As filed with the Securities and Exchange Commission
on February 15, 2024
Registration No. 333-250207
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Novartis AG
(Exact name of registrant as specified in its charter)
Switzerland | |
N/A |
(State or other jurisdiction of incorporation or organization) | |
(I.R.S. Employer Identification No.) |
Lichtstrasse 35
CH-4056 Basel, Switzerland
(Address of principal executive offices)
Novartis AG Long Term Incentive Plan
Novartis AG Deferred Share Bonus Plan
Novartis Corporation 2011 Stock Incentive Plan
for North American Employees
(Full title of the plan)
Karen L. Hale
Chief Legal Officer
Novartis AG
Lichtstrasse 35
CH-4056 Basel, Switzerland
(Name and address of agent for service)
+41 61 324 1111
(Telephone number, including area code, of agent
for service)
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x |
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Accelerated filer ¨ |
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Non-accelerated
filer ¨ |
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Smaller reporting company ¨ |
Emerging
growth company ¨
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨
EXPLANATORY NOTE
This
Post-Effective Amendment No. 3 (the “Post-Effective Amendment”) to the Registration Statement on Form S-8, File No. 333-250207 (the “Registration Statement”) is filed by Novartis AG for the purpose of filing:
(i) the Novartis AG Long Term Incentive Plan, adopted on January 22, 2014, and amended and restated effective January 1,
2024, as Exhibit 4.5 to the Registration Statement; (ii) the Novartis AG Deferred Share Bonus Plan, adopted on January 22,
2014, and amended and restated effective January 1, 2024, as Exhibit 4.6 to the Registration Statement; and (iii) the Novartis
Corporation 2011 Stock Incentive Plan for North American Employees, adopted on November 11, 2010, and amended and restated effective
January 1, 2024 as Exhibit 4.7 to the Registration Statement. No additional securities are being registered. All items have
been omitted from the Post-Effective Amendment other than the facing page, this explanatory note, Item 8, the signature page, Exhibit 4.5, Exhibit 4.6 and Exhibit 4.7.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Exhibit
Number |
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Exhibit |
4.1 |
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Articles of Incorporation of Novartis AG, as amended September 15, 2023 (English translation) (incorporated by reference to Exhibit 1.1 to the Annual Report of Novartis AG on Form 20-F (File No. 001-15024) as filed with the Commission on January 31, 2024). |
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4.2 |
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Regulations of the Board of Directors, the Board Committees and the Executive Committee of Novartis AG, effective March 7, 2023 (incorporated by reference to Exhibit 4.2 to Amendment No. 2 to Novartis AG’s registration statement on Form S-8 (File No. 333-250207) as filed with the Commission on March 23, 2023). |
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4.3 |
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Form of Second Amended and Restated Deposit Agreement among Novartis AG, JPMorgan Chase Bank, N.A., as depositary, and all Holders and Beneficial Owners from time to time of American Depositary Receipts (“ADRs”) issued thereunder, including the Form of ADR attached as Exhibit A thereto (incorporated by reference to Exhibit (a) to Novartis AG’s registration statement on Form F-6 (File No. 333-198623) as filed with the Commission on December 16, 2022) |
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4.4 |
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Form of American Depositary Receipt (included as Exhibit A to Exhibit 4.3) |
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4.5* |
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Novartis AG Long Term Incentive Plan, adopted on January 22, 2014, and amended and restated effective January 1, 2024 |
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4.6* |
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Novartis
AG Deferred Share Bonus Plan, adopted on January 22, 2014, and amended and restated effective January 1, 2024 |
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4.7* |
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Novartis
Corporation 2011 Stock Incentive Plan for North American Employees, adopted on November 11, 2010, and amended and restated effective
January 1, 2024 |
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5.1 |
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Opinion of Bär & Karrer AG (incorporated by reference to Exhibit 5.1 to Novartis AG’s registration statement on Form S-8 (File No. 333-250207) as filed with the Commission on November 19, 2020) |
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23.1 |
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Consent of Independent Auditors - PricewaterhouseCoopers AG (incorporated by reference to Exhibit 23.1 to Novartis AG’s registration statement on Form S-8 (File No. 333-250207) as filed with the Commission on November 19, 2020) |
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24 |
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Powers of Attorney (incorporated by reference to the signature page of Novartis AG’s registration statement on Form S-8 (File No. 333-250207) as filed with the Commission on November 19, 2020) |
* Filed herewith.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Post-Effective Amendment No. 3 to the Registration Statement on Form S-8
(File No. 333-250207) to be signed on its behalf by the undersigned, thereunto duly authorized, in Basel, Switzerland on February 15,
2024.
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NOVARTIS AG |
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By: |
/s/ Christian Rehm |
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Name: |
Christian Rhem |
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Title: |
Authorized Signatory |
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By: |
/s/ Daniel Weiss |
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Name: |
Daniel Weiss |
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Title: |
Authorized Signatory |
Pursuant to the requirements
of the Securities Act of 1933, this Post-Effective Amendment No. 3 to the Registration Statement on Form S-8 (File No. 333-250207)
has been signed by the following persons in the capacities indicated on February 15, 2024.
SIGNATURE |
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TITLE |
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* |
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Chief Executive Officer |
Vasant Narasimhan, M.D. |
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(principal executive officer) |
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* |
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Chief Financial Officer |
Harry Kirsch |
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(principal financial and accounting officer) |
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* |
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Chair of the Board of Directors |
Joerg Reinhardt, Ph.D. |
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* |
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Vice-Chair of the Board of Directors |
Simon Moroney, D.Phil. |
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* |
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Director |
Nancy C. Andrews, M.D. Ph.D. |
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* |
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Director |
Ton Buechner |
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* |
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Director |
Patrice Bula |
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* |
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Director |
Elizabeth Doherty |
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* |
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Director |
Bridgette Heller |
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* |
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Director |
Frans van Houten |
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SIGNATURE |
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TITLE |
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* |
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Director |
Charles L. Sawyers, M.D. |
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* |
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Director |
William T. Winters |
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*By: |
/s/ Christian Rehm |
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Christian Rehm |
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As Attorney-In-Fact |
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AUTHORIZED REPRESENTATIVE
Pursuant to the requirements
of the Securities Act of 1933, the undersigned certifies that it is the duly authorized United States representative of the Registrant
and has duly caused this Post-Effective Amendment No. 3 to Registration Statement on Form S-8 (File No. 333-250207) to
be signed on its behalf by the undersigned, thereunto duly authorized, in East Hanover, New Jersey on February 15, 2024.
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/s/ Jaime Huertas |
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Jaime Huertas |
Exhibit 4.5
Novartis AG
Long Term Incentive Plan
Adopted by the Board of Directors on January 22,
2014 and amended thereafter with latest adjustments made on December 13, 2023 with effect in relation to awards made on or after
January 1, 2024.
Contents
NOVARTIS AG LONG TERM INCENTIVE PLAN |
3 |
|
|
1. |
PURPOSE OF THE PLAN |
3 |
2. |
GRANTING OF AWARDS |
3 |
3. |
DIVIDENDS AND DIVIDEND EQUIVALENTS |
5 |
4. |
VESTING OF AWARDS |
6 |
5. |
LAPSE OR FORFEITURE OF AWARDS |
8 |
6. |
CESSATION OF EMPLOYMENT |
8 |
7. |
CORPORATE EVENTS |
10 |
8. |
PARTICIPANT RIGHTS AND OBLIGATIONS |
11 |
9. |
CLAWBACK |
11 |
10. |
TAX, SOCIAL SECURITY AND OTHER CHARGES |
12 |
11. |
TRANSFER OF AWARDS |
12 |
12. |
COMPANY DOCUMENTS |
13 |
13. |
BOARD’S POWERS |
13 |
14. |
ADMINISTRATION AND REGULATIONS |
13 |
15. |
AWARDS NOT PENSIONABLE ETC. |
13 |
16. |
NOTICES |
13 |
17. |
DATA PROTECTION |
14 |
18. |
AMENDMENT AND TERMINATION OF THE PLAN |
14 |
19. |
COMPLIANCE WITH LAW AND ARTICLES OF INCORPORATION |
14 |
20. |
APPLICABLE LAW |
15 |
21. |
DEFINITIONS AND INTERPRETATION |
15 |
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SCHEDULE A NOVARTIS COMPETITORS |
20 |
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SCHEDULE 1 LONG TERM PERFORMANCE PLAN |
21 |
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1. |
APPLICATION OF THE SCHEDULE |
21 |
2. |
PERFORMANCE PERIOD |
21 |
3. |
PERFORMANCE CONDITIONS |
21 |
4. |
CESSATION OF EMPLOYMENT |
22 |
5. |
AMENDMENTS |
23 |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
SCHEDULE 2 PARTICIPANTS WHO ARE OR BECOME MEMBERS OF THE ECN |
24 |
|
|
1. |
APPLICATION OF THIS SCHEDULE |
24 |
2. |
DEFINITIONS |
24 |
3. |
PERFORMANCE CONDITIONS AND ECN LTPP AWARDS VESTING |
24 |
4. |
BLOCKING RESTRICTIONS |
25 |
5. |
CESSATION OF EMPLOYMENT – INTRODUCTION |
25 |
6. |
CESSATION OF EMPLOYMENT AS A RESULT OF RETIREMENT |
26 |
7. |
CORPORATE EVENTS |
27 |
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SCHEDULE 3 UNITED STATES |
28 |
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1. |
APPLICATION OF THIS SCHEDULE |
28 |
2. |
GRANT OF AWARDS – SHARES SUBJECT TO THE PLAN |
28 |
3. |
DEFINITIONS |
28 |
4. |
STOCK APPRECIATION RIGHTS |
28 |
5. |
CONSEQUENCES OF VESTING – RESTRICTED STOCK UNITS |
29 |
6. |
CORPORATE EVENTS |
30 |
7. |
CODE SECTION 409A |
30 |
8. |
US EXECUTIVE FINANCIAL RECOUPMENT PROGRAM |
31 |
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SCHEDULE 4 SELECT PLAN 2024 |
31 |
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1. |
APPLICATION OF THE SCHEDULE |
31 |
2. |
PURPOSE |
31 |
3. |
PARTICIPANTS |
31 |
4. |
VESTING AND OTHER CONDITIONS |
31 |
5. |
DEFINITIONS |
32 |
6. |
CESSATION OF EMPLOYMENT |
32 |
7. |
US SELLING RESTRICTIONS |
33 |
8. |
APPENDICES TO THE SELECT PLAN |
33 |
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APPENDIX 1 NOVARTIS SELECT PLAN SWITZERLAND |
34 |
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1. |
SELECT SWITZERLAND |
34 |
2. |
SELECT CHOICES SWITZERLAND |
34 |
3. |
CESSATION OF EMPLOYMENT |
34 |
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SCHEDULE 5 NOVARTIS LAUNCH LEADER PLAN |
35 |
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1. |
APPLICATION OF THE SCHEDULE |
35 |
2. |
ELIGIBLE PARTICIPANTS |
35 |
3. |
AWARD SIZE |
35 |
4. |
VESTING AND OTHER CONDITIONS |
35 |
5. |
DIVIDENDS AND DIVIDEND EQUIVALENTS |
36 |
6. |
CESSATION OF EMPLOYMENT |
36 |
7. |
DEFINITIONS |
37 |
8. |
AMENDMENTS |
37 |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
NOVARTIS AG LONG TERM INCENTIVE PLAN
1. PURPOSE
OF THE PLAN
The purpose of the Plan is to enhance the alignment
of the Participants in the Plan with the interests of the Company and its shareholders and to foster long term value creation.
The Rules govern the grant of Awards under
the Plan and any sub-plan of the Plan, including the Long Term Performance Plan, the Business Unit Performance Plan, Select 2015 and other
forms of long term incentive awards (including special, off cycle and ad hoc awards).
2. GRANTING
OF AWARDS
2.1 Selection
of Participants
The Board may select any Eligible Employee to be granted an Award.
2.2 Timing
of Awards
Subject to any Dealing Restrictions which prevent
Awards being granted, the Board may grant Awards at any time during a Grant Period.
2.3 Decisions
relating to Awards
In respect of any Award (whether Restricted Stock,
Restricted Stock Units, SARs or other form of award) the Board will determine:
| (a) | the type of Award to be granted; |
| (b) | where relevant, whether the Award is in respect of Shares or ADIs; |
| (c) | if the Award is a SAR, the base value from which the growth in value is to be measured; |
| (d) | if the Award does not comprise Restricted Stock, Restricted Stock Units or SARs, the form and terms and
conditions of any such Award; |
| (e) | subject to Rule 2.4, the minimum, target and maximum number of Shares or ADIs to be subject or linked
to the Award; |
| (f) | the Vesting Date or Vesting Dates; |
| (g) | whether the Award is subject to Performance Conditions and, if so, the terms of such Performance Conditions
(including the applicable Performance Period); |
| (h) | whether the Award (or Shares or other rights comprising the Award) is subject to any holding or blocking
period and if so the terms of any such period; |
| (i) | whether or not the Award will carry Dividend Equivalents and, if so, the form of such Dividend Equivalents; |
| (j) | whether the Participant is required to sell sufficient Shares to meet Taxation; and |
| (k) | which, if any, Schedules to the Plan will apply to the Award. |
2.4 Determining
the number of Shares or ADIs subject to an Award
In order to determine the minimum, target and maximum number of Shares
or ADIs subject to or linked to an Award, the Board shall:
| (a) | divide the relevant percentage of salary (as determined by the Board) expressed as a cash sum by the Market
Value of a Share or ADI (as appropriate) as at the date immediately preceding the Grant Date and then, where necessary, round up to the
nearest whole Share or ADI; or |
(b) apply
such other method as the Board may determine from time to time.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
2.5 Change
of Performance Conditions
Notwithstanding Rule 18 (amendment and termination
of the Plan), the Board may change a Performance Condition applicable to an outstanding Award if there are circumstances which cause the
Board to consider that an altered performance condition would be a fairer measure of performance. Any such altered Performance Condition
must be, in all material respects, no easier and no harder to satisfy than the original Performance Condition.
