Exhibit 10.1
United Therapeutics Corporation Supplemental
Executive Retirement Plan
(Effective
as of July 1, 2006)
Contents
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Page
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Article 1.
The Plan
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4
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1.1 Establishment of the Plan
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4
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1.2 Purpose of the Plan
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4
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1.3 Applicability of the Plan
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4
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|
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Article 2.
Definitions
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2.1 Actuarial Equivalent
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5
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2.2 Affiliate
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5
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2.3 Beneficiary
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6
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2.4 Benefit Commencement Date
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6
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2.5 Board
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7
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2.6 Change in Control
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7
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2.7 Code
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7
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2.8 Committee
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7
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2.9 Company
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7
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2.10 Compensation
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7
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2.11 Competing Product
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7
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2.12 Competing Organization
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7
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2.13 Confidential Information
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8
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2.14 Disability
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9
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2.15 Disability Retirement Date
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9
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2.16 Employer
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9
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2.17 Employment Commencement
Date
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9
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2.18 ERISA
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9
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2.19 Executive
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9
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2.20 Final Average Compensation
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9
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2.21 Normal Retirement Date
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9
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2.22 Participant
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9
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2.23 Plan
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9
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2.24 Plan Year
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10
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2.25 Social Security Benefit
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10
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2.26 Termination of Service
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10
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2.27 Years of Service
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10
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i
Article 3.
Participation
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3.1 Eligibility
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12
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3.2 Duration
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12
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Article 4. Retirement
Benefits
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4.1 Normal Retirement Benefits
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13
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4.2 Disability Retirement Benefits
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14
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4.3 Form of Payment
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15
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4.4 Change in Control
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17
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4.5 Competing Activity
Covenant
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18
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Article 5.
Preretirement Death Benefits
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5.1 Eligibility
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20
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5.2 Amount
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20
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5.3 Commencement
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20
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5.4 Form of Payment
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20
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Article 6. Financing
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6.1 Financing
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21
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6.2 Unsecured Interest
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21
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Article 7.
Administration
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7.1 Administration
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22
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7.2 Assistance
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22
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7.3 Appeals from Denial of Claims
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22
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7.4 Tax Withholding
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23
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7.5 Expenses
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23
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Article 8. Adoption
by an Affiliate; Amendment and Termination
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8.1 Adoption by an Affiliate
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24
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8.2 Amendment and Termination
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24
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Article 9.
Miscellaneous Provisions
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9.1 No Contract of Employment
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25
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9.2 Nonalienation
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25
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9.3 Severability
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25
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9.4 Applicable Law
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25
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9.5 Successors
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25
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9.6 Facility of Payment
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25
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ii
Appendix A
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Participating Executives as of July 1, 2006
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24
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iii
Article 1. The Plan
1.1 Establishment of the Plan
United
Therapeutics Corporation (the Company) hereby establishes this supplemental
retirement plan for eligible Executives of the Company and its participating
Affiliates. This plan shall be known as the United Therapeutics Corporation
Supplemental Executive Retirement Plan (the Plan).
1.2 Purpose of the Plan
The
Plan provides supplemental retirement income to selected Executives. The Plan
is intended to provide deferred compensation to a select group of management
or highly compensated employees within the meaning of ERISA section 201(2).
In addition, Plan benefits will be paid solely from the general assets of the
Company. This Plan, therefore, is intended to be exempt from the participation,
vesting, funding, and fiduciary requirements of Title I of ERISA. The Plan is
also intended to constitute a nonqualified deferred compensation plan for
purposes of Code section 3121(v)(2) and 4 U.S.C. 114.
1.3 Applicability of the Plan
This
Plan applies only to eligible Executives who are in the active employ of the
Company or a participating Affiliate on or after July 1, 2006.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings
set forth below unless otherwise expressly provided. When the defined meaning
is intended, the term is capitalized. The definition of any term in the
singular shall also include the plural, whichever is appropriate in the
context.
2.1 Actuarial Equivalent
Actuarial Equivalent means a benefit having the same value as
the benefit that it replaces, computed on the basis of
(a)
the applicable
mortality table as determined under Code section 417(e)(3)(A)(ii)(I) on
the date on which the present value is being determined; and
(b)
an
annual interest rate equal to the Moodys AA corporate bond rate, rounded to
the nearest 25 basis points, as of November 30 (or the immediately
preceding business day if November 30 is not a business day) of the
calendar year preceding the year in which the distribution is made.
2.2 Affiliate
Affiliate means
(a)
any
corporation while it is a member of the same controlled group of corporations
(within the meaning of Code section 414(b)) as the Company;
(b)
any
other trade or business (whether or not incorporated) while it is under common
control (within the meaning of Code section 414(c)) with the Company;
(c)
any
organization during any period in which it (along with the Company) is a member
of an affiliated service group (within the meaning of Code section 414(m));
or
(d)
any
other entity during any period in which it is required to be aggregated with
the Company under Code section 414(o).
