera alguna podrá ser interpretada como una modificación de sus condiciones de trabajo.
Asimismo, usted entiende que su participación en el Program es el resultado de una decisión unilateral y discrecional de la Compañía, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o terminar su participación en cualquier momento, sin ninguna responsabilidad hacia usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía, por cualquier compensación o daño en relación con cualquier disposición del Program o de los beneficios derivados del mismo, y en consecuencia usted otorga un amplio y total finiquito a la Compañía, sus afiliadas, sucursales, oficinas de representación, accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.
NETHERLANDS
Terms and Conditions
Labor Law Acknowledgment
. By accepting the PRSU, the Participant acknowledges that: (i) the PRSU is intended as an incentive to remain employed with the Employer and is not intended as remuneration for labor performed; and (ii) the PRSU is not intended to replace any pension rights or compensation.
Data Privacy
. This provision replaces in its entirety Section 18 of the Agreement:
The Participant understands that the Employer, the Company and any Subsidiary or affiliate may hold certain personal information about him or her, including, without limitation, the Participant’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any shares or directorships held in the Company or Subsidiary, details of all PRSUs, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, managing and administering his or her participation in the Program.
The Participant also understands that providing the Company with the Data is necessary for the performance of the Program and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Program, but will not adversely affect his or her employment status or service or career with the Employer.
The Controller of the processing activities under the Program is Edwards Lifesciences Corporation with registered offices at One Edwards Way, Irvine, California 92614, U.S.A., and its representative in the Netherlands is Edwards Lifesciences B.V. or BMEYE BV, depending on the Participant's Employer, with registered offices at Verlengde Poolseweg 16, 4818 CL Breda, The Netherlands, and Hoogoorddreef 60, 1101 BE Amsterdam, The Netherlands, respectively.
The Participant understands that the Data will be transferred to the broker designated by the Company or such other stock plan service provider as may be selected in the future, or other third parties involved in the implementation, management and administration of the Program. These service providers only act upon the explicit instructions of the Controller and do not process the Data for any other purpose. In addition, the Company has ensured that these service providers have appropriate technical and organizational security measures in place to guarantee an adequate level of protection. Likewise, as part of the processing operations, the Company will from time to time need to make some of the Data available to judicial and regulatory authorities (including the tax authorities), and to the Company’s accountants, auditors, lawyers and other outside professional advisers, to implement, administer and manage the Participant’s participation in the Program. The Participant understands that the recipients of the Data may be located
in the United States or elsewhere and that the recipients’ country (e.g., the United States) may not have or have different data privacy laws and protection than the Participant’s country. When appropriate, the Controller will take the appropriate steps to guarantee an adequate level of protection similar to the level of protection of the Participant’s country.
The Controller will take steps to ensure the Data is accurate and up to date. From time to time the Participant will be requested to review and update the Data. The Data will only be held for as long as it is appropriate for the implementation, administration and management of the Participant’s participation in the Program. The Participant understands that he or she has the right to, without limitation, access, delete, update, correct, or block the Data processing.
In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the local human resources representative.
NEW ZEALAND
There are no country-specific provisions.
NORWAY
There are no country-specific provisions.
POLAND
Notifications
Foreign Asset and Account Reporting
. Polish residents holding foreign securities (including Shares) and/or maintaining accounts abroad must report information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts if the value of such transactions or balances (when combined with all other assets held abroad) exceeds PLN 7 million. If required, the reports are due on a quarterly basis by the 20th day following the end of each quarter. The reports are filed on special forms available on the website of the National Bank of Poland.
Exchange Control Information
. If a Polish resident transfers funds in excess of €15,000 into or out of Poland, the funds must be transferred via a Polish bank account or financial institution. Polish residents are required to retain the documents connected with a foreign exchange transaction for a period of five years measured from the end of the year in which the relevant transaction occurred.
PORTUGAL
Terms and Conditions
English Language Consent
. The Participant hereby expressly declares that he or she has full knowledge of the English language and has read, understood and fully accepts and agrees with the terms and conditions established in the Program and the Agreement.
Consentimento de Lingua Inglesa
. O beneficiário pelo presente declara expressamente que tem pleno conhecimento da língua Inglesa e que leu, compreendeu e totalmente aceitou e concordou com os termos e condições estabelecidas no Plano e no Acordo.
Notifications
Exchange Control Information
. Residents of Portugal who acquire Shares under the Program may be required to file a report with the Portuguese Central Bank for statistical purposes (unless the Participant arranges to have the Shares deposited with a Portuguese financial intermediary, in which case the intermediary will file the report).
PUERTO RICO
There are no country-specific provisions.
SINGAPORE
Notifications
Securities Law Notification
. The PRSU was granted to the Participant pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). Neither the Agreement nor the Program have been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that his or her PRSU is subject to section 257 of the SFA and the Participant will not be able to make any subsequent sale of the Shares in Singapore, or any offer of such subsequent sale of the Shares underlying the PRSU unless such sale or offer in Singapore is made (i) after six months from the Date of Grant of the PRSU, or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).