2.6 Award
documentation
Each Award as such will be granted by resolution
of the Board and subsequently legally offered by the respective Employer of the Eligible Employee.
Each Participant shall receive a notice of the
grant of an Award (either electronically or in hard copy) in such form as the Board shall determine from time to time.
In relation to any Award the Participant is required
to accept the grant of the Award to him by providing such acceptance via the service provider’s online interface (or in such form
as the Board shall determine from time to time) as well as, if required, complete and update the CRS FACTA documentation via the service
provider’s online interface at the latest within 6 months after he received the notice of the grant of the Award. The Board may
determine that the Participant will be reminded of these prerequisites for participation in the Plan. If a Participant does not provide
such acceptance and/or CRS FATCA documentation in time (and, if any, after reminders), any Awards granted shall lapse or, in the case
of Restricted Stock, the Shares under that Award shall be forfeited without compensation, unless the Board determines otherwise.
Alternatively, the Board may determine that a
Participant who receives an Award is deemed (as of the time of receipt) to have accepted the grant and agreed to the Rules (including
applicable Schedules) and the terms set out in the notice of the grant of the Award. If this is the case, a Participant may reject his
Award within 14 days of receiving the notice of grant of that Award (or such longer period as the Board permits or is otherwise required
by law). If a Participant does so reject his Award, then immediately on such rejection that Award shall lapse or, in the case of Restricted
Stock, the Shares under that Award shall be forfeited.
2.7 Schedules
to the Plan
The Board may establish such schedules to the
Rules as it considers necessary or appropriate. Such schedules may be included in the Plan in such a way that they create special
rules applicable to certain Eligible Employees or categories of Eligible Employees and/or to constitute sub-plans to the Plan for
Eligible Employees inside and outside Switzerland.
2.8 Policies
etc.
Awards shall be subject to all applicable policies
and procedures adopted by the Company from time to time, including without limitation the policies entitled “Policy for the treatment
of awards in the event of a new hire, modified target, assignment or transfer within the Company” and “Policy for the
grant of equity awards under the Novartis AG Long Term Incentive Plan in circumstances where an employee may leave the Company or has
received an unsatisfactory performance or behaviour assessment”.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
2.9 Delegations
The Board decided to delegate the following powers
with regard the Plan, to the Employer, who decides after consultation with the Global Rewards &/or Global Legal teams at their
discretion:
| (a) | with reference to section 5 (Lapse of forfeiture of awards); |
| (b) | with reference to section 6.6 (Cessation of employment as a result of death or Disability) for the assessment
of the performance condition if any; and |
| (c) | with reference to section 9 (Clawback). |
The Board decided to delegate the implementation
and execution of the Plan, including making non-material changes to the Rules themselves, to the Global Rewards &/or Global
Legal teams.
3. DIVIDENDS
AND DIVIDEND EQUIVALENTS
3.1 Restricted
Stock Units and SARs
A Participant holding an Award of Restricted Stock
Units or SARs shall not be entitled to vote, to receive dividends or to have any other rights of a shareholder in respect of such an Award
unless and until the Shares comprising the Award are transferred to or acquired by the Participant.
3.2 Restricted
Stock
The Board in relation to an Award of Restricted
Stock may determine that the Participant must agree to surrender or waive any right to vote, receive dividends or any other rights of
a shareholder in respect of such Award.
3.3 Dividend
Equivalents
If the Board determines that an Award carries Dividend Equivalents:
| (a) | unless the Board decides otherwise, the number of Shares (or notional Shares if the Award is a SAR) subject
to the Award will be increased by the number of Shares which could have been acquired by the reinvestment in the purchase of Shares (at
the market value of a Share on each relevant dividend payment date) of dividends payable between the Grant Date and the Vesting Date on
that number of Shares (or notional Shares) subject to the Award that Vests; |
| (b) | if the Board decides that Dividend Equivalents would not be on a notional reinvestment basis as described
in Rule 3.3(a), as soon as practicable after the time an Award vests in full (and Shares are transferred or acquired or cash is paid
to the Participant) the Company (or the Participant’s Employer) shall pay to the Participant (in cash or Shares) (subject to all
applicable tax and social security deductions) an amount equal to the aggregate dividends which would have been paid on the Award (including
in respect of notional Shares for Awards that are SARs) between the Grant Date and the Vesting Date; or |
| (c) | the Board may decide that the Dividend Equivalents may be calculated on any other basis. |
For the avoidance of doubt, the amount of a dividend, for these purposes
is the amount of the gross dividend before taxes.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
For the purposes of this Rule 3, “market
value” shall be determined by the Board on each relevant occasion.
Unless otherwise determined by the Board at any
time or times, a Participant is not entitled to receive Dividend Equivalents with respect to the time period between the Vesting Date
and the date that the relevant Shares are transferred to or acquired by him or payment in respect of the Award is made.
4. VESTING
OF AWARDS
4.1 General
Vesting of Awards under the Plan, transfer of
Shares or ADIs or payment of cash is subject to any Rules or law that may require otherwise, including Rule 4.6 (dealing restrictions),
Rule 4.8 (delivery of Shares or ADIs to a deposit account), Rule 5 (lapse or forfeiture of Awards) and Rule 9 (clawback).
The Board shall determine the number of Shares
(or amount of cash in respect of a SAR) comprising an Award that shall Vest on any particular day or days. Furthermore, the Board shall
confirm the Performance Condition as satisfied and the appropriate performance payout factor, if there is any applicable.
4.2 Normal
Vesting
Subject to satisfying applicable Performance Conditions
to which the Award is subject and the exceptions set out in the Rules, an Award shall Vest on the Vesting Date (or, if there is more than
one Vesting Date, as to the relevant number of Shares or relevant cash entitlement in the case of SARs on each Vesting Date).
As soon as administratively possible, the Vested
Award(s) will be visible to the Participant via the service provider’s online interface. For the avoidance of doubt, this may
be some time after the actual Vesting Date.
4.3 Consequences
of Vesting – Restricted Stock Units
As soon as administratively practicable and legally
possible after the Vesting and subject to the Board’s confirmation of the satisfaction of the Performance Condition and the appropriate
performance payout factor, if there is any applicable, the Company shall transfer the number of Shares (or pay or procure to be paid a
cash sum if the Board has determined that the RSU is to be settled in cash) in respect of which the Award has Vested to the Participant.
4.4 Consequences
of Vesting – Restricted Stock
As soon as administratively practicable after
the Vesting, the restrictions applicable to the relevant Restricted Stock under the Plan shall cease to apply to the extent such Restricted
Stock Vests.
4.5 Consequences
of Vesting – SARs
As soon as administratively practicable and
legally possible after the Vesting and subject to the Board’s confirmation of the satisfaction of the Performance Condition
and the appropriate performance payout factor, if there is any applicable, the Company or the Participant’s Employer shall pay
to the Participant a sum equal to growth in the market value (as determined by the Board) of the number of Vested notional Shares
comprising each SAR.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
4.6 Dealing
Restrictions
If the Vesting of an Award is prevented on any
date by a Dealing Restriction, the Award shall Vest on the first day it is not so prevented.
If the transfer of Shares or ADIs (or payment
of cash) on or following Vesting is prevented by a Dealing Restriction, the period for such transfer or payment shall start from the first
date on which it is no longer so prevented.
Shares received by a Participant on or following
Vesting may be subject to Dealing Restrictions. Subject to any such restrictions, a Participant may sell (or may be required to do so)
a sufficient number of such Shares to meet Taxation (as defined in Rule 10 (tax, social security and other charges)).
4.7 Fractional
entitlements
Any fractional number of Shares which arises for
any reason under the Plan shall be aggregated as at the Vesting Date and rounded up to the nearest whole Share (or, in the case of a SAR,
notional Share), unless the Board determines otherwise.
4.8 Delivery
of Shares or ADIs to a deposit account
Subject to Board determination otherwise, all
Shares and ADIs transferred to Participants under the Plan shall be transferred to and registered in one single securities account (Securities
Deposit Account) held in trust by such service provider as is nominated from time to time by the Company.
If a Participant Ceases Employment, the Participant
must dispose of or, if possible, transfer from the Securities Deposit Account to a private securities account all of the Shares or ADIs
managed by the service provider within the period of three months. If that is not done, the service provider will sell all of the Shares
at market value without delay on behalf of the Participant or the Participant’s successor and transfer the proceeds less costs of
sale to the Participant’s last known salary account and such transfer is in full and final satisfaction.
If a Participant Ceases Employment due to death,
the period within which the Participant’s personal representative or successor in title must dispose of or transfer the Shares is
twelve (12) months or such longer period as the Board may determine.
If the Company’s contract with the service
provider for administration of the Plan ends in circumstances where the Plan continues, the Company will make arrangements for appropriate
services to be provided by another service provider that the Company shall instruct at its sole discretion. In such circumstances, each
Participant must give all notices and take all steps necessary to end the trust or custody agreement with the old service provider and
appoint a new service provider.
The procedures specified above may be altered
and other procedures established by the Board.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
4.9 Lock-In
period
Subject to Rule 4.10, the Board may determine
or a Participant may elect at any time (in such form as the Board requires) that Shares or ADIs transferred or to be transferred to him
under the Plan are or will be held in the Securities Deposit Account for a fixed period of time (the Lock-In Period) during which
time such a Participant may not alienate such Shares or ADIs or create any security interest in or encumbrance on such Shares except as
may be necessary for the proper administration of the Plan. During the Lock-In Period, the Participant is entitled without restriction
to the dividend and voting rights associated with the Shares or ADIs the Participant acquired.
4.10 Cash,
Share and ADI alternatives
The Board may decide to satisfy an Award (including any Dividend Equivalents)
by:
| (a) | paying or procuring to be paid to the Participant a sum equal to the market value (as determined by the
Board) of the number of Shares that would otherwise have been transferred to the Participant following the Vesting of that Award; |
| (b) | delivering to the Participant ADIs with a value equal to the market value of the number of Shares that
would otherwise have been transferred to the Participant following the Vesting of that Award; or |
| (c) | in the case of SARs delivering to the Participant Shares or ADIs with a value equal to the cash sum that
would otherwise have been paid to the Participant following the vesting of that Award. |
5. LAPSE
OR FORFEITURE OF AWARDS
Subject to Board determination otherwise, Awards lapse or in the case
of Restricted Stock are forfeited on the earlier of:
| (a) | failure to meet the Performance Condition or integrity conditions or compliance with company policies; |
| (b) | the occurrence of any event described in the Rules resulting in forfeiture or lapse of Awards, including
under Rule 2 (granting of awards), Rule 6 (cessation of employment) and Rule 7 (corporate events); or |
| (c) | failure from the Participant to adhere to Rule 2.6 (Award documentation). |
Furthermore, the Board may decide to deem that
Awards lapse or in the case of Restricted Stock are forfeited if the Participant grossly negligently or intentionally violates his obligations
resulting from his employment with his Employer, e.g. breach of confidentiality.
6. CESSATION
OF EMPLOYMENT
6.1 Introduction
This Rule 6 applies where a Participant Ceases Employment.
Notwithstanding any other part of this Rule 6,
the Board may, in its discretion with no obligation to do so, allow (on such terms as the Board decides, including, without limitation,
the Participant first executing and not revoking a general release of claims acceptable to the Company) a greater proportion of an Award
to Vest and/or accelerate the time at which Vesting occurs and/or treat a Participant who has Ceased Employment as having done so within
Rules 6.3, 6.4 or 6.6.
In the event that Awards are outstanding pursuant
to Rules 6.3 or 6.4 and the Participant dies prior to the Vesting of those Awards, then Rule 6.6 shall apply.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
6.2 General
Unless Rule 6.3, Rule 6.4 or Rule 6.6
applies, an Award that has not Vested will lapse or be forfeited on the day the Participant Ceases Employment.
6.3 Cessation of Employment as a result of Retirement
If a Participant Ceases Employment because of
Retirement with the agreement of the Participant’s employer, his Award shall, subject to Rule 6.5 and, if so determined by
the Board, the Participant first executing and not revoking a general release of claims acceptable to the Company, Vest on the Vesting
Date to the extent the Performance Conditions have been met PROVIDED ALWAYS THAT if the Cessation of Employment in respect of which this
Rule 6.3 applies occurs on or before the first anniversary of the Grant Date then the extent to which such Award Vests shall be reduced
to take account of the proportion of the Performance Period as has elapsed when the Cessation of Employment occurs.
6.4 Cessation of Employment for other good reasons and following
sale
If a Participant Ceases Employment because of:
| (a) | termination of employment by the Participant’s Employer (whether or not by notice) other than for
cause, including misconduct or poor performance; |
| (b) | his Employer ceasing to be a member of the Company; or |
| (c) | the business for which the Participant works is transferred to a person which or who is not a member of
the Company, |
his Award shall, subject to Rule 6.5 and,
in relation to Rule 6.4(a) and if so determined by the Board, the Participant first executing and not revoking a general release
of claims acceptable to the Company, Vest on the Vesting Date in respect of a proportion of the Award (corresponding to such proportion
of the Performance Period as has elapsed when the Participant Ceases Employment (notwithstanding Rule 6.1)) to the extent the Performance
Conditions have been met provided that the Board may determine in the case of leaving for reasons set out in Rule 6.4(b) or
Rule 6.4(c) that some or all of the Awards held by relevant Participants shall be exchanged in accordance with Rule 7.2
(exchange of awards).