2.3 Beneficiary
Beneficiary means the person or persons designated by the
Participant to receive any benefits due after his or her death under a joint
and survivor annuity option described in section 4.3(c)(2) or a
preretirement death benefit under Article 5. If a preretirement death
benefit becomes payable under Article 5, and the Participant had not
previously designated a Beneficiary (or the Beneficiary designated by the
Participant is not living at the time of his or her death), the preretirement
death benefit shall be paid to the Participants estate.
2.4 Benefit Commencement Date
Benefit Commencement Date means the date on which a
Participants retirement benefit shall commence under Article 4 or the
date on which a preretirement death benefit shall be paid under Article 5.
Except as otherwise provided under section 4.3(b), the Benefit Commencement
Date shall be determined as follows:
(a)
Normal Retirement.
For a Participant who is eligible for a
benefit under section 4.1, the Benefit Commencement Date shall be the
first day of the sixth month after the Participants Normal Retirement Date.
(b)
Disability Retirement.
For a Participant who becomes
entitled to a benefit under section 4.2, the Benefit Commencement Date
shall be the first day of the sixth month following the Participants
Disability Retirement Date.
(c)
Change in Control.
For a Participant who becomes entitled to
a benefit under section 4.4, the Benefit Commencement Date shall be as
soon as administratively practicable following a Change in Control.
(d)
Death Benefit.
For a Beneficiary who becomes entitled to a
preretirement death benefit under Article 5, the Benefit Commencement Date
shall be as soon as administratively practicable following the Participants
death.
2.5 Board
Board means the Companys Board of Directors.
2.6 Change in Control
Change in Control means any transfer of control of the
Company by acquisition, merger, hostile takeover or for any other reason
whatsoever which also qualifies as a change in the ownership or effective
control of the corporation, or in the ownership of a substantial portion of the
assets of the corporation under Code section 409A(a)(2)(A)(v).
2.7 Code
Code means the Internal Revenue Code of 1986, as amended, or
as it may be amended from time to time. A reference to a particular section of
the Code shall also be deemed to refer to the regulations under that section.
2.8 Committee
Committee means the Compensation Committee of the Board.
2.9 Company
Company means United Therapeutics Corporation, or any
successor thereto that agrees to adopt and continue this Plan.
2.10 Compensation
Compensation means the Participants gross base salary from
the Company and its Affiliates.
2.11 Competing Product
Competing Product means any product, system, or service, in
existence or under development, of any person or organization other than the Company
which is the same as, similar to, competes with, or has a usage allied to a
product, process, system, or service offered by the Company during the
three-year period preceding the Participants Termination of Service, or which
was under development by the Company at the time of the Participants
Termination of Service.
2.12 Competing Organization
Competing Organization means any person or organization which
is engaged in, or about to become engaged in, research on, or development,
production, marketing, leasing, selling, licensing, or servicing of, a
Competing Product.
2.13 Confidential Information
Confidential Information means any information of whatever
kind or form, including without limitation: an idea, invention, concept,
formula, computer program, algorithm, research, device, method, technique,
design, manufacturing process, know how, internal procedure or method of
operation, process, plan, project, picture, drawing, lists of customers,
contracts, contractors or vendors, business or financial data, plans or
accounts, pricing strategies, purchasing data and/or reports, marketing data
and/or reports, business relationships, contractual rights, lists of actual or
prospective investors, industrial or strategic partners and consultants, trade secrets,
and other proprietary information of the Company that became known to the
Participant, or was developed, examined, enhanced, or modified by the
Participant as a result of or during the course of the Participants employment
with the Company. However, Confidential Information shall not include:
(a)
information
that is or becomes known to the general public in a manner other than
disclosure by the Participant;
(b)
information
that is customarily disclosed to others without restriction on subsequent disclosure;
(c)
information
that is obtained by the Participant from a third party without an accompanying
disclosure by the Participant of Confidential Information and without
restriction on subsequent disclosure; or
(d)
information
to the limited extent that disclosure is expressly required by judicial or
administrative order, or as otherwise required by law, provided that the
Participant gives immediate notice to the Company prior to the disclosure of
such information.
2.14 Disability
Disability means any physical or mental condition that
qualifies a Participant for a disability benefit under any long-term disability
plan sponsored by the Company or an Affiliate.
2.15 Disability Retirement Date
Disability Retirement Date means the first day of the month
coinciding with or next following a Participants Termination of Service on
account of Disability.
2.16 Employer
Employer means the Company and each Affiliate that has
adopted this Plan for the benefit of its eligible Executives.
2.17 Employment Commencement Date
Employment Commencement Date means the Executives first day
of active employment with the Company or one of its Affiliates.