Chief Executive Officer and Director Notification
. If the Participant is the Chief Executive Officer (“CEO”) or a director, associate director or shadow director of a Singapore Subsidiary, then the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singapore Subsidiary in writing when the Participant receives an interest (
e.g
., PRSUs, Shares) in the Company or any related company. In addition, the Participant must notify the Singapore Subsidiary when the Participant sells Shares of the Company or any related company (including when the Participant sells Shares acquired under the Program). These notifications must be made within two (2) business days of acquiring or disposing of any interest in the Company or any related company. In addition, a notification must be made of the Participant’s interests in the Company or any related company within two (2) business days of becoming the CEO/a director.
SOUTH AFRICA
Terms and Conditions
Responsibility for Taxes
. The following provision supplements Section 13 of the Agreement:
By accepting the PRSU, the Participant agrees that, immediately upon vesting and settlement of the PRSU, the Participant will notify the Employer of the amount of any gain realized. If the Participant fails to advise the Employer of the gain realized upon vesting and settlement, the Participant may be liable for a fine. The Participant will be solely responsible for paying any difference between the actual tax liability and the amount withheld by the Employer.
Notifications
Exchange Control Information
. To participate in the Program, the Participant must comply with exchange control regulations and rulings in South Africa and neither the Company nor the Employer will be liable for any fines or penalties resulting from the Participant’s failure to comply with applicable laws. Because no transfer of funds from South Africa is required under the PRSU, no filing or reporting requirements should apply when the PRSU is granted or when Shares are issued upon vesting and settlement of the PRSU, nor should the PRSU or the underlying Shares count towards the ZAR4,000,000 annual offshore investment limit. However, because the exchange control regulations are subject to change, the Participant should consult the Participant’s personal advisor prior to vesting and settlement of the PRSU to ensure compliance with current regulations.
SPAIN
Terms and Conditions
Nature of Grant
. The following provision supplements Section 16 of the Agreement:
By accepting the PRSU, the Participant consents to participation in the Program and acknowledge that the Participant has received a copy of the Program.
The Participant understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant PRSUs under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world. The decision is limited and entered into based upon the express assumption and condition that any PRSUs will not economically or otherwise bind the Company or any parent, Subsidiary or affiliate, including the Employer, on an ongoing basis, other than as expressly set forth in the Agreement. Consequently, the Participant understands that the PRSU is granted on the assumption and condition that the PRSU shall not become part of any employment contract (whether with the Company or any parent, Subsidiary or affiliate, including the Employer) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. Furthermore, the Participant understands and freely accepts that there is no guarantee that any benefit whatsoever shall arise from the PRSU, which is gratuitous and discretionary, since the future value of the PRSU and the underlying Shares is unknown and unpredictable. The Participant also understands that this grant of PRSUs would not be made but for the assumptions and conditions set forth hereinabove; thus, the Participant understands, acknowledges and freely accepts that, should any or all of the assumptions be mistaken or any of the conditions not be met for any reason, then the grant of this PRSU shall be null and void.
Further, this PRSU is a conditional right to Shares and can be forfeited in the case of, or affected by, the Participant’s termination of employment. This will be the case, for example, even if (1) the Participant is considered to be unfairly dismissed without good cause (
i.e
., subject to a “despido improcedente”); (2) the Participant is dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) the Participant terminates employment due to a change of work location, duties or any other employment or contractual condition; (4) the Participant terminates employment due to unilateral breach of contract of the Company or any of its Subsidiaries; or (5) the Participant’s employment terminates for any other reason whatsoever, except for Cause. Consequently, upon termination of the Participant’s employment for any of the reasons set forth above, the Participant may automatically lose any rights to the unvested PRSU granted to the Participant as of the date of his or her termination of employment, as described in the Program and the Agreement.
Notifications
Foreign Asset and Account Reporting
. To the extent that Spanish residents hold rights or assets (
e.g.
, Shares, cash, etc.) in a bank or brokerage account outside of Spain with a value in excess of €50,000 per type of right or asset as of December 31 each year, such residents are required to report information on such rights and assets on their tax return for such year. Shares constitute securities for purposes of this requirement, but unvested rights (
e.g.
, PRSUs) are not considered assets or rights for purposes of this requirement.
If applicable, Spanish residents must report the assets or rights on Form 720 by no later than March 31 following the end of the relevant year. After such assets or rights are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported assets or rights increases by more than €20,000. Failure to comply with this reporting requirement may result in penalties.
Spanish residents are also required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities held in such accounts, if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €1,000,000.
Spanish residents should consult with their personal tax and legal advisors to ensure compliance with their personal reporting obligations.