6.5 Lapse or forfeiture of Awards on joining a Competitor
Where either Rule 6.3 or 6.4 applies such
that Awards are retained by the Participant following Cessation of Employment, the following shall also apply: In the event that the Participant,
in the period commencing on such cessation and ending immediately following the relevant Vesting Date, becomes an employee or director
(or otherwise provides services to) a Competitor, other than as a direct result of an event within Rule 6.4(b) or Rule 6.4(c),
the Awards held by that Participant shall immediately lapse (or in the case of Restricted Stock, shall be immediately forfeited).
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
6.6 Cessation of Employment as a result of death or Disability
If a Participant Ceases Employment as a result
of his death or Disability then Awards held by that Participant shall Vest immediately:
| (a) | if, as at the date of Cessation of Employment, it is impractical to assess performance against the applicable
Performance Conditions, at target; or |
| (b) | if, as at the date of Cessation of Employment, it is practicable to assess performance against the applicable
Performance Conditions, to the extent the Board determines having regard to performance against the applicable Performance Conditions
up to the date of Cessation of Employment. |
In case of a Participant’s death, upon notice
to the Company his personal representative or successor in title shall be entitled to, if any, the Vested Awards. Settlement of these
Vested Awards to the Participant’s personal representative or successor in title excludes any other potential claims of the Participant’s
estate with regards to the Plan.
6.7 Cessation of Employment – effect on blocking periods
If Rule 6.3 or 6.4 apply, all Awards held
by the Participant will remain blocked until the end of the Mandatory Blocking Period and/or, where applicable, until the end of any Additional
Blocking Period.
If a Participant Ceases Employment as a result
of his death or Disability all Mandatory and Additional Blocking Periods shall cease to apply immediately.
7. CORPORATE
EVENTS
7.1 Change
of Control
If a Change of Control occurs or is anticipated
to occur, unvested Awards shall Vest at the effective time of such Change of Control (or such earlier date or time that the Board may
determine) as follows:
| (a) | if, as at the proposed date of Vesting, it is impractical to assess performance against the applicable
Performance Conditions, at target; or |
| (b) | if, as at the proposed date of Vesting, it is practicable to assess performance against the applicable
Performance Conditions, to the extent the Board determines having regard to performance against the applicable Performance Conditions
up to the date of proposed date of Vesting, |
PROVIDED ALWAYS THAT if, in respect of an Award,
the Change of Control in respect of which this Rule 7.1 applies occurs on or before the first anniversary of the Grant Date then
the extent to which such Award Vests shall be reduced to take account of the proportion of the Performance Period as has elapsed when
the Change of Control occurs.
Notwithstanding the preceding paragraph of this
Rule 7.1, the Board may in its discretion with no obligation to do so, allow a greater proportion of an Award to Vest.
Alternatively, the Board may determine that some
or all Awards will be automatically exchanged under Rule 7.2 or may allow Participants to choose Vesting and/or exchange.
7.2 Exchange
of Awards
If an Award is exchanged, then:
| (a) | the exchanged award will be in respect of or by reference to shares in any company determined by the company
offering the exchange; |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
| (b) | the exchanged award shall have equivalent terms to those of the Award that was exchanged; |
| (c) | the Board may determine that any holding or blocking periods shall continue to apply to the exchanged
Award; |
| (d) | the exchanged award will be subject to the Plan as it had effect in relation to the old Award immediately
before the exchange; |
| (e) | with effect from the exchange, the Rules will apply as if references to Shares are references to
shares over which the exchanged award has been granted; and |
| (f) | the Rules shall apply with such other adjustments as the Board may decide. |
7.3 Demerger,
variations of share capital and other corporate events
If the Board becomes aware that the Company is
or is expected to be affected by any variation of share capital, rights issue, sub-division, consolidation or reduction of share capital,
demerger, distribution (other than an ordinary dividend), liquidation or other event (other than a Change of Control) which, in the opinion
of the Board, could affect the current or future value of Shares, the Board may:
| (a) | adjust Awards in such manner as it considers appropriate; |
| (b) | allow Awards (for all or some Participants) to Vest in whole or in part, subject to any conditions that
the Board may impose; or |
| (c) | require some or all Awards to be exchanged under Rule 7.2. |
8. PARTICIPANT
RIGHTS AND OBLIGATIONS
The rights and obligations of a Participant under
the terms of his or her office, employment or contract are not affected by becoming a Participant. These Rules do not form part of,
and will not be incorporated into, any contract between a Participant and any member of the Company.
Participants do not have any right to continued
employment with the Company as a result of participating in the Plan, nor are they entitled to any compensation or damages if any benefit
under the Plan is reduced or cancelled as a result of applying the Rules.
Selection as a Participant refers only to the
participation for the one grant year and does not guarantee a right of participation in the Plan in any subsequent year.
Nothing in this Plan confers any benefit, right
or expectation on a person who is not an Eligible Employee or a Participant.
The Plan is discretionary and is not part of the
any employment contract with the Employer or with the Company. Neither does the Plan create any contract between the Participant and Company,
nor does the Plan give rise to a claim or legal entitlement to compensation for the Participant. The Plan may be changed or cancelled
by the Board in its absolute discretion. Any future Awards may therefore be changed or cancelled at any time.
9. CLAWBACK
Participants must adhere at all times to
applicable laws, the Articles, the Company’s organisational regulations, the Code of Ethics and all applicable Company or
Employer policies, procedures and guidelines (including without limitation the “Malus and clawback” practice). If a
Participant fails to comply with any such laws, Articles, regulations, Code of Ethics, policies, procedures and/or guidelines in
material respects then the Board may determine that:
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
| (a) | all or any Award (whether vested or unvested) held by the Participant will lapse or be forfeited; |
| (b) | all or any of a Participant’s Shares or ADIs transferred to him under the Plan following the Vesting
of Awards will be forfeited and must be transferred to the Company; |
| (c) | the Participant must pay the Company (or such other member of the Company as the Board may determine)
gross proceeds from the sale of some or all of the Shares or ADIs transferred to him following the Vesting of Awards; and |
| (d) | pay to the Company (or such other member of the Company as the Board may determine) some or all of the
gross sums paid to him under the Plan. |
Furthermore, all Executive Officers, as defined in the Novartis AG
Policy Governing the Recovery of Erroneously Awarded Compensation (“Policy”), which has been adopted by the Board of Directors
of Novartis AG to comply with the requirements of United States Securities and Exchange Commission Rule 10D- 1 and Section 303A.14
of the New York Stock Exchange Listed Company Manual, will be subject to all of the terms and conditions of that Policy, as amended from
time to time.
10. TAX,
SOCIAL SECURITY AND OTHER CHARGES
The Participant indemnifies each member of the
Company against all taxes, social security contributions and other levies for which he is responsible that arise in connection with an
Award (together “Taxation”).
If a member of the Company must settle Taxation
on behalf of the Participant, where such duties are permitted and/or required by applicable laws, regulations or policies (e.g. tax equalization
policies) to be deducted from the Participant’s net pay, the member of the Company shall withhold such amount from the current and/or
subsequent payrolls and make such arrangements as is considered necessary for such a deduction.
If the available amounts of net pay are not sufficient,
the Participant shall be obliged to forward a payment in the appropriate amount to the member of the Company or another designated legal
entity to cover the amount of duties.
At the member of the Company’s discretion,
a number of Shares in respect of which the Award has Vested to the Participant may be sold (Sell-to-Cover) or withheld (Withhold-to-Cover)
in order to settle any Taxation. For this purpose, the Participant expressly authorizes the service provider, the Company and the Employer
to sell or withhold Shares in an amount that is necessary to cover the Taxation.
The Company and/or the Employer may make such
arrangements which it or they consider necessary to meet any liability to pay or account for Taxation (including selling sufficient Shares
to meet such liability and accounting for the proceeds of sale to the Company or the Employer). The Participant will promptly do all things
necessary to facilitate any such arrangements. Vesting and the transfer of Shares to him can be delayed until he does so.
11. TRANSFER
OF AWARDS
Unless specifically permitted under the Plan
or with the prior written consent of the Board, Awards or any rights in respect of any Award may not be transferred, assigned or
otherwise disposed of. If Awards (or any rights in respect of Awards) are transferred, assigned or otherwise disposed of or if the
Participant becomes bankrupt, they shall lapse or be forfeited immediately.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
12. COMPANY
DOCUMENTS
The Company may (but need not) send to any Participant
any documents which the Company sends to its shareholders.
13. BOARD’S
POWERS
The exercise of any power or discretion, including
refraining from exercise, of the Board concerning the Plan or any Award is absolute and unlimited and may be reasonably exercised at any
time, subject always to the principle of good faith. When the Board exercises any of its powers or discretions in a way that will impact
a Participant, the Board may (but need not) inform the relevant Participant in such manner as the Board shall determine.
Any decision of the Board in connection with the
Plan, the interpretation of the Plan and any related documents and in connection with any dispute relating to the Plan will be final and
binding.
14. ADMINISTRATION
AND REGULATIONS
The Plan shall be administered by the Board.
The Board may make and vary regulations and policies
for the administration and operation of the Plan.
The Board has the right to delegate its powers related to this Plan.
15. AWARDS
NOT PENSIONABLE ETC.
For the avoidance of doubt, Awards under the Plan
are not pensionable and do not count in relation to the calculation of benefit under programs such as life cover, income protection or
continuation, medical or such other benefits as the Board may determine.
16. NOTICES
Any notice or other communication under or in
connection with the Plan or any Award may be given:
| (a) | by the Company to an Eligible Employee or Participant either personally or sent to him at his place of
work by electronic mail or other electronic means (including the internet or the intranet) or by post addressed to the address last known
to the Company (including any address supplied by the relevant member of the Company) or sent through the Company's internal postal service;
and |
| (b) | to the Company, either personally or by post to the Company secretary. |
Items sent by post shall be pre-paid and shall
be deemed to have been received 72 hours after posting. Items sent by electronic mail or other electronic means shall be deemed to have
been received at the expiration of 24 hours from when they were sent.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
The Board may decide the accept notices given
by Participants if received after any time stipulated for receipt.
17. DATA
PROTECTION
As required by local laws and regulations, Participants
are informed about the processing of their personal information in connection with an Award and the general administration of the Plan
by the Company and any of their advisers or agents and to the transmission of any such information to other jurisdictions.
18. AMENDMENT
AND TERMINATION OF THE PLAN
The Board may at any time change the Plan (including
amending or adding schedules to the Plan) in any way. Changes may affect Awards already granted provided always that, unless required
by law, no such change may be made which is to the material disadvantage of a Participant without that Participant’s prior written
consent. The Board shall give notice of any changes to any Participant. The Board may terminate the Plan at any time. Termination will
not affect existing Awards.
19. COMPLIANCE
WITH LAW AND ARTICLES OF INCORPORATION
19.1 Compliance
with Law etc.
The Plan is subject to all applicable laws and
the Company’s Articles. If such law or the Articles require, the terms of any provision of the Plan and any Award (including any
outstanding Award) shall be interpreted and/or amended and applied to the extent required to comply fully with such law or the Articles.
19.2 Swiss
law with respect to the compensation of certain executives of listed companies
The Plan, in particular, is subject to any mandatory
provisions of Swiss law pertaining to compensation of governing bodies derived from article 95 paragraph 3 of the Swiss Federal Constitution
and the related implementing legislation (VegüV or later implementing Federal law). Any interpretation and/or amendment necessary
in respect of any provision of the Plan or any Award as a result of applicable law and/or the Articles (whether currently in force or
in the future) to the detriment of the Participant shall not give rise to any claims by or other rights whatsoever of the Participant.
This applies in particular if the annual general meeting of the Company does not approve the compensation of the Participant which is
subject to approval under the VegüV.
19.3 US
Code Section 409A
If a Participant (other than a Participant whose
benefits are provided under the United States Schedule) is subject to the United States Internal Revenue Code (“US Code”)
(a “US Participant”), and if benefits under this Plan for such US Participant are not exempt from US Code Section 409A,
it is intended that to the maximum extent permitted under all applicable law this Plan will be interpreted and administered to conform
to the requirements of US Code Section 409A as they apply to such US Participant.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
In furtherance of this intent, to the extent that
any portion of the benefits provided under the Plan constitutes a “deferral of compensation” under United States Treasury
Regulation Section 1.409A-1(b):
| (a) | any election to voluntarily defer such portion shall be made in accordance with the requirements for an
initial deferral under United States Treasury Regulation 1.409A-2(a); |
| (b) | the substantive provisions of Section 4(a) of Schedule United States shall apply to Awards of
SARs with the “market value” in paragraphs 4(a)(i) and 4(a)(ii) of that same Schedule determined pursuant to Rule 22
of the Plan rather than paragraph 4(a)(iii) of Schedule United States; |
| (c) | Section 5.2 of Schedule United States shall apply to Restricted Stock Units, and |
| (d) | the provisions of Sections 6 and 7 of Schedule United States shall apply to all such Awards. |
19.4 Voluntary
Participation
By accepting any award or grant of securities
under this Plan, Participants shall be deemed to represent and warrant to the Company that such Participant’s participation in the
trade and acceptance of such securities is voluntary and that such Participant has not been induced to participate by expectation of engagement,
appointment, employment or continued engagement, appointment or employment, as applicable.
20. APPLICABLE
LAW
The Plan is governed by and construed in accordance
with the laws of Switzerland, under express exclusion of any provisions of conflict of laws.