2.18 ERISA
ERISA means the Employee Retirement Income Security Act of
1974, as amended, or as it may be amended from time to time. A reference
to a particular section of ERISA shall also be deemed to refer to the
regulations under that section.
2.19 Executive
Executive means any individual employed by the Company or an
Affiliate at a level of vice president or above.
2.20 Final Average Compensation
Final Average Compensation means the monthly average of the
total Compensation received by the Participant over his or her last 36 months
of active employment. (However, for a Participant who transfers into a Senior
Advisor role after becoming eligible for a benefit under section 4.1(a),
Final Average Compensation shall be determined using the average of the
Compensation received by the Participant over the 36-month period immediately
preceding such transfer.)
2.21 Normal Retirement Date
Normal Retirement Date means the first day of the month
coinciding with or next following a Termination of Service which occurs on or
after the date on which the Participant reaches age 60.
2.22 Participant
Participant means an Executive who has met, and continues to
meet, the eligibility requirements under section 3.1.
2.23 Plan
Plan means this United Therapeutics Corporation Supplemental
Executive Retirement Plan, as amended from time to time.
2.24 Plan Year
Plan Year means initially the period beginning July 1,
2006 and ending December 31, 2006. Thereafter, Plan Year means the
calendar year.
2.25 Social Security Benefit
Social Security Benefit means the estimated monthly primary
insurance amount that a Participant is entitled to receive under the federal
Social Security Act commencing as of the later of the Participants Normal
Retirement Date or the first day of the month coinciding with or next following
the date on which the Participant reaches age 62. This estimated benefit shall be
determined
(a)
under
the Social Security Act in effect on January 1 of the Plan Year in which
the Participants incurs a Termination of Service (without regard to
legislative changes made after that date);
(b)
assuming
that the Participants wages before he or she commenced employment with the
Company or an Affiliate increased at a rate equal to the rate of increase in
the average national wage as reported by the Social Security Administration;
(c)
in the
case of a Participant who incurs a Termination of Service before reaching
age 62, assuming that the Participant has no wages for the period from his
or her Termination of Service to the date on which he or she reaches
age 62; and
(d)
assuming
no change in the primary insurance amount after the later of the Participants
Normal Retirement Date or the first day of the month coinciding with or next
following the date on which the Participant reaches age 62 (either by amendment
of the Social Security Act or by application of the provisions of that Act).
2.26 Termination of Service
Termination of Service means the last date on which the
Executive is compensated as an employee of the Company or an Affiliate.
In
addition, for the purpose of determining the Normal Retirement Date of a
Participant who exercises an option (on or after age 60) under an employment
agreement to resign from his or her Executive position and transfer into a Senior
Advisor role, a Termination of Service shall generally be deemed to have
occurred as of the date on which the Senior Advisor role ends. However, if such
transfer is (or becomes) a separation from service within the meaning of Code
section 409A(a)(2)(A)(i), the Participants Termination of Service shall
be deemed to have occurred as of the date on which the separation from service
has occurred.
2.27 Years of Service
Years of Service are used to determine the amount of a
Participants benefit under Article 4.
(a)
General Rule.
A Participant shall be credited with Years of
Service equal to the full years and completed months of employment with the
Company and its Affiliates beginning on the Participants Employment
Commencement Date and ending on the date on which the Participant incurs a
Termination of Service.
(b)
Leaves of Absence.
Any period during which the Participant
is on leave of absence authorized by the Committee shall be included in the
Participants Years of Service under this Plan.
(c)
Reemployment.
If an Executive incurs a Termination of
Service prior to becoming eligible for a retirement benefit under Article 4,
but is subsequently reemployed by the Company or an Affiliate, the Compensation
Committee shall determine in its sole and absolute discretion whether such
Executive shall again become a Participant hereunder and the extent to which
Years of Service earned by such Executive during his or her first period of
employment shall be reinstated if the Executive again becomes a Participant.
Article 3. Participation
3.1 Eligibility
The Executives named in
Appendix A shall become Participants in this Plan as of July 1, 2006 and
shall continue to be active Participants in this Plan until participation is
terminated under section 3.2.
Thereafter,
an Executive shall first be recommended for participation by the Companys
Chief Executive Officer and shall become a Participant on the first day of the
month coinciding with or next following the date on which he or she is
designated by the Committee as eligible to participate in this Plan.
However,
notwithstanding the above, an Executive shall not be eligible to become a
Participant (or remain a Participant) unless he or she is a member of a select
group of management or highly compensated employees within the meaning of
ERISA section 201(2).
3.2 Duration
An Executive who becomes a Participant under section 3.1
shall remain an active Participant until the earlier of
(a)
the
Executives Termination of Service;
(b)
the
Executives death; or
(c)
the date
on which the Committee declares that the Executive is no longer eligible to
participate in this Plan.