Exchange Control Information
. The Participant must declare the acquisition of Shares to the
Dirección General de Política Comercial e Inversiones
(“
DGCI
”) of the Ministry of Economy and Competitiveness for statistical purposes. The Participant must also declare the ownership of any Shares with the Directorate of Foreign Transactions, on Form D-6, each January while the Shares are owned. In addition, the sale of Shares must be declared on Form D-6 filed with the DGCI in January, unless the sale proceeds exceed the applicable threshold (currently €1,501,530), in which case, the filing is due within one month after the sale.
Securities Law Notification
. The grant of the PRSU and the Shares issued pursuant to the vesting of the PRSU are considered a private placement outside of the scope of Spanish laws on public offerings and issuances of securities.
SWEDEN
There are no country-specific provisions.
SWITZERLAND
Notifications
Securities Law Notification
. The grant of the PRSU is considered a private offering in Switzerland; therefore, it is not subject to registration in Switzerland. Neither this document nor any other materials relating to the PRSU constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither this document nor any other materials relating to the PRSU may be publicly distributed nor otherwise made publicly available in Switzerland.
TAIWAN
Notifications
Securities Law Notification
. The offer of participation in the Program is made only to employees of the Company and its Subsidiaries. The offer of participation in the Program is not a public offer of securities by a Taiwanese company.
Exchange Control Information
. The Participant may acquire and remit foreign currency (including proceeds from the sale of Shares) into Taiwan up to US$5,000,000 per year. If the transaction amount is TWD$500,000 or more in a single transaction, the Participant must submit a foreign exchange transaction form and also provide supporting documentation to the satisfaction of the remitting bank.
If the transaction amount is US$500,000 or more, the Participant may be required to provide additional supporting documentation to the satisfaction of the remitting bank. The Participant should consult his or her personal advisor to ensure compliance with applicable exchange control laws in Taiwan.
THAILAND
Notifications
Exchange Control Information
. Thai resident Participants realizing US$50,000 or more in a single transaction from the sale of Shares must immediately repatriate the proceeds from the sale of Shares to Thailand and convert the funds to Thai Baht or deposit the proceeds into a foreign currency account opened with any commercial bank in Thailand within 360 days of repatriation. If the repatriated amount is US$50,000 or more, the Participant must report the inward remittance to the Bank of Thailand on a Foreign Exchange Transaction Form.
TURKEY
Notifications
Securities Law Information.
Turkish residents are not permitted to sell Shares acquired under the Program in Turkey. The Shares are currently traded on the New York Stock Exchange, which is located outside of Turkey, under the ticker symbol “EW” and the Shares may be sold through this exchange.
Exchange Control Information.
In certain circumstances, Turkish residents are permitted to sell shares traded on a non-Turkish stock exchange only through a financial intermediary licensed in Turkey. Therefore, Turkish residents may be required to appoint a Turkish broker to assist with the sale of the Shares acquired under the
Program. Turkish residents should consult their personal legal advisor before selling any Shares acquired under the Program to confirm the applicability of this requirement.
UNITED KINGDOM
Terms and Conditions
Award Payable Only in Shares
. The grant of the PRSU does not provide the Participant with a right to receive a cash payment; the PRSU is payable only in Shares.
Responsibility for Taxes
. The following supplements Section 13 of the Agreement:
If payment or withholding of the income tax due is not made within ninety (90) days after the end of the U.K. tax year in which the event giving rise to the liability occurs or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax liability shall constitute a loan owed by the Participant to the Employer, effective as of the Due Date. The Participant agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 13 of the Agreement.
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the Participant shall not be eligible for a loan from the Company to cover the Tax-Related Items. In the event that the Participant is a director or executive officer and Tax-Related Items are not collected from or paid by the Participant by the Due Date, the amount of any uncollected tax liability will constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) will be payable. The Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit, which may be recovered by the Company or the Employer at any time thereafter by any of the means referred to in the Agreement.
Exhibit 31.1
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Michael A. Mussallem, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Edwards Lifesciences Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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July 29, 2015
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By:
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/s/ MICHAEL A. MUSSALLEM
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Michael A. Mussallem
Chairman of the Board and
Chief Executive Officer
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Exhibit 31.2
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Scott B. Ullem, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Edwards Lifesciences Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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July 29, 2015
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By:
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/s/ SCOTT B. ULLEM
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Scott B. Ullem
Chief Financial Officer
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Exhibit 32
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Edwards Lifesciences Corporation (the "Company") on Form 10-Q for the period ended
June 30, 2015
as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Michael A. Mussallem, Chairman of the Board and Chief Executive Officer of the Company, and Scott B. Ullem, Corporate Vice President, Chief Financial Officer, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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July 29, 2015
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/s/ MICHAEL A. MUSSALLEM
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Michael A. Mussallem
Chairman of the Board and
Chief Executive Officer
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July 29, 2015
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/s/ SCOTT B. ULLEM
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Scott B. Ullem
Chief Financial Officer
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