The Board may resolve conclusively all questions
of fact or interpretation concerning the Plan and has the authority to resolve any dispute of any kind that arises under or in connection
with the Plan. In the event a dispute escalates to require resolution by a court, the dispute will exclusively be resolved by the Courts
of Basel, Switzerland.
21. DEFINITIONS
AND INTERPRETATION
In this Plan and in the Schedules to the Plan, unless otherwise required
by the Rules:
21.1 Definitions
ADIs means American depositary instruments
being either American Depositary Shares or American Depositary Receipts of the Company as specified in the Grant Notice.
Articles means the articles of incorporation of the Company
as amended from time to time.
Award means an award under the Plan (which
may be an award of Restricted Stock Units, Restricted Stock, Stock Appreciation Rights or such other form of award referable to the Company’s
equity as the Board may determine).
Board means the Company’s Board of
Directors or, to the extent permitted by applicable law, the Board’s delegate or, following a Change of Control, those persons who
comprised the Board immediately prior to such Change of Control.
Cessation of Employment occurs, for
the purposes of the Plan, when a Participant ceases to hold an office or employment with any member of the Company PROVIDED THAT a
Participant will not be treated as Ceasing Employment in circumstances in which that Participant is on a leave of absence where the
Participant’s right to re-employment is guaranteed either by statute or contract and employment is not otherwise terminated
during such leave of absence (in which case the Participant will Cease Employment at the time of such termination) and similar
terms, such as “Ceases Employment” or “Ceasing to be Employed”, shall be construed
accordingly.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
Change of Control means any of the following:
| (a) | any person or group of persons who are acting together purchases or otherwise becomes the beneficial owner
or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately or subject to passage of time
or other conditions) of voting securities representing more than 50% of the combined voting power of all outstanding securities of the
Company; |
| (b) | the Company’s shareholders approve an agreement to merge or consolidate the Company with or into
another corporation as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity are or
will be owned by the former shareholders of the Company; or |
| (c) | the Company’s shareholders approve the sale of all or substantially all of the Company’s business
and/or assets to a person or entity which is not a member of the Company, |
provided that an Internal Reorganisation shall not be a Change of Control.
Code of Ethics means the code of ethics adopted by the Company
which describes the fundamental principles concerning ethical business conduct as amended from time to time.
Company means Novartis AG.
Competitor means any company or other organisation that is either
or both:
| (a) | part of the Company’s comparator peer group of peer companies in the global healthcare industry,
as listed in Schedule A, as may be updated by the Board at any time without prior notice to plan participants, or |
| (b) | in competition with the Company or in relation to products and/or clinical areas. |
The intent of identifying Competitors under this
Plan is, and always has been, to be inclusive of all subsidiaries and affiliates of each such Competitor, and with respect to organisations
that are in competition with the Company or in relation to products and/or clinical areas, is also inclusive of investors (including without
limitation venture capital and private equity funds or management companies) that “significantly” invest in companies or other
organisations that are engaged in activities that are in competition with the Company or in relation to products and/or clinical areas
(“Investors”). For these purposes, a company or organisation shall be considered to be an Investor if the Board determines,
in its sole and exclusive discretion, that such company or organisation makes significant investments in areas that are in competition
with the Company or in relation to products and/or clinical areas. The determination of whether an Investor significantly invests in companies
or other organisations that are engaged in activities that are in competition with the Company or in relation to products and/or clinical
areas, and therefore is a “Competitor” for the purpose of this Plan, is within the complete, sole and unfettered discretion
of the Board, which it can determine at any time without prior notice to plan participants.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
Notwithstanding the foregoing, for the
purposes of this Plan, a company or other organisation (including an Investor) shall not be deemed to be a “Competitor”
if it is active in (or for Investors, does not invest in any products and/or clinical areas that are in competition with the Company
or in relation to products and/or clinical areas) no jurisdiction (or, in connection with products or services, for delivery,
sale, marketing, or development in no jurisdiction) in which the Company does business. For these purposes,
“jurisdiction” means country.
If any part of the definition of “Competitor”
is held to be void but would be valid if part of the wording were deleted or reformed, the definition of “Competitor” shall
apply with such deletion or revision as may be necessary to make it valid and effective.
Dealing Day means a day on which the Swiss
Exchange (SIX) or, in relation to ADIs, the national securities exchange in the US on which ADIs are listed, is open for business.
Dealing Restrictions means restrictions
on the dealing in Shares or the grant of Awards imposed by any law, regulation or Code of Practice (including the Novartis Global Insider
Trading Policy, as amended or replaced from time to time) or otherwise.
Disability means the Participant is permanently
incapable of performing his duties and responsibilities due to illness or accident, in accordance with applicable law, or in the absence
of such applicable law, as determined by the Board.
Dividend Equivalents means a right to cash or Shares as described
in Rule 3.
Eligible Employee means any member of the
Executive Committee and the Corporate Executive Company or any employee or group of employees of the Company as the Board shall determine.
Employer means the member of the Company
by or in which the Participant is or, where the context so admits, was an office holder or employed.
Grant Date means the date an Award is made as specified in the
Grant Notice.
Grant Notice means a grant notice provided to a Participant
in accordance with the Rules.
Grant Period means the period of 42 calendar days commencing:
| (a) | the day on which the Plan is adopted by the Board; |
| (b) | the Dealing Day immediately following the day on which the Company announces results for any period; |
| (c) | the day on which the Company’s annual general meeting is held; or |
| (d) | any day on which the Board resolves that exceptional circumstances exist which justify the making of an
Award. |
Internal Reorganisation means any event, offer, scheme, share
purchase, merger or arrangement whereby:
| (a) | a Change of Control occurs; and |
| (b) | immediately afterwards the share capital of the company then controlling (whether directly or indirectly)
the Company is owned substantially by the same persons who were shareholders of the Company immediately prior to such event, scheme or
arrangement in substantially the same proportions. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
Lock-In Period has the meaning set out in Rule 4.9.
Market Value means in relation to a Share or ADI (as appropriate)
on any given day:
| (a) | if the Shares are admitted to trading on the Swiss Exchange (SIX) an amount equal to the closing price
on that day (or if there is no such price on that day the last preceding day for which such price is available); |
| (b) | if the ADIs are listed on a national securities exchange in the US an amount equal to the closing price
on that day (or if there is no such price on that day the last preceding day for which such price is available; or |
| (c) | if the Shares are not admitted to trading on the Swiss Exchange (SIX) or the ADIs are not listed on a
national securities exchange in the US, then such value as is determined by the Board. |
Participant means an Eligible Employee who is selected by the
Board to participate in the Plan and is employed by the Company at the Grant Date.
Performance Condition means the condition (whether performance,
time based or otherwise) set out in any Schedule or such other condition as the Board determines from time to time.
Performance Period means the period over which the Performance
Conditions are measured, as determined by the Board.
Plan means the Novartis AG Long Term Incentive Plan.
Restricted Stock means an award of Shares subject to restrictions
in accordance with the Plan.
Restricted Stock Units means a right to receive Shares or cash
under the Plan (but subject to Rule 4.10 (cash and ADI alternative)).
Retirement means the Cessation of Employment:
| (a) | subject, for the purposes of the Plan, to approval by the Employer, after having attained retirement age
according to the law applicable to the Participant, if any; |
| (b) | on early retirement in accordance to applicable local law as approved by the Employer; or |
| (c) | by reason of retirement provided that such retirement is approved by the Board and the Employer. |
Rules mean the rules of the Plan (including all Schedules).
Schedule means a schedule to the Rules.
Service means the period of continuous
employment with the Company ending with the relevant Cessation of Employment for the purposes of the Plan PROVIDED ALWAYS THAT the Board
may determine that prior periods of employment with the Company and/or periods of employment with entities outside the Company (but which
are subsequently acquired by the Company) may be taken into account.
Share means a registered share of the Company
with a par value of CHF -.50 or, in the case of SARs, notional Shares.
Stock Appreciation Rights or SARs means
an award under the Plan, the future value of which is based on the increase in the value of Shares (from the base value set by the
Board at the time an Award is made) which notionally comprises each SAR from the relevant Grant Date.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
VegüV means the Swiss ordinance in
executive compensation and is the German abbreviation for the ordinance against excessive compensation in listed companies (in full “Verordnung
gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften” or compensation of governing bodies
in public companies such as members of the executive committee, the board of directors or the advisory boards).
Vesting means:
| (a) | in the case of Restricted Stock Units, a Participant being entitled to receive Shares or cash; |
| (b) | in the case of Restricted Stock, restrictions under the Plan ceasing to apply; or |
| (c) | in the case of SARs, a Participant being entitled to receive a cash sum based on the growth in value of
the notional Shares comprising the Award, |
and “Vest” shall be construed accordingly.
Vesting Date means the date an Award vests
as determined by the Board and specified in the Grant Notice.
21.2 Interpretation
Unless the context requires otherwise: words importing
the singular include the plural and vice versa; the masculine includes the feminine and vice versa; the word “includes” is
not a word of limitation; references to “Schedule” shall refer to the appropriate Schedule to the Plan; headings and boldings
are for convenience only and do not affect the interpretation of these Rules.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
SCHEDULE A
NOVARTIS COMPETITORS
SCHEDULE 1
LONG TERM PERFORMANCE PLAN
1. APPLICATION
OF THE SCHEDULE
Where Awards are granted under the Long Term Performance
Plan (the LTPP), then the Rules of the Novartis AG Long Term Incentive Plan (LTIP) shall apply subject to the terms set out
in this Schedule.
2. PERFORMANCE
PERIOD
The Performance Period is the three-year period
over which the Performance Conditions are measured ending on 31 December of the year preceding the year in which the Vesting Date
of the relevant LTPP Award occurs or such other period as the Board shall determine as set out in the relevant Grant Notice.
3. PERFORMANCE
CONDITIONS
LTPP Awards are subject to Performance Conditions
relating to Net Sales Growth, Core Operating Income Growth and Innovation. Each of the Performance Conditions is subject to an equal weighting
percentage of an LTPP Award.
The maximum number of Vested LTPP Awards is 200%
of the Awards determined in the Grant Notice before any Dividend Equivalents (with the caps applicable to each specific Performance Condition
detailed below). To achieve this maximum, each Performance Condition should have a Performance Factor of 200% i.e. one Performance Conditions
cannot compensate for the loss of another.
Net Sales Growth Performance Condition
For the purposes of this Schedule:
“Base Net Sales” means net
sales of the Company for the Financial Year ended 31 December preceding the Grant Date as determined from time to time by
the Board; and
“Net Sales Growth CAGR” means
compound annual growth in net sales over the Performance Period as determined from time to time by the Board and expressed as the percentage
change in comparison with the Base Net Sales, which is defined above.
The number of LTPP Awards that are subject to
the Net Sales Growth Performance Condition Vesting on the Vesting Date is determined by multiplying the number of granted LTPP Awards
that are subject to that Performance Condition with the Net Sales Growth Performance Factor. The Net Sales Growth Performance Factor is
determined by the Board based on the following Vesting schedule for all positive values of Net Sales Growth CAGR:
Net Sales Growth CAGR | |
Net Sales Growth Performance Factor |
Target Range 1 | |
120 to 200 per cent |
Target Range 2 | |
80 to 120 per cent |
Target Range 3 | |
40 to 80 per cent |
below Target Range 3 | |
0 per cent |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
Target Range 1, Target Range 2 and Target Range
3 will be determined by the Board and notified to a Participant in the relevant Grant Notice.
Core Operating Income Growth Performance Condition
For the purposes of this Schedule:
“Base Core Operating Income” means
the core operating income of the Company for the Financial Year ended 31 December preceding the Grant Date as determined from time
to time by the Board; and
“COI Growth CAGR” means compound
annual growth in core operating income over the Performance Period as determined from time to time by the Board and expressed as the percentage
change in comparison with the Base Core Operating Income, which is defined above.
The number of LTPP Awards that are subject to
the Core Operating Income Growth Performance Condition Vesting on the Vesting Date is determined by multiplying the number of granted
LTPP Awards that are subject to that Performance Condition with the COI Growth Performance Factor. The COI Growth Performance Factor is
determined by the Board based on the above Vesting schedule for the Net Sales Growth Performance Condition for all positive values of
COI Growth CAGR (on the basis that the Vesting Schedule will have the following substituted column headings: the COI Growth CAGR and the
COI Growth Performance Factor and that, as noted above, Target Range 1, Target Range 2 and Target Range 3 will be determined by the Board
and notified to a Participant in the relevant Grant Notice).
Innovation Performance Condition
The Innovation Performance Factor reflects the
achievement of the three-year forward-looking Innovation Targets set out for the respective grant of an Award and is determined by the
Board as a percentage (the “Innovation Performance Factor”).
Innovation Targets focus on key innovation program
milestones that will improve future business and/or highly contribute to Company’s scientific reputation and are approved by the
Board under consultation with Company’s CEO and Research & Development Committee of the Board.
The number of LTPP Awards that are subject to
the Innovation Performance Condition Vesting on the Vesting Date is determined by multiplying the number of granted LTPP Awards that are
subject to that Performance Condition with the Innovation Performance Factor.