An
individual whose active participation has been terminated under this section 3.2
shall continue to be an inactive Participant until all benefits to which he or
she is entitled to under this Plan have been paid.
Article 4. Retirement Benefits
4.1 Normal Retirement Benefits
(a)
Eligibility
. A Participant who incurs a Termination of
Service on or after attaining age 60 shall be eligible for a normal
retirement benefit under this section 4.1. However, notwithstanding the
above, a Participant who exercises a right under his or her employment
agreement to transfer into a Senior Advisor role before reaching age 60 will
not be eligible for a benefit under this section 4.1.
(b)
Amount
. The normal retirement benefit calculated under this section 4.1(b) represents
the amount payable as a single life annuity commencing on the Participants
Benefit Commencement Date. However, the benefit payable under this section 4.1
shall actually be distributed to the Participant in the form determined
under section 4.3. The amount payable in the form of a single life
annuity under this section 4.1 shall be calculated as follows:
(i)
Original
Participants
. A
Participant who is listed on Appendix A, and who becomes entitled to a normal
retirement benefit under section 4.1(a), shall be entitled to a monthly
single life annuity equal to 100 percent of the Participants Final
Average Compensation reduced by the Participants Social Security Benefit.
(ii)
Future
Participants
. An
Executive who becomes a Participant after July 1, 2006, and who becomes
entitled to a normal retirement benefit under section 4.1(a), shall be
entitled to monthly single life annuity equal to:
(A)
100 percent of the Participants Final Average Compensation reduced by
the Participants Social Security Benefit; multiplied by
(B)
a fraction (not to exceed one) having
(i)
a numerator
equal to the Participants Years of Service; and
(ii)
a denominator
equal to 15.
When calculating benefits payable under this section 4.1(b),
the offset for the Social Security Benefit shall be applied only as of the
first day of the month coinciding with or next following the date on which the
Participant reaches age 62 (or the Participants actual Benefit Commencement
Date, if later).
(c)
Commencement
. Payment of benefits under this section 4.1
shall begin on the Participants Benefit Commencement Date (as determined under
section 2.4(a)). However, if a Participant incurs a Termination of
Employment after satisfying the eligibility requirements described in section 4.1(a),
and a Change in Control occurs before the Benefit Commencement Date determined
under section 2.4(a), the
Participants benefit shall be paid as soon as
administratively practicable following such Change in Control.
4.2 Disability Retirement Benefits
(a)
Eligibility
. A Participant who incurs a Termination of
Service on account of Disability before satisfying the eligibility requirements
for a normal retirement benefit under section 4.1(a) shall be
eligible for a disability retirement benefit under this section 4.2.
(b)
Amount
. The disability retirement benefit calculated under
this section 4.2(b) represents the amount payable as a single life
annuity commencing on the Participants Benefit Commencement Date. However, the
benefit payable under this section 4.2 shall actually be distributed to
the Participant in the form determined under section 4.3. The amount
payable in the form of a single life annuity under this section 4.2
shall be calculated as follows:
(1)
Original
Participants
. A
Participant who is listed on Appendix A, and who becomes entitled to a
disability retirement benefit under section 4.2(a), shall be entitled to a
monthly single life annuity equal to
(A)
100 percent of the Participants Final Average Compensation reduced
by the Participants Social Security Benefit; multiplied by
(B)
a fraction (not to exceed one) having
(i)
a numerator
equal to the Participants Years of Service as of the date on which the
Participant incurs a Termination of Service on account of Disability; and
(ii)
a denominator
equal to the Years of Service the Participant would have had if the Participant
had remained in active employment with the Company or an Affiliate from his or
her original Employment Commencement Date through the date on which the
Participant would have attained age 60.
(2)
Future
Participants
. An
Executive who becomes a Participant after July 1, 2006, and who becomes
entitled to a disability retirement benefit under section 4.2(a), shall be
entitled to a monthly single life annuity equal to
(A)
100 percent of the Participants Final Average Compensation reduced by
the Participants Social Security Benefit; multiplied by
(B)
a fraction (not to exceed one) having
(i)
a numerator
equal to the Participants Years of Service as of the date on which the
Participant incurs a Termination of Service on account of Disability; and
(ii)
a denominator
equal to the greater of (I) the Years of Service the Participant would have had
if the Participant had remained in active employment with the Company or an
Affiliate from his or her original Employment Commencement Date through the
date on which the Participant would have attained age 60 or (ii) 15.
When calculating
benefits payable under this section 4.2(b), the offset for the Social
Security Benefit shall be applied only as of the first day of the month
coinciding with or next following the date on which the Participant reaches age
62.
(c)
Commencement
. Payment of benefits under this section 4.2
shall begin on the Participants Benefit Commencement Date (as determined under
section 2.4(b)). However, if a Participant incurs a Termination of
Employment after satisfying the eligibility requirements described in section 4.2(a),
and a Change in Control occurs before the Benefit Commencement Date determined
under section 2.4(b), the Participants benefit shall be paid as soon as
administratively practicable following such Change in Control.
4.3 Form of Payment
The normal retirement benefit payable to a Participant under section 4.1,
and the disability retirement benefit payable to the participant under section 4.2,
shall be paid in the form elected by the Participant under this section 4.3.
(a)
Initial Election of a Form of Payment.
(1)
Original Participants
. A Participant who is
listed on Appendix A must make an initial election regarding the form of
payment for normal or disability retirement benefits no later than December 31,
2006. This election must be made in a manner prescribed by the Committee. If
such Participant does not make a timely election under this section 4.3(a)(1),
the Participant shall be deemed to have elected to receive his or her normal or
disability retirement benefit in the form a lump sum payment.
(2)
Future Participants
. An Executive who becomes
a Participant after July 1, 2006 must make an initial election regarding
the form of payment for normal or disability retirement benefits on or
before the date on which such Executive first becomes a Participant (or by December 31,
2006, if later). This election must be made in a manner prescribed by the
Committee. If such Participant does not make a timely election under this section 4.3(a)(2),
the Participant shall be deemed to have elected to receive his or her normal or
disability retirement benefit in the form a lump sum payment.
(b)
Subsequent Election Change
. A Participant can change the form of
payment elected (or deemed elected) under section 4.3(a) to any other
form available to the Participant under section 4.3(c). This election
can be made by the Participant at a time and in a manner prescribed by the
Committee. However, if a Participant moves
from a lump sum payment to any of the annuity options
described in section 4.3(c), or if the Participant moves from an annuity
option to a lump sum payment, such election must:
(1)
be made at least one year
in advance of the Benefit Commencement Date in effect immediately before the
new election is made; and
(2)
result in a new Benefit
Commencement Date that is at least five years after the Benefit Commencement
Date in effect immediately before the new election is made.
(The restrictions described and subsections (b)(1) and
(b)(2) above do not apply in cases where a Participant is changing his or
her payment form from one of the annuity options described in section 4.3(c)(1) or
4.3(c)(2) to another annuity option that is also described in section 4.3(c)(1) or
4.3(c)(2).)
(c)
Forms of Payment
. The payment forms available to the
Participant under this section 4.3 include the following:
(1)
Single Life
Annuity
: A single
life annuity is a monthly retirement benefit payable to the Participant for
life, with no payments made after the Participants death.
(2)
Joint and
Survivor Annuity
: A
joint and survivor annuity is a reduced monthly retirement benefit payable to
the Participant for life, with a survivor annuity payable to the Participants
Beneficiary if such Beneficiary is still living at the time of the Participants
death. The monthly amount payable to the surviving Beneficiary shall equal 50
percent, 75 percent, or 100 percent (as elected by the Participant) of the
monthly annuity amount payable during the lifetime of the Participant.
(3)
Lump Sum
: The total Plan benefit
is distributed to the Participant in the form of a single lump sum
payment.
The joint and survivor
annuity and lump sum payment options described above shall be the Actuarial
Equivalent of the single life annuity payable over the lifetime of the
Participant. In addition the Actuarial Equivalent present value of a lump sum
that becomes payable before age 60 under section 4.2 shall be calculated
on a deferred-to-age 60 basis. In all other cases, the Actuarial Equivalent
present value of a lump sum payment shall be calculated on an immediate basis.
(d)
Change in Control Overide
.
(1)
Notwithstanding anything
in this section 4.3 to the contrary, if a former Executive is entitled to
a benefit under section 4.1 or 4.2, and a Change in Control occurs before
the Benefit Commencement Date determined under
section 2.4(a) or
(b), the benefit will be distributed to
such former Executive in the form of a lump sum.
(2)
Notwithstanding anything in this section 4.3
to the contrary, if a Change in Control occurs while a former Executive is
receiving annuity payments under the Plan, the annuity payments shall cease
upon the change in control and the Actuarial Equivalent value of all remaining
annuity payments shall be paid to such former Executive in a single lump sum
value as soon as administratively practicable following such Change in Control.
4.4 Change
in Control
(a)
Eligibility
. Notwithstanding any provision in this Plan to
the contrary, a Participant will be entitled to a benefit under this section 4.4
if he or she is actively employed on the date of a Change in Control.
(b)
Amount
. The change in control benefit calculated
under this section 4.4(b) represents the amount payable as a single
life annuity commencing on the Participants Benefit Commencement Date.