4. CESSATION
OF EMPLOYMENT
Rule 6 of the LTIP shall apply save as modified as follows:
6.6 Cessation
of Employment as a result of death or Disability
Rule 6.6 shall apply as follows:
“If a Participant Ceases Employment as a
result of his death then the number of LTPP Awards as determined in the Grant Notice and held by that Participant shall Vest immediately
in respect of a proportion of the LTPP Award (corresponding to such proportion of the Performance Period as has elapsed when the Participant
Ceases Employment as a result of death):
| (a) | if, as at the date of Cessation of Employment, it is impractical to assess performance against the applicable
Performance Conditions, at target; or |
| (b) | if, as at the date of Cessation of Employment, it is practicable to assess performance against the applicable
Performance Conditions, to the extent the Board determines having regard to performance against the applicable Performance Conditions
up to the date of Cessation of Employment. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
In case of a Participant’s death, upon notice
to the Company his personal representative or successor in title shall be entitled to, if any, the Vested LTPP Awards. Settlement of these
Vested LTPP Awards to the Participant’s personal representative or successor in title excludes any other potential claims of the
Participant’s estate with regards to the LTPP.”
5. AMENDMENTS
The Board may at any time change this Schedule. Subject to Rule 2.5
of the LTIP, changes may affect Awards already granted provided always that, unless required by law, no such change may be made which
is to the material disadvantage of a Participant without that Participant’s prior written consent.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
SCHEDULE 2
PARTICIPANTS WHO ARE OR BECOME MEMBERS OF THE ECN
1. APPLICATION
OF THIS SCHEDULE
Unless specifically provided otherwise, this Schedule shall apply to:
| (a) | Awards granted to any Participant who at the relevant Grant Date is a member of the ECN; and |
| (b) | Awards granted to any Participant who, after the relevant Grant Date, becomes a member of the ECN. |
Where this Schedule applies relevant Awards shall be subject to all
the provisions of the Novartis AG Long Term Incentive Plan save as modified below.
2. DEFINITIONS
For the purposes of this Schedule the following definitions shall apply:
“ECN” means the Executive Committee of Novartis
AG (including permanent attendees to that committee).
“Retirement” means the Cessation of Employment after:
| (a) | having attained age 58 or older, or |
| (b) | in respect of those Participants who satisfied the Rule of 60 at December 31, 2015, having attained
age 55 or older and having completed at least 10 years of Service. |
“Rule of 60” the sum of
the Participant’s age plus Service being equal to 60 or more. For the purposes of this definition the Participant’s age and
his Service shall be whole calendar years as at December 31, 2015.
3. PERFORMANCE
CONDITIONS AND ECN LTPP AWARDS VESTING
The paragraph 3 of “Schedule Long Term Performance
Plan” shall apply as modified as follows:
In addition, for Executive Committee members,
Relative TSR is included to the Performance Conditions previously mentioned.
Each of the Performance Conditions is subject
to the following weighting percentage of an LTPP Award:
25% Net Sales Growth
25% Core Operating Income Growth
25% Innovation and
25% relative TSR
Relative Total Shareholder Return (TSR) Performance Condition
TSR is calculated using such standard published
methodology as the Board may determine from time to time, including share price growth and dividends paid over the Performance Period.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
TSR is measured against a comparator peer group of fourteen peer companies
in the global healthcare industry, currently AbbVie, Amgen, AstraZeneca, Biogen, Bristol-Myers Squibb, Eli Lilly & Company,
Gilead, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novo Nordisk, Pfizer, Roche and Sanofi. The Board, in its
discretion, may alter the constituents of the comparator group in such circumstances as it considers appropriate, including where a constituent
company is no longer listed on a stock exchange.
The number of LTPP Awards that are subject to
the TSR Performance Condition Vesting on the Vesting Date is determined by multiplying the number of granted LTPP Awards that are subject
to that Performance Condition with the TSR Performance Factor. The TSR Performance Factor is determined by the Board based on the following
Vesting schedule for all positive values of TSR.
The performance factor is set out as follows PROVIDED
ALWAYS that the below shall not apply to Awards under the LTPP which were granted prior to the date on which the Participant became a
member of the ECN:
TSR rank compared to the comparator group | |
LTPP Performance Factor |
1 to 2 | |
170 to 200 per cent |
3 to 5 | |
130 to 160 per cent |
6 to 8 | |
80 to 120 per cent |
9 to 15 | |
0 per cent |
In the event of a non-positive TSR value, the
Board may reduce the number of LTPP Awards subject to the TSR Performance Condition, which would otherwise Vest.
For the avoidance of doubt, all of the other Performance
Conditions set out in paragraph 3 of Schedule Long Term Performance Plan (i.e. the Net Sales Growth Performance Condition, the Core Operating
Income Growth Performance Condition and the Innovation Performance Condition) shall continue to apply, as specified in Schedule Long Term
Performance Plan.
4. BLOCKING
RESTRICTIONS
Awards granted to the Chief Executive Officer
and Chief Financial Officer are subject to a mandatory blocking period of two years beyond the vesting date (after applicable taxes) (“Mandatory
Blocking Period”).
Furthermore, the Board may offer Participants
the opportunity to block Awards in the form of Restricted Stocks after the expiry of the Mandatory Blocking Period (“Additional
Blocking Period”). The blocking choices and the terms of the blocking will be determined by the Board from time to time.
5. CESSATION
OF EMPLOYMENT – INTRODUCTION
The following in Rule 6.1 shall not apply:
“Notwithstanding any other part of
this Rule 6, the Board may, in its discretion with no obligation to do so, allow (on such terms as the Board decides,
including, without limitation, the Participant first executing and not revoking a general release of claims acceptable to the
Company) a greater proportion of an Award to Vest and/or accelerate the time at which Vesting occurs and/or treat a Participant who
has Ceased Employment as having done so within Rules 6.3, 6.4 or 6.6.”
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
6. CESSATION
OF EMPLOYMENT AS A RESULT OF RETIREMENT
| 6.1 | Subject to proviso (b) below, Rule 6.3 shall be deleted in its entirety and replaced with the
following: |
“If a Participant Ceases Employment
because of Retirement with the agreement of the Participant’s employer his Award shall, subject to Rule 6.5 and, if so determined
by the Board, the Participant first executing and not revoking a general release of claims acceptable to the Company, Vest on the Vesting
Date to the extent the Performance Conditions have been met PROVIDED ALWAYS THAT:
| (a) | the extent to which such Award Vests shall be reduced to take account of the proportion of the Performance
Period as has elapsed when the Cessation of Employment occurs; and |
| (b) | this provision of this Schedule shall not apply to any member of the ECN who, as at 1 January 2018,
satisfied the definition of Retirement, as set out above in this Schedule (irrespective of whether or not such Retirement has been approved
by his employer). If this proviso (b) applies then Rule 6.3 (as set out in the main body of the Plan) shall apply.” |
| 6.2 | Immediately following Rule 6.3 the following shall be added as Rule 6.3A: |
“In determining whether to approve
Retirement under Rule 6.3(a), the Board shall take into consideration the Participant’s satisfaction of certain conditions,
including:
| (a) | whether the Participant is leaving the Company in good standing and not for “cause” (for example
because of dishonesty, misconduct, gross negligence, violation of the Code of Ethics or similar reason); |
| (b) | whether the Participant has returned to his Employer all company property in his possession at his termination; |
| (c) | whether the Participant has cooperated with his Employer in the orderly handover and transition of his
duties and responsibilities prior to his date of termination; |
| (d) | whether the Participant has given his written commitment that for one year following his termination he
will not work for a Competitor and he will refrain from soliciting other employees of the Company to terminate their employment; and |
| (e) | whether the Participant has affirmed his obligation not to disclose confidential information he received
during his employment with the Company and to refrain from using any such information for any purpose not in Company’s business
interests.” |
| 6.3 | At the end of Rule 6.6 the following proviso shall be added: |
“PROVIDED ALWAYS THAT if, in respect
of an Award, the death or Disability in respect of which this Rule 6.6 applies occurs on or before the first anniversary of the Grant
Date then the extent to which such Award Vests shall be reduced to take account of the proportion of the Performance Period as has elapsed
when Cessation of Employment by reason of death or Disability occurs.”
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
7. CORPORATE
EVENTS
The following in Rule 7.1 shall not apply:
“Notwithstanding the preceding paragraph of this Rule 7.1,
the Board may in its discretion with no obligation to do so, allow a greater proportion of an Award to Vest.”
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
SCHEDULE 3
UNITED STATES
1. APPLICATION
OF THIS SCHEDULE
When Awards under the Plan (including but not limited to Awards under
the LTPP and Select Schedules to the Plan) are to be granted the Board may determine that this Schedule applies, in which case such Awards
shall be subject to all the provisions of the Novartis AG Long Term Incentive Plan save as modified below.
ADIs subject to the Awards under the Plan are intended to be registered
under the United States Securities Act of 1933.
2. GRANT
OF AWARDS – SHARES SUBJECT TO THE PLAN
Subject to Rule 7.3, the aggregate number
of ADIs made subject to Awards under this Schedule may not exceed 13,510,000, plus any ADIs that were not issued under the Plan as of
January 1, 2021; plus any ADIs subject to outstanding Awards under the Plan as of January 1, 2021 that on or after January 1,
2021 cease for any reason to be subject to such Awards.
Such ADIs shall be deemed to have been used in
payment of Awards whether they are actually delivered or the market value equivalent of such ADIs is paid in cash. In the event any Award
is surrendered or terminated, or expires or is forfeited, the number of ADIs no longer subject thereto shall thereupon be released and
shall thereafter be available for new Awards under this Schedule.
ADIs comprising Awards under this Schedule or
delivered by the Company in settlement of Awards under this Schedule may be derived from authorised and unissued Shares or from Shares
or ADIs held in the treasury of the Company or held by another member of the Company or may be purchased on the open market or by private
purchase.
3. DEFINITIONS
For the purposes of this Schedule the following definitions shall apply:
“Company” in this Schedule means Novartis Corporation,
a New York corporation.
“Retirement” the Cessation
of Employment after having attained age 55 or older and having completed at least 10 years of Service.
4. STOCK
APPRECIATION RIGHTS
SARs granted under this Schedule shall be subject
to such terms and conditions, not inconsistent with the Plan, as the Board may impose, including, but not limited to, the following:
| (a) | SARs with Participant discretion to exercise |
| (i) | Base Value. The Base Value for SARs per ADI subject to a SAR shall not be less than 100% of the
market value of an ADI at the Grant Date. |
| | |
| (ii) | Payment on exercise. On the exercise of a SAR, the Company or the Employer shall pay to the Participant
an amount equal to the number of ADIs subject to the SAR multiplied by the excess, if any, of the market value of one ADI on the exercise
date over the Base Value. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
| (iii) | Market value. For the purposes of SARs subject to this Schedule, “market value” in
paragraphs 4(a)(i) and 4(a)(ii) of this Schedule on a given date means: |
| (aa) | if the ADIs are listed on a national securities exchange in the United States, the closing sale price
reported as having occurred on the primary exchange with which the Shares are listed and traded (currently the New York Stock Exchange)
on such date or, if there is no such sale on that date, then the last preceding date on which such a sale was reported; |
| (bb) | if the ADIs are not listed on any national securities exchange but is quoted on the National Market System
of the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), the trade price of the last
sale reported on such date or, if there is no such sale on that date, then the last preceding date on which such a sale was reported;
or |
| (cc) | if the ADIs are not listed on a national securities exchange nor quoted on NASDAQ, on a last sale basis
the amount determined by the Board to be the fair market value based upon a good faith attempt to value the Shares accurately. |
| (iv) | Dividend Equivalents. If the Board designates Dividend Equivalents to apply to SARs pursuant to
Rule 3.3(a), such accumulated Dividend Equivalents shall be paid to the Participant immediately upon Vesting. |
| (v) | No deferral of proceeds. Pursuant to the limitations of the United States Treasury Regulation Section 1.409A-1(b)(5)(i)(B)(3),
a Participant may not defer the proceeds of the exercise of a SAR. |
| (b) | SARs without Participant Discretion to exercise |
If a SAR is granted with a fixed exercise
date and the Participant has no discretion to exercise the SAR, Participants may elect to defer the payment of the proceeds of the automatic
exercise of the SAR, and any accumulated Dividend Equivalents, to the date later than the payment date specified in the Award provided
that the Participant makes such deferred election either as an initial deferral under United States Treasury Regulation Section 1.409A-2(a) or
pursuant to the subsequent deferral provisions of United States Treasury Regulation Section 1.409A-2(b). The Board shall determine
whether such deferral is in the form of Shares (ADIs) or cash. If deferrals are in Shares (ADIs), unless otherwise directed by the Board
such Shares (ADIs), and any accumulated Dividend Equivalents, shall be delivered upon such deferred payment date. If the deferrals are
in cash, the cash proceeds of such automatic exercise of the SARs shall be transferred into the applicable non-qualified deferred compensation
plan of the Company entity which employs the Participant.
5. CONSEQUENCES
OF VESTING – RESTRICTED STOCK
UNITS
| 5.1 | Participants may elect to defer the payment of Restricted Stock Units, and any accumulated Dividend Equivalents,
to the date later than the payment date specified in the relevant Award provided that the Participant makes such a deferred election either
as an initial deferral under United States Treasury Regulation Section 1.409A-2(a) or pursuant to the subsequent deferral provisions
of United States Treasury Regulation Section 1.409A-2(b). The Board shall determine whether such deferral is in the form of Shares
(ADIs) or cash. If deferrals are in Shares (ADIs), unless otherwise directed by the Board, such Shares (ADIs), and any accumulated Dividend
Equivalents, shall be delivered from this Plan upon such deferred
payment date. If deferrals are in cash, the cash proceeds of such Awards shall be transferred into the applicable non-qualified deferred
compensation plan of the Participant’s employing Company in the United States. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
| 5.2 | Rule 4.3 shall be amended by inserting the underlined words below: |
“As soon as practicable after
the Vesting (but no later than the 15th day of the third calendar month after the Vesting) the Company shall transfer the number
of Shares (or pay or procure to be paid a cash sum if the Board has determined that the RSU is to be settled in cash) in respect of which
the Award has Vested to the Participant”.