However, this change in control benefit shall actually be distributed to the
Participant in the form described in section 4.4(d). This Change in
Control benefit, when expressed as a monthly single life annuity, shall equal:
(1)
100 percent of the Participants Final
Average Compensation (determined as if the Participant incurred a Termination
of Service on the Change in Control date), reduced by the Participants Social
Security Benefit (also determined as if the Participant incurred a Termination
of Service on the Change in Control date); multiplied by
(2)
a fraction (not to exceed one) having
(A)
a numerator equal to the Participants Years of Service; and
(B)
a denominator equal to 15.
When calculating
benefits payable under this section 4.4(b), the offset for the Social
Security Benefit shall be applied only as of the first day of the month
coinciding with or next following the date on which the Participant reaches age
62.
(c)
Commencement
. Payment of benefits under this section 4.4
shall begin on the Participants Benefit Commencement Date (as determined under
section 2.4(c)).
(d)
Form of Payment
.
The change in control benefit described in this section 4.4 shall be paid
in a single lump sum payment that is equal to the Actuarial Equivalent present
value of the monthly single life annuity calculated under section 4.4(b).
This present value shall be calculated on
(1)
a
deferred-to-age 60 basis if the Participant is younger than age 60 as of his or
her Benefit Commencement Date; or
(2)
an
immediate basis if the Participant is age 60 or older as of his or her Benefit
Commencement Date.
(e)
Effect on Other Benefits
. The benefit payable to a Participant who
satisfies the eligibility requirements described in this section 4.4(a) shall
be determined and paid under this section 4.4. Such Participant shall not
become entitled to any additional future benefits under section 4.1 or
4.2.
4.5 Competing Activity Covenant
(a)
General Rule.
Except as provided in section 4.5(b), a
former Participant who enters into competing activity (as defined in section 4.5(c))
with the Company or its Affiliates during the one-year period that begins on
the day following the date on which the Participant incurs a Termination of
Service shall return to the Company all payments received by the Participant
pursuant to section 4.1 or 4.2, and shall permanently forfeit the right to
any future Plan payments.
(b)
Attainment of Age 65
. The restriction related to competing
employment ceases to apply when a Participant attains age 65. As a result, section 4.5(a) does
not apply to a Participant who incurs a Termination of Service upon or after reaching
age 65. In addition, if a Participant incurs a Termination of Service after
reaching age 64, but before reaching age 65, such Participant is subject to the
restriction described in section 4.5(a) only until he or she reaches
age 65.
(c)
Competing Activity Defined
. A Participant shall be deemed to
be engaged in competing activities under this section 4.5 if he or she:
(1)
accepts employment from, or renders services
to, in any capacity whatsoever within the United States, to any Competing
Organization, or otherwise engages in any business activity in which it would
be helpful to the Participant or others with whom the Participant is
associated, to use or disclose any Confidential Information; except, however,
the Participant may accept employment with a Competing Organization
without violating this section 4.5 to the extent that the Compensation
Committee determines, in its sole and absolute discretion, that such employment
will not cause the Participant to be engaged in any way with the development,
production, marketing, or selling of a Competing Product, and would not
necessitate or benefit from the Participants use or disclosure of any
Confidential Information;
(2)
accepts employment from, or renders services
to, any Competing Organization in connection with the development, manufacture,
marketing, sale, merchandising, leasing, licensing, servicing, or promotion of
any Competing Product to any customer or potential customer of the Company with
which the
Participant
dealt personally, or with respect to which the Participant rendered services,
during his or her period of employment with the Company;
(3)
hires, attempts to hire, assists in hiring,
or causes to be hired by another person or organization any person who was an
employee of the Company at any time after the Participant first had contact
with such other person or organization (without regard to whether such contact
was initiated by the Participant) concerning the possible employment of Company
employees; and/or
(4)
identifies or furnishes any information about
any Company employee to any other person or organization for the purpose of
assisting or facilitating the hiring efforts of such other person or
organization.
Article 5. Preretirement Death Benefits
5.1 Eligibility
If a Participant dies
before his or her Benefit Commencement Date, the Participants Beneficiary
shall be entitled to the preretirement death benefit determined under this Article 5.
5.2 Amount
The preretirement death benefit calculated under this section 5.2
represents the amount payable to the Participants Beneficiary as a single life
annuity commencing on the Beneficiarys Benefit Commencement Date. However,
this preretirement death benefit shall actually be distributed to the
Participant in the form described in section 5.4 below. The single
life annuity value of this preretirement death benefit shall be determined as
follows:
(a)
Death after Qualifying for Normal Retirement.
In the case of
a Participant who dies after having met the eligibility requirements for a
normal retirement benefit under section 4.1, the Beneficiary shall be
entitled to a benefit, when expressed as a single life annuity, equal to the
survivor portion of the joint and 75 percent survivor annuity that would have
been payable to the Participant had the Participant retired and began receiving
a retirement benefit in the form of a joint and 75 percent survivor
annuity on the day before his or her death.
(b)
Death before Qualifying for Normal Retirement.