Should the Board determine that adjustments be
made to Awards under Rule 7, any such adjustments or modifications must be made in a manner which is consistent with the provisions
of section 409A of the United States Internal Revenue Code (“Code Section 409A”).
7. CODE
SECTION 409A
| 7.1 | Notwithstanding anything under the Plan to the contrary, to the extent applicable, it is intended that
the Plan as it applies to Participants shall comply with the provisions of Code Section 409A and the Plan and all applicable Awards
be construed and applied in a manner consistent with this intent. In furtherance thereof, any amount constituting a “deferral of
compensation” under Treasury Regulation Section 1.409A-1(b) that is payable to a Participant upon a separation from service
of the Participant (within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due to the Participant’s death),
occurring while the Participant shall be a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i))
of the Company (as limited by Code Sections 414(b), (c), (m) and (o)), shall not be paid until the earlier of: |
| (a) | the date that is six months following such separation from service; or |
| (b) | the date of the Participant’s death following such separation from service. |
| 7.2 | Notwithstanding any provision of the Plan to the contrary, to the extent that an Award constituting a
“deferral of compensation” subject to Code Section 409A shall be deemed to be vested or restrictions lapse upon the occurrence
of a Change of Control, and if such Change of Control does not constitute a “change in control event” (as defined in Treasury
Regulation Section 1.409A-3(i)), then even though such Award may be deemed to be vested or restrictions lapse, payment will only
be made to the extent necessary to comply with the provisions of Code Section 409A, to the United States Participant on the earliest
of: |
| (a) | the United States Participant’s separation from service, the date payment otherwise would have been
made pursuant to the regular payment terms of the Award; or |
| (b) | the Participant’s death. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
8. US
EXECUTIVE FINANCIAL RECOUPMENT
PROGRAM
For grants made on or after January 1,
2021 for US-based roles covered by the Incentive Compensation Restriction and Executive Financial Recoupment Program, as set forth
in Appendix E of the Corporate Integrity Agreement Between the Office of Inspector General of the Department of Health and Human
Services and Novartis Corporation (“2020 Novartis Corporate CIA”) (the “Corporate Executive Financial Recoupment
Program”), the Board temporarily delegates its authority and discretion to make Clawback determinations under section 9 of
this Plan, with respect to incentives awarded under this Plan, to the Recoupment Committee established under the Corporate Executive
Financial Recoupment Program, and to fulfill the obligations entrusted to the Recoupment Committee under such Program, for the term
of the 2020 Novartis Corporate CIA.
Covered Executives must agree to accept the terms
and conditions of the Corporate Executive Financial Recoupment Program as a condition of accepting awards under this Plan. The terms and
conditions of the Executive Financial Recoupment Program shall apply to all awards made under this Plan to Covered Executives during the
term of the 2020 Novartis Corporate CIA.
At the conclusion of the 2020 Novartis Corporate
CIA, this temporary delegation of authority and discretion shall cease and will revert to the Board. The 2020 CIA may be accessed online
at:
https://oig.hhs.gov/fraud/cia/agreements/Novartis_Corporation_06302020.pdf.
SCHEDULE 4
SELECT PLAN 2024
1. APPLICATION
OF THE SCHEDULE
Where Awards are granted under the Select Plan
2024 (“Select Plan”) either regularly or under special circumstances, then the Rules of the Novartis AG Long Term
Incentive Plan (LTIP) shall apply subject to the terms set out in this Schedule.
The Select Plan applies for Select Awards made on or after 1 January 2024.
2. PURPOSE
The purpose of the Select Plan is to provide selected
Eligible Employees of the Company or any member of the Company with an opportunity to receive an Award in respect of Restricted Stock
and/or Restricted Stock Units, thus providing an increased incentive for such persons to contribute to the future success and prosperity
of the Company, enhancing the value of the Shares for the benefit of the shareholders of the Company and increasing the ability of the
Company to attract and retain individuals of exceptional skill.
3. PARTICIPANTS
| (a) | Members of the ECN may not be granted Awards under the Select Plan. |
| (b) | Without prejudice to any subsisting Awards, the Board may, from time to time, exclude from participation
under the Select Plan such category or categories of Eligible Employees as the Board may determine. |
4. VESTING
AND OTHER CONDITIONS
| (a) | Subject to the Board determining otherwise the overall staggered Vesting Period of the total Awards granted
regularly under the Select Plan is 3 years. |
| (b) | With each completed year of the 3-year overall staggered Vesting Period, the Participant accrues an entitlement
equalling 1/3 of the total Awards. The effective date used to determine the partially vested
Award each year will be calculated backward from the Vesting Date specified in the Grant Notice. To the extent necessary, the partially
vested Award for the first year is rounded commercially to the next whole number. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
| (c) | However, for special Awards granted under the Select Plan, like buyout grants, CEO grants and any other
type of one-off grant, the Vesting Period of such Awards is a 3 year cliff (or alternatively as defined on the award agreement/notice
itself), i.e. without a staggered vesting. |
| (d) | In the event that an Award comprises Select Restricted Stock, the Participant shall be entitled to receive
all dividends declared in respect of such shares (if any) and, other than in the year in which the Award is made if that Award is made
after the Company’s annual general meeting, to vote in any meeting of the Company’s shareholders by reference to such shares. |
| (e) | In the event that an Award comprises Select Restricted Stock Units, during the Vesting Period the Participant
shall not, in relation to any shares referable to such SRSU, be entitled to any dividends or votes. SRSUs are not tradeable. |
5. DEFINITIONS
For the purposes of this Schedule and its Appendices the following
definitions shall apply:
“ECN” means the Executive Committee
of Novartis AG (including permanent attendees to that committee).
“Select Restricted Stock” or
“SRS” shall mean a Share subject to restrictions in accordance with the Select Plan.
“Select Restricted Stock Unit”
or “SRSU” shall mean a right to receive a Share (subject to the Board determining that SRSUs or any of them are to
be settled in cash) in accordance with the Select Plan after the expiry of the Vesting Period.
“U.S. Person” has the same
meaning as set out in Regulation S under the Securities Act of the United States of America provided that “U.S. Person” shall
always include any person who is a resident of the United States.
“Vesting Date” means in relation
to an Award the Vesting Date specified in the relevant Grant Notice.
“Vesting Period” shall mean
the period between the Grant Date and Vesting Date of an Award.
6. CESSATION
OF EMPLOYMENT
Rule 6 of the LTIP shall apply save as modified as follows:
6.3 Cessation
of Employment as a result of Retirement
Rule 6.3 shall apply as follows:
“If a Participant Ceases Employment because
of Retirement with the agreement of the Participant’s employer his Award shall, provided, if so determined by the Board, the Participant
first executes and does not revoke a general release
of claims acceptable to the Company, Vest on the date of such Cessation of Employment PROVIDED ALWAYS THAT if the Cessation of Employment
in respect of which this Rule 6.3 applies occurs on or before the first anniversary of the Grant Date then the extent to which such
Award Vests shall be reduced to take account of the proportion of the Vesting Period as has elapsed when the Cessation of Employment occurs.”
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
6.4 Cessation
of Employment for other good reasons and following sale
“If a Participant Ceases Employment because of:
| (a) | termination of employment by the Participant’s Employer (whether or not by notice) other than for
misconduct or poor performance; |
| (b) | his Employer ceasing to be a member of the Company; or |
| (c) | the business for which the Participant works is transferred to a person which or who is not a member of
the Company, |
his Award shall, provided, in relation to Rule 6.4(a) and
if so determined by the Board, the Participant first executes and does not revoke a general release of claims acceptable to the Company,
Vest on the date of such Cessation of Employment in respect of a proportion of the Award (corresponding to such proportion of the Vesting
Period as has elapsed when the Participant Ceases Employment provided that the Board may determine in the case of leaving for reasons
set out in (b) or (c) above that some or all of the Awards held by relevant Participants shall be exchanged in accordance with
Rule 7.2 of the LTIP (exchange of awards).”
6.5 Lapse
or forfeiture of Awards on joining a Competitor
"Section 6.5 entitled Lapse or forfeiture
of Awards on joining a Competitor shall not apply to awards made under this Schedule.”
6.6 Cessation
of Employment as a result of death or Disability
“If a Participant Ceases Employment as a
result of his death or Disability then Awards held by that Participant shall Vest immediately.”
7. US
SELLING RESTRICTIONS
The Shares subject to the Select Plan (including
those received by Participants following Vesting of SRSUs) have not been and will not be registered under the U.S. Securities Act of 1933
and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except in certain transactions
exempt from the registration requirements of the Securities Act. In connection with the acquisition of Shares, each Participant will represent
and agree that she/he: is not a U.S. Person; is not purchasing or acquiring the Shares for the account or benefit of any U.S. Person;
and has not offered or sold, and will not offer, sell or deliver, any of the Shares within the United States or to, or for the account
or benefit of, any U.S. Person except pursuant to registration under the Securities Act or an available exemption from such registration.
8. APPENDICES
TO THE SELECT PLAN
The Board may establish such appendices to the
Select Plan as it considers necessary or appropriate. Such appendices may be included in such a way that they create special rules applicable
to certain Eligible Employees or categories of Eligible Employees and/or constitute sub-plans to the Select Plan.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
APPENDIX 1
NOVARTIS SELECT PLAN SWITZERLAND
SCHEDULE 5
NOVARTIS LAUNCH LEADER PLAN
| 1. | APPLICATION OF THE
SCHEDULE |
Where Awards are granted under the Novartis Launch
Leader Plan (the “NLLP”) then the rules of the Novartis AG Long Term Incentive Plan (LTIP) shall apply subject to the
terms set out in this Schedule. Awards under the NLLP may be granted in addition to the Awards under other long-term incentive programs
within this Plan or other Plans. Awards under the NLLP granted to US and Canadian Participants will be awarded under the respective Schedule
of the Novartis Corporation 2011 Stock Incentive Plan for North American Employees, as amended.
For Participants to be eligible to participate in the NLLP they must
be both
| 1. | US and global launch leaders of products with anticipated peak sales in excess of 1 billion USD in
the financial year (as determined in the sole discretion of the company), and |
| 2. | Holder of Enterprise Value Roles (“EVR”) and Business Value Roles (“BVR”) ECN
members are excluded from participation in the NLLP. Additionally, those Participants that are US or Canadian paid are not eligible under
this schedule. US and Canadian Participants are eligible for awards under the respective Schedule of the Novartis Corporation 2011 Stock
Incentive Plan for North American Employees, as amended. |
Eligible participants may receive Awards up to the following size
| (i) | Business Value Role (“BVR”): up to 5,000 Restricted Stock Units |
| (ii) | Holder of Enterprise Value Roles (“EVR”): up to 10,000 Restricted Stock Units |
The Board may change the Award size at any time.
| 4. | VESTING AND OTHER
CONDITIONS |
| a) | NLLP Awards are subject to the following Vesting conditions: |
| 1. | The Participants need to receive at least a short term individual performance factor of 100% over the
Vesting Period as defined in the Grant Notice; and |
| 2. | the Participants may not move out of their EVR or BVR role they were in at the grant date before the end
of the Vesting Period. |
| b) | If the Vesting condition no. 1 is not met at the time of Vesting, the NLLP Award will not qualify for
Vesting and will lapse. |
| c) | If a Participant initiates a move to a role that does not qualify for eligibility for NLLP Awards within
the Company (including all subsidiaries and affiliates of Novartis AG) at any time during the vesting period but prior to Vesting, condition
no. 2 fails and the NLLP Award will lapse. |
| d) | The Novartis Compensation Committee or the CEO can approve exceptions to these Vesting conditions. The
CEO may delegate approval for exceptions to the Chief People & Organization Officer. |
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
| e) | To the extent the Vesting conditions are met (as determined by the Board), the NLLP Award shall Vest on
the Vesting Date subject to the rules of the Novartis AG Long Term Incentive Plan, including subject to the provisions relating to
cessation of employment. The Board can also define additional Vesting conditions in the Grant Notice. |
5. DIVIDENDS
AND DIVIDEND EQUIVALENTS
A Participant holding an NLLP Award of Restricted
Stock Units shall not be entitled to vote, to receive dividends or to have any other rights of a shareholder in respect of such an Award
unless and until the Shares comprising the Award are transferred to or acquired by the Participant.
6. CESSATION
OF EMPLOYMENT
Rule 6 of the LTIP shall apply save as modified as follows:
6.3 Cessation
of Employment as a result of Retirement
Rule 6.3 shall apply as follows:
“If a Participant Ceases Employment because
of Retirement with the agreement of the Participant’s employer his Award shall, provided, if so determined by the Board, the Participant
first executes and does not revoke a general release of claims acceptable to the Company, Vest on the date of such Cessation of Employment
PROVIDED ALWAYS THAT if the Cessation of Employment in respect of which this Rule 6.3 applies occurs on or before the first anniversary
of the Grant Date then the extent to which such Award Vests shall be reduced to take account of the proportion of the Vesting Period as
has elapsed when the Cessation of Employment occurs.”
6.4 Cessation
of Employment for other good reasons and following sale
“If a Participant Ceases Employment because of:
| (a) | termination of employment by the Participant’s Employer (whether or not by notice) other than for
misconduct or poor performance; |
| (b) | his Employer ceasing to be a member of the Company; or |
| (c) | the business for which the Participant works is transferred to a person which or who is not a member of
the Company, |
his Award shall, provided, in relation to Rule 6.4(a) and
if so determined by the Board, the Participant first executes and does not revoke a general release of claims acceptable to the Company,
Vest on the date of such Cessation of Employment in respect of a proportion of the Award (corresponding to such proportion of the Vesting
Period as has elapsed when the Participant Ceases Employment provided that the Board may determine in the case of leaving for reasons
set out in (b) or (c) above that some or all of the Awards held by relevant Participants shall be exchanged in accordance with
Rule 7.2 of the LTIP (exchange of awards).”