In the case
of a Participant who dies before having met the eligibility requirements for a
normal retirement benefit under section 4.1, the Beneficiary shall be
entitled to a benefit, when expressed as a single life annuity, equal to the
survivor portion of the joint and 75 percent survivor annuity that would have
been payable to the Participant had the Participant retired under section 4.2
and began receiving a disability retirement benefit in the form of a joint
and 75 percent survivor annuity on the day before his or her death.
5.3 Commencement
Payment of benefits under this section 4.1 shall begin
on the Beneficiarys Benefit Commencement Date (as determined under section 2.4(d)).
5.4 Form of Payment
The preretirement death
benefit described in this Article 5 shall be paid in a single lump sum
payment that is equal to the Actuarial Equivalent present value of the monthly
single life annuity calculated under section 5.2.
Article 6. Financing
6.1 Financing
The Plan is intended to
constitute an unfunded plan maintained for a select group of management or
highly compensated employees within the meaning of ERISA section 201(2).
The benefits under this Plan shall be paid either from general assets of the
Company, or from a trust fund whose assets would remain available to the
general creditors of the Company in the event of the Companys insolvency. The
decision whether to establish and fund such a trust shall be made by the
Committee in its sole and absolute discretion.
6.2 Unsecured Interest
No Participant or Beneficiary shall have any interest
whatsoever in any specific asset of the Company or an Affiliate. To the extent
that any person acquires a right to receive payments under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
an Employer.
Article 7. Administration
7.1 Administration
The Plan shall be
administered by the Committee. The Committee shall have all powers necessary or
appropriate to carry out the provisions of the Plan. It may, from time to time,
establish rules for the administration of the Plan and the transaction of
the Plans business.
The
Committee shall have the exclusive right to make any finding of fact necessary
or appropriate for any purpose under the Plan including, but not limited to,
the determination of eligibility for and amount of any benefit. Benefits under
this Plan shall be paid only if the Committee decides in its discretion that a
Participant or Beneficiary is entitled to them.
The
Committee shall have the exclusive right to interpret the terms and provisions
of the Plan and to determine any and all questions arising under the Plan or in
connection with its administration, including, without limitation, the right to
remedy or resolve possible ambiguities, inconsistencies, or omissions by
general rule or particular decision, all in its sole and absolute
discretion.
To
the extent permitted by law, all findings of fact, determinations,
interpretations, and decisions of the Committee shall be conclusive and binding
under all persons having or claiming to have any interest or right under the
Plan.
7.2 Assistance
The Committee may, in its sole and absolute discretion,
delegate any of its powers and duties under this Plan to one or more
individuals. In such a case, every reference in the Plan to the Committee shall
be deemed to include such individuals with respect to matters within their
jurisdiction.
7.3 Appeals from Denial of Claims
If any claim for benefits under the Plan is wholly or
partially denied, the claimant shall be given notice of the denial. The Committee
shall give this notice in writing within a reasonable period of time after
receipt of the claim. This period will not exceed 90 days after receipt of
the claim, except that if the Committee determines that special circumstances
require an extension of time, the period may be extended up to an
additional 90 days. Written notice of the extension shall be furnished to
the claimant prior to termination of the initial 90-day period, and it shall
indicate the special circumstances requiring an extension of time and the date
by which the benefit determination is expected.
Notice
of any claim denial shall be written in a manner calculated to be understood by
the claimant and shall set forth the following information:
(a)
the
specific reason or reasons for the denial;
(b)
specific
reference to pertinent Plan provisions on which the denial is based;
(c)
a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why this material or
information is necessary;
(d)
an
explanation that a full and fair review by the Committee of the decision
denying the claim may be requested by the claimant or his authorized
representative by filing with the Committee, within 60 days after such
notice has been received, a written request for review; and
(e)
a
statement of the claimants right to bring a civil action under ERISA section 502(a) following
an adverse decision upon review.
If
a claimant files a written request for review of a denied claim, the claimant
or his or her authorized representative may request, free of charge,
reasonable access to and copies of all documents, records, and other
information relevant to the claim and may submit written comments,
documents, records, and other information relevant to the claim within the 60-day
period specified in subsection (d) above. The notice of claim denial
shall include a statement of the claimants rights to review and submit
information pursuant to this paragraph.
The
review by the Committee shall take into account all comments, documents,
records, and other information submitted by the claimant relating to the claim
without regard to whether such material was submitted or considered as part of
the initial determination. The decision of the Committee upon review shall be
made promptly, and not later than 60 days after the Committees receipt of
the request for review. However, if the Committee determines that special
circumstances require an extension of time, this period may be extended up
to an additional 60 days. Written notice of the extension shall be
furnished to the claimant prior to termination of the initial 60-day period,
and it shall indicate the special circumstances requiring an extension of time
and the date by which the decision on review is expected.