6.5 Lapse
or forfeiture of Awards on joining a Competitor
"Where either Rule 6.3 or 6.4
applies such that NLLP Awards are retained by the Participant following Cessation of Employment, the following shall also apply: In
the event that the Participant, in the period commencing on such cessation and ending immediately following the relevant Vesting
Date, becomes an employee or director of (or otherwise provides services to) a Competitor, other than as a direct result of an event
within Rule 6.4(b) or Rule 6.4(c), the NLLP Awards held by that Participant shall immediately lapse (or in the case
of Restricted Stock, shall be immediately forfeited).”
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
6.6 Cessation
of Employment as a result of death or Disability
“If a Participant Ceases Employment as a
result of his death or Disability then Awards held by that Participant shall Vest immediately.”
7. DEFINITIONS
For the purpose of this Schedule, the following additional definitions
shall apply:
“Equivalent Performance Measurement”
If the performance assessment is not available for any reason including any performance management system changes, only the available
assessments will be considered or an Equivalent Performance Measurement will be sought. For new Awards, the Equivalent Performance Measurement
will be defined in the Grant Notice.
“EVR” Enterprise Value Roles are roles with enterprise-wide
responsibilities and impact.
“BVR” Business Value Roles
are roles with function-wide or business-wide responsibilities and impact.
“Launch Leaders” have responsibility
and control over product launches with anticipated sales budgets of > 1 billion USD per financial year (as determined in the sole discretion
of the company).
“Rating” means the performance
assessment on the Novartis matrix used for the annual performance evaluation, which is required subsequently over the performance period.
“Restricted Stock Unit” or
“SRSU” shall mean a right to receive a Share (subject to the Board determining that SRSUs or any of them are to be
settled in cash) in accordance with the Select Plan after the expiry of the Vesting Period.
“Vesting Date” means in relation
to an Award the Vesting Date specified in the relevant Grant Notice.
“Vesting Period” shall mean
the period between the Grant Date and Vesting Date of an Award.
8. AMENDMENTS
The Board may change this Schedule at any time.
Changes may affect NLLP Awards already granted provided always that, unless required by law, no such change may be made which is to the
material disadvantage of a Participant without the Participant’s prior written consent.
LTIP rules – January 22, 2014 and amended thereafter (effective in relation to awards made on or after January 1, 2024)
Exhibit 4.6
Novartis AG
Deferred Share Bonus Plan
Adopted by the Board of Directors on January 22,
2014 and amended thereafter with latest adjustments made on December 13, 2023 with effect in relation to awards made on or after
that date.
Contents
NOVARTIS AG DEFERRED SHARE BONUS PLAN |
2 |
|
|
1. PURPOSE OF THE PLAN |
2 |
2. DETERMINATION OF DEFERRED SHARE BONUS AWARDS |
2 |
3. DIVIDENDS AND DIVIDEND EQUIVALENTS |
3 |
4. VESTING OF DEFERRED SHARE BONUS AWARDS |
4 |
5. LAPSE OR FORFEITURE OF DEFERRED SHARE BONUS AWARDS |
6 |
6. CESSATION OF EMPLOYMENT |
6 |
7. CORPORATE EVENTS |
8 |
8. PARTICIPANT RIGHTS AND OBLIGATIONS |
9 |
9. CLAWBACK |
9 |
10. TAX, SOCIAL SECURITY AND OTHER CHARGES |
9 |
11. TRANSFER OF DEFERRED SHARE BONUS AWARDS |
10 |
12. COMPANY DOCUMENTS |
10 |
13. BOARD’S POWERS |
10 |
14. ADMINISTRATION AND REGULATIONS |
10 |
15. AWARDS NOT PENSIONABLE ETC. |
11 |
16. NOTICES |
11 |
17. DATA PROTECTION |
11 |
18. SCHEDULES TO THE PLAN |
11 |
19. AMENDMENT AND TERMINATION OF THE PLAN |
11 |
20. COMPLIANCE WITH LAW AND ARTICLES OF INCORPORATION |
12 |
21. APPLICABLE LAW |
12 |
22. DEFINITIONS AND INTERPRETATION |
13 |
|
|
SCHEDULE 1 PARTICIPANTS WHO ARE OR BECOME MEMBERS OF THE ECN |
17 |
|
|
1. APPLICATION OF THIS SCHEDULE |
17 |
2. DEFINITIONS |
17 |
3. LAPSE OR FORFEITURE OF DEFERRED SHARE BONUS AWARDS |
17 |
4. CESSATION OF EMPLOYMENT – INTRODUCTION |
17 |
5. LEAVING IN SPECIAL CIRCUMSTANCES |
17 |
SCHEDULE 2 UNITED STATES |
19 |
|
|
1. APPLICATION OF THIS SCHEDULE |
19 |
2. GRANT OF DEFERRED SHARE BONUS AWARDS – SHARES SUBJECT TO THE PLAN |
19 |
3. DEFINTIONS |
19 |
4. STOCK APPRECIATION RIGHTS |
19 |
5. CONSEQUENCES OF VESTING – RESTRICTED STOCK UNITS |
21 |
6. CORPORATE EVENTS |
21 |
7. CODE SECTION 409A |
21 |
8. US EXECUTIVE FINANCIAL RECOUPMENT PROGRAM |
22 |
|
|
SCHEDULE 3 RETENTION SHARE BONUS AWARDS |
23 |
|
|
1. APPLICATION OF THIS SCHEDULE |
23 |
2. DEFINITIONS |
23 |
3. DETERMINATION OF RETENTION SHARE BONUS AWARD |
23 |
4. DETERMINING THE NUMBER OF SHARES OR ADIS SUBJECT TO A RETENTION SHARE BONUS AWARD |
23 |
5. TIMING OF RETENTION SHARE BONUS AWARDS |
24 |
6. VESTING OF RETENTION SHARE BONUS AWARDS |
25 |
7. LEAVING IN SPECIAL CIRCUMSTANCES - RETENTION SHARE BONUS AWARDS |
25 |
8. CHANGE OF CONTROL PRIOR TO THE VESTING DATE - RETENTION SHARE BONUS AWARDS |
26 |
NOVARTIS AG DEFERRED SHARE BONUS PLAN
1. PURPOSE
OF THE PLAN
The purpose of the Plan is to retain Eligible Employees.
2. DETERMINATION
OF DEFERRED SHARE BONUS
AWARDS
2.1 General
The Board may determine that a proportion of the gross amount payable
in respect of an Annual Incentive Award will be provided to the Participant in the form of a Compulsory Deferred Share Bonus Award.
2.2 Voluntary
Deferred Share Bonus Awards
A Participant may, subject to completing such
documentation as the Board may specify from time to time within the time limits specified by the Board, decide to receive up to all of
any payment (in increments as determined by the Board) in connection with an Annual Incentive Award (other than that part of the Award
that is subject to a Compulsory Deferred Share bonus Award) in the form of a Voluntary Deferred Share Bonus Award.
2.3 Decisions
relating to Deferred Share Bonus Awards
In respect of any Deferred Share Bonus Award, the Board shall determine:
| (a) | whether the Deferred Share Bonus Award is in respect of Restricted Stock, Restricted Stock Units or SARs; |
| (b) | where relevant, whether the Deferred Share Bonus Award is in respect of Shares or ADIs; |
| (c) | whether or not the Deferred Share Bonus Award will carry Dividend Equivalents and, if so, the form of
such Dividend Equivalents; |
| (d) | the latest date by which the Participant must complete a form of acceptance of a Deferred Share Bonus
Award; |
| (e) | if the Deferred Share Bonus Award is a SAR, the base value from which the growth in value is to be measured; |
| (f) | if the Deferred Share Bonus Award does not comprise Restricted Stock, Restricted Stock Units or SARs,
the form, terms and conditions of any such Deferred Share Bonus Award; |
| (h) | the number of Shares, ADIs or notional shares in the case of SARs to be subject or linked to the Deferred
Share Bonus Award (see Rule 2.4 below); |
| (i) | the Vesting Date or Vesting Dates and any conditions to which the Award is subject; |
| (j) | whether the Participant is required to sell sufficient Shares to meet Taxation; |
| (k) | which, if any, Schedules to the Plan will apply to the Award. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
2.4 Determining
the number of Shares or ADIs subject to a Deferred Share Bonus Award
In order to determine the number of Shares or ADIs subject or linked
to a Deferred Share Bonus Award, the Board shall:
| (a) | divide the relevant cash sum by the Market Value of a Share or ADI (as appropriate) as at the date immediately
preceding the Grant Date and then, where necessary, round up to the nearest whole Share or ADI; or |
| (b) | apply such other method as the Board may determine from time to time. |
2.5 Timing
of Deferred Share Bonus Awards
Subject to any Dealing Restrictions which prevent
Deferred Share Bonus Awards being granted, the Board shall grant such Compulsory Deferred Share Bonus Awards and Voluntary Share Bonus
Awards as soon as practicable within the first Grant Period following the expiry of the Performance Period applicable to an Annual Incentive
Award.
3. DIVIDENDS
AND DIVIDEND EQUIVALENTS
3.1 Restricted
Stock Units and SARs
A Participant holding a Deferred Share Bonus Award
of Restricted Stock Units or SARs shall not be entitled to vote, to receive dividends or to have any other rights of a shareholder in
respect of such an Award unless and until the Shares comprising the Award are transferred to or acquired by the Participant.
3.2 Restricted
Stock
The Board in relation to a Deferred Share Bonus
Award of Restricted Stock may determine that the Participant must agree to surrender or waive any right to vote, receive dividends or
any other rights of a shareholder in respect of such Award.
3.3 Dividend
Equivalents
If the Board determines that a Deferred Share Bonus Award carries Dividend
Equivalents:
| (a) | unless the Board decides otherwise, the number of Shares (or notional Shares if the Deferred Share Bonus
Award is a SAR) subject to the Deferred Share Bonus Award will be increased by the number of Shares which could have been acquired by
the reinvestment in the purchase of Shares (at the market value of a Share on each relevant dividend payment date) of dividends payable
between the Grant Date and the Vesting Date on that number of Shares (or notional Shares) subject to the Deferred Share Bonus Award that
Vests; or |
| (b) | if the Board decides that Dividend Equivalents would not be on a notional reinvestment basis as described
in Rule 3.3(a), as soon as practicable after the time a Deferred Share Bonus Award vests in full (and Shares are transferred or acquired
or cash is paid to the Participant) the Company shall pay to the Participant (in cash or Shares) (subject to all applicable tax and social
security deductions) an amount equal to the aggregate dividends which would have been paid on the Deferred Share Bonus Award (including
in respect of notional Shares for Deferred Share Bonus Awards that are SARs) between the Grant Date and the Vesting Date; or |
| (c) | the Board may decide that the Dividend Equivalents may be calculated on any other basis. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
For the avoidance of doubt, the amount of a dividend,
for these purposes is the amount of the gross dividend before taxes.
For the purposes of this Rule 3, “market
value” shall be determined by the Board on each relevant occasion.
A Participant is not entitled to receive Dividend
Equivalents with respect to the time period between the Vesting Date and the date that the relevant Shares are transferred to or acquired
by him or payment in respect of the Deferred Share Bonus Award is made.
4. VESTING
OF DEFERRED SHARE BONUS
AWARDS
4.1 General
Vesting of Deferred Share Bonus Awards under the
Plan, transfer of Shares or ADIs or payment of cash is subject to any Rules or law that may require otherwise, including Rule 4.5
(dealing restrictions), Rule 4.7 (delivery of Shares or ADIs to a deposit account), Rule 5 (lapse or forfeiture of Awards) and
Rule 9 (clawback).
4.2 Normal
Vesting
Subject to the
exceptions set out in these Rules, Deferred Share Bonus Awards shall Vest on the Vesting Date.
4.3 Consequences
of Vesting – Restricted Stock Units
As soon as practicable after the Vesting Date
the Company shall transfer the number of Shares (or pay a cash sum if the Board has determined that the RSU is to be settled in cash)
in respect of which the Deferred Share Bonus Award has Vested to the Participant.
4.4 Consequences
of Vesting – Restricted Stock
On the Vesting Date the restrictions applicable
to the relevant Restricted Stock under the Plan shall cease to apply to the extent such Restricted Stock Vests.
4.5 Dealing
Restrictions
If the Vesting of a Deferred Share Bonus Award
is prevented on any date by a Dealing Restriction, the Deferred Share Bonus Award shall Vest on the first day it is not so prevented.
If the transfer of Shares or ADIs (or payment
of cash) on or following the Vesting Date is prevented by a Dealing Restriction, the period for such transfer or payment shall start from
the first date on which it is no longer so prevented.
Shares received by a Participant on or following
the Vesting Date may be subject to Dealing Restrictions. Subject to any such restrictions, a Participant may sell (or may be required
to do so) a sufficient number of such Shares to meet Taxation (as defined in Rule 10 (tax, social security and other charges)).
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
4.6 Fractional
entitlements
Any fractional number of Shares which arises for
any reason under the Plan shall be aggregated as at the Vesting Date and rounded up to the nearest whole Share (or, in the case of a SAR,
notional Share), unless the Board determines otherwise.
4.7 Delivery
of Shares or ADIs to a deposit account
Subject to Board determination otherwise, all
Shares and ADRs transferred to Participants under the Plan shall be transferred to and registered in one single securities account (Securities
Deposit Account) held in trust by such service provider as is nominated from time to time by the Company.