If
the claim is denied, wholly or in part, the claimant shall be given a copy of
the decision promptly. The decision shall be in writing and shall be written in
a manner calculated to be understood by the claimant. The decision shall
include specific reasons for the denial; specific references to the pertinent
Plan provisions on which the denial is based; a statement that the claimant may request,
free of charge, reasonable access to and copies of all documents, records, and
other information relevant to the claim; and a statement of the claimants
right to bring a civil action under ERISA section 502(a).
7.4 Tax Withholding
The Company may withhold from any payment under this
Plan any federal, state, or local taxes required by law to be withheld with
respect to the payment and any sum the Company may reasonably estimate as
necessary to cover any taxes for which they may be liable and that may be
assessed with regard to the payment. Employment taxes with respect to amounts
deferred hereunder shall be payable in accordance with Code section 3121(v)(2) and
may be withheld from a Participants compensation if due prior to the time
of a distribution hereunder.
7.5 Expenses
The Company shall pay all expenses incurred in the
administration of the Plan.
Article 8. Adoption by an Affiliate; Amendment and Termination
8.1 Adoption by an Affiliate
An Affiliate may adopt the Plan by action of its board
of directors or authorized officers or representatives, subject to the approval
of the Committee.
8.2 Amendment and Termination
The Company hereby reserves the right to amend, modify, or
terminate the Plan at any time, and for any reason; provided that no such
amendment, modification or termination may reduce a Participants benefit
that accrued before the date of such amendment, modification, or termination.
Any such amendment, modification, or termination must be approved and adopted
by the Committee.
After
a Change in Control, any Plan termination or material modification or amendment
shall require the consent of a majority of the Participants, with weighted
voting based on their relative accrued benefits. Any other provision of this
Plan to the contrary notwithstanding, the Plan may be amended by the
Company at any time, and retroactively if required to the extent that, in the
opinion of the Company, such amendment shall be necessary in order to ensure
that the Plan will be characterized as a plan maintained for a select group of
management or highly compensated employees, as described in ERISA sections 201(2),
301(a)(3) and 401(a)(1), or to conform the Plan to the requirements
of any applicable law, including without limitation ERISA and the Code. No such
amendment shall be impermissible even if it reduces the amount of the
Participants accrued benefit.
Notwithstanding
any other provision hereof, the Plan shall be administered in a manner
consistent with the requirements of Code section 409A. In addition, if any
provision of this Plan would cause Participants to incur any additional tax or
interest under Code section 409A or any regulations or Treasury guidance
promulgated thereunder, the Company may reform such provision to
maintain to the maximum extent practicable the original intent of the
applicable provision without violating the provisions of Code section 409A.
Article 9. Miscellaneous Provisions
9.1 No Contract of Employment
Nothing contained in the
Plan shall be construed to give any Executive the right to be retained in the
service of the Company or an Affiliate or to interfere with the right of the
Company or an Affiliate to discharge an Executive at any time.
9.2 Nonalienation
No benefit payable under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge. Any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge shall be void. Benefits shall not be in any
manner subject to the debts, contracts, liabilities, engagements, or torts of,
or claims against, any Participant or Beneficiary, including claims of
creditors, claims for alimony or support, and any other like or unlike claims;
provided, however, that a qualified domestic relations order may assign
benefits to a former spouse of a Participant.
9.3 Severability
If any provisions of this Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect its remaining parts. The
Plan shall be construed and enforced as if it did not contain the illegal or
invalid provision.
9.4 Applicable Law
Except to the extent preempted by applicable federal law,
this Plan shall be governed by and construed in accordance with the laws of the
State of Maryland.
9.5 Successors
The provisions of
this Plan shall bind and inure to the benefit of the Company and its successors
and assigns and the Participants and the Participants Beneficiaries.
9.6 Facility of Payment
If a distribution is
to be made to a minor, or to a person who is otherwise incompetent, then the
Committee may, in its discretion, make such distribution (a) to the legal
guardian, or if none, to a parent of a minor payee with whom the payee
maintains his or her residence, or (b) to the conservator or committee or,
if none, to the person having custody of an incompetent payee. Any such
distribution shall fully discharge the Committee, the Company and Plan from
further liability on account thereof.
In
Witness Whereof,
the authorized officers of the Company have signed this document on May 3,
2006, but effective as of July 1, 2006.
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United
Therapeutics Corporation
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Attest:
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By
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/s/ Roger Jeffs, Ph.D.
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President & COO
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By
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/s/ Paul Mahon
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Secretary
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Appendix A.
Participating Executives as of July 1, 2006
Executive
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Employment
Commencement Date
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Martine
Rothblatt
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September 1,
1997
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Roger
Jeffs
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September 15,
1998
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Fred
Hadeed
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January 31,
2000
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Paul
Mahon
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June 16,
2001
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[Two other officers are designated to participate]
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