If a Participant Ceases Employment, the Participant
must dispose of or if possible transfer from the Securities Deposit Account to a private securities account all of the Shares or ADIs
managed by the service provider within the period three months. If that is not done, the service provider will sell all of the Shares
at market value without delay on behalf of the Participant or the Participant’s successor and transfer the proceeds less costs of
sale to the Participant’s last known salary account and such transfer is in full and final satisfaction.
If a Participant Ceases Employment of the Company
due to death, the period within which the Participant’s personal representative or successor in title must dispose of or transfer
the Shares is 12 months or such longer period as the Board may determine.
If the Company’s contract with the service
provider for administration of the Plan ends in circumstances where the Plan continues, the Company will make arrangements for appropriate
services to be provided by another service provider that the Company shall instruct at its sole discretion. In such circumstances, each
Participant must give all notices and take all steps necessary to end the trust or custody agreement with the old service provider and
appoint a new service provider.
The procedures specified above may be altered
and other procedures established by the Board.
4.8 Lock-In
Period
Subject to Rule 4.9, the Board may determine
or a Participant may elect at any time (in such form as the Board requires) that Shares or ADIs transferred or to be transferred to him
under the Plan are or will be held in the Securities Deposit Account for a fixed period of time (the “Lock-In Period”)
during which time such a Participant may not alienate such Shares or ADIs or create any security interest in or encumbrance on such Shares
except as may be necessary for the proper administration of the Plan.
During the Lock-In Period, the participant is
entitled without restriction to the dividend and voting rights associated with the Shares or ADIs the Participant acquired.
4.9 Cash,
Share and ADI alternatives
The Board may decide to satisfy a Deferred Share
Bonus Award (including any Dividend Equivalents) by:
| (a) | paying the Participant a sum equal to the market value (as determined by the Board) of the number of Shares
that would otherwise have been transferred to the Participant following the Vesting of that Deferred Share Bonus Award; or |
| (b) | delivering to the Participant ADIs with a value equal to the market value of the number of Shares that
would otherwise have been transferred to the Participant following the Vesting of that Deferred Share Bonus Award. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
5. LAPSE
OR FORFEITURE OF DEFERRED SHARE BONUS
AWARDS
Subject to Board determination otherwise, Deferred
Share Bonus Awards lapse or in the case of Restricted Stock are forfeit on the earlier of the occurrence of any event described in the
Rules resulting in forfeiture or lapse of a Deferred Bonus Share Award, including under Rule 6 (Cessation of Employment) and
Rule 7 (Corporate events).
In relation to any Award the Participant is required
to accept the grant of the Award to him by providing such acceptance via the service provider’s online interface (or in such form
as the Board shall determine from time to time) as well as, if required, complete and update the CRS FACTA documentation via the service
provider’s online interface at the latest within 6 months after he received the notice of the grant of the Award. The Board may
determine that the Participant will be reminded of these prerequisites for participation in the Plan. If a Participant does not provide
such acceptance and/or CRS FATCA documentation in time (and, if any, after reminders), any Awards granted shall lapse or, in the case
of Restricted Stock, the Shares under that Award shall be forfeited without compensation, unless the Board determines otherwise.
Alternatively, the Board may determine that a
Participant who receives an Award is deemed (as of the time of receipt) to have accepted the grant and agreed to the Rules (including
applicable Schedules) and the terms set out in the notice of the grant of the Award. If this is the case, a Participant may reject his
Award within 14 days of receiving the notice of grant of that Award (or such longer period as the Board permits or is otherwise required
by law). If a Participant does so reject his Award, then immediately on such rejection that Award shall lapse or, in the case of Restricted
Stock, the Shares under that Award shall be forfeited.
The Board may decide to deem that Awards lapse
or in the case of Restricted Stock are forfeited if the Participant grossly negligently or intentionally violates his obligations resulting
from his employment with his Employer, e.g. breach of confidentiality or any compliance issue with company policies.
6. CESSATION
OF EMPLOYMENT
6.1 Introduction
This Rule 6 applies where a Participant Ceases Employment.
Notwithstanding any other part of this Rule 6,
the Board may, in its discretion with no obligation to do so, allow (on such terms as the Board decides) a greater proportion of a Deferred
Share Bonus Award to Vest and/or to accelerate the time at which Vesting occurs.
In the event that Compulsory Deferred Share Bonus Awards are outstanding
pursuant to Rule
| 6.3 | and the Participant dies prior to the Vesting of those Awards, then Rule 6.4 shall apply. |
Unless Rules 6.3, 6.4 or 6.6 apply, a Deferred
Share Bonus Award (or any proportion of a Deferred Share Bonus Award) that has not Vested will lapse or be forfeit on the day the Participant
Ceases Employment
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
6.3 Leaving
in special circumstances – Compulsory Deferred Share Bonus Awards
If a Participant Ceases Employment because of:
| (a) | Retirement with the agreement of the Participant’s Employer; |
| (b) | termination of employment by the Participant’s Employer (whether or not by notice) other than for
misconduct or poor performance |
| (c) | his employer ceasing to be a member of the Company; |
| (d) | the business for which the Participant works is transferred to a person which or who is not a member of
the Company; or |
| (e) | any other reason if the Board so decides, |
his Compulsory Deferred Share Bonus Award shall
Vest on the Vesting Date provided that the Board may determine in the case of leaving for reasons set out in Rule 6.3(d) or
Rule 6.3(e) that some or all of the Awards held by relevant Participants shall be exchanged in accordance with Rule 7.2
(exchange of awards).
| 6.4 | Cessation of Employment as a result of death or disability – Compulsory Deferred Share Bonus
Awards |
If a Participant Ceases Employment as a result
of his death or disability then Compulsory Deferred Share Bonus Awards held by that Participant shall Vest immediately on such cessation.
In case of a Participant’s death or disability,
upon notice to the Company himself or his personal representative or successor in title shall be entitled to, if any, the payment of the
annual incentive. Settlement of this incentive to the Participant or his personal representative or successor in title excludes any other
potential claims of the Participant’s estate with regards to the Plan.
| 6.5 | Lapse or forfeiture of Compulsory Deferred
Share Bonus Awards on joining a Competitor |
Where Rule 6.3 applies such that Compulsory
Deferred Bonus Awards are retained by the Participant following Cessation of Employment, in the event that the Participant, in the period
commencing on such cessation and ending immediately following the relevant Vesting Date becomes an employee or director of (or otherwise
provides services to) a Competitor then Compulsory Deferred Share Bonus Awards held by that Participant shall immediately lapse (or on
the case of Restricted Stock shall be immediately forfeited).
6.6 Cessation
of Employment – Voluntary Deferred Share Bonus Awards
If a Participant Ceases Employment for any reason
his Voluntary Deferred Share Bonus Awards shall Vest immediately on such cessation.
6.7 Assignments
and Transfers
If a Participant is sent on an international assignment
or is transferred to another entity within the Company, this will not be considered as Ceasing Employment under the Plan. The treatment
of assignments and transfers is subject to the rules of the “Internal Transfer Policy for Share plans”.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
7. CORPORATE
EVENTS
7.1 Change
of Control prior to the Vesting Date
| (a) | Compulsory Deferred Share Bonus Awards |
If a Change of Control occurs or is
anticipated to occur prior to the Vesting Date of a Compulsory Deferred Share Bonus Award then each such Award shall Vest on the Change
of Control or at such earlier point as the Board shall determine.
Alternatively, the Board may determine
that some or all Deferred Share Bonus Awards will be automatically exchanged under Rule 7.2 or may allow Participants to choose Vesting
and/or exchange.
| (b) | Voluntary Deferred Share Bonus Awards |
If a Change of Control occurs or is
anticipated to occur prior to the Vesting Date of a Voluntary Deferred Share Bonus Award then each such Award shall Vest on the Change
of Control or at such earlier point as the Board shall determine.
7.2 Exchange
of Deferred Share Bonus Awards
If a Deferred Share Bonus Award is exchanged, then:
| (a) | the exchanged award will be in respect of or by reference to shares in any company determined by the company
offering the exchange; |
| (b) | the exchanged award shall have equivalent terms to those of the Deferred Share Bonus Award that was exchanged; |
| (c) | the exchanged award will be subject to the Plan as it had effect in relation to the old Deferred Share
Bonus Award immediately before the exchange; |
| (d) | with effect from the exchange, the Rules will apply as if references to Shares are references to
shares over which the exchanged award has been granted; |
| (e) | the Rules shall apply with such other adjustments as the Board may decide. |
7.3 Demerger,
variations of share capital and other corporate events
If the Board becomes aware that the Company is
or is expected to be affected by any variation of share capital, rights issue, sub-division, consolidation or reduction of share capital,
demerger, distribution (other than an ordinary dividend), liquidation or other event (other than a Change of Control) which, in the opinion
of the Board, could affect the current or future value of Shares, the Board may:
| (a) | adjust Deferred Share Bonus Awards in such manner as it considers appropriate; |
| (b) | allow Deferred Share Bonus Awards (for all or some Participants) to Vest in whole or in part, subject
to any conditions that the Board may impose; |
| (c) | require some or all Deferred Share Bonus Awards to be exchanged under Rule 7.2. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
8. PARTICIPANT
RIGHTS AND OBLIGATIONS
The rights and obligations of a Participant under
the terms of his or her office, employment or contract are not affected by becoming a Participant. These Rules do not form part of,
and will not be incorporated into, any contract between a Participant and any member of the Company.
Participants do not have any right to continued
employment with the Company as a result of participating in the Plan, nor are they entitled to any compensation or damages if any benefit
under the Plan is reduced or cancelled as a result of applying the Rules.
Nothing in this Plan confers any benefit, right
or expectation on a person who is not an Eligible Employee or a Participant.
9. CLAWBACK
Participants must adhere at all times to applicable
laws, the Articles, the Company’s organizational regulations, the Code of Ethics, and all applicable Company, Company or Employer
policies, procedures and guidelines. If, in the reasonable opinion of the Board, a Participant fails to comply with any such laws, Articles,
regulations, Code of Ethics, policies, procedures and/or guidelines in all material respects then the Board may determine that:
| (a) | all or any of a Deferred Share Bonus Award (whether Vested or unvested) held by the Participant will lapse
or be forfeit; |
| (b) | all or any amount of cash received (on a gross basis) under any Deferred Share Bonus Award be paid to
the Company (or such other member of the Company as the Board may determine); |
| (c) | all or any of a Participant’s Shares or ADIs transferred to him under the Plan following the Vesting
of Deferred Share Bonus Awards will be forfeit and must be transferred to the Company; and |
| (d) | the Participant must pay the Company (or such other member of the Company as the Board may determine)
gross proceeds from the sale of some or all of the Shares or ADIs transferred to him following the Vesting of Deferred Share Bonus Awards. |
Furthermore, all Executive Officers, as defined in the Novartis AG
Policy Governing the Recovery of Erroneously Awarded Compensation (“Policy”), which has been adopted by the Board of Directors
of Novartis AG to comply with the requirements of United States Securities and Exchange Commission Rule 10D- 1 and Section 303A.14
of the New York Stock Exchange Listed Company Manual, will be subject to all of the terms and conditions of that Policy, as amended from
time to time.
10. TAX,
SOCIAL SECURITY AND OTHER CHARGES
The Participant indemnifies each member of the
Company against all taxes, social security contributions and other levies for which he is responsible that arise in connection with any
Deferred Share Bonus Award (together “Taxation”).
The Company and any employer may make such arrangements
it considers necessary to meet any liability to pay or account for Taxation (including selling sufficient Shares to meet such liability
and accounting for the proceeds of sale to the Company or the Participant’s employer or making deductions from any cash sum payable
to the Participant). The Participant will promptly do all things necessary to facilitate any such arrangements and payment of cash. Vesting and the transfer of Shares
to him can be delayed until he does so.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
11. TRANSFER
OF DEFERRED SHARE BONUS
AWARDS
Unless specifically permitted under the Plan or
with the prior written consent of the Board, Deferred Share Bonus Awards or any rights in respect of any such Awards may not be transferred,
assigned or otherwise disposed of. If Deferred Share Bonus Awards (or any rights in respect of Deferred Share Bonus Awards) are transferred,
assigned or otherwise disposed of or if the Participant becomes bankrupt, they shall lapse or be forfeit immediately.
12. COMPANY
DOCUMENTS
The Company may (but need not) send to any Participant
any documents which the Company sends to its shareholders.
13. BOARD’S
POWERS
The exercise of any power or discretion, including
refraining from exercise, of the Board concerning the Plan or any Award is absolute and unlimited and may be reasonably exercised at any
time, subject always to the principle of good faith. When the Board exercises any of its powers or discretions in a way that will impact
a Participant, the Board may (but need not) inform the relevant Participant in such manner as the Board shall determine.
Any decision of the Board in connection with the
Plan, the interpretation of the Plan and any related documents and in connection with any dispute relating to the Plan will be final and
binding.
The Board decided to delegate the following powers
with regard to the Plan to the Employer who decides after consultation with the Global Rewards &/or Global Legal teams at their
discretion:
| (a) | with reference to section 5 (Lapse of forfeiture of awards) |
| (b) | with reference to section 6.4 (Cessation of employment as a result of Death or disability) |
| (c) | with reference to section 9 (Clawback) |
The Board decided to delegate the implementation
and execution of the Plan, including making non-material changes to the Rules themselves, to the Global Rewards &/or Global
Legal teams.
14. ADMINISTRATION
AND REGULATIONS
| 14.1 | The Plan shall be administered by the Board. |
| 14.2 | The Board may make and vary regulations and policies for the administration and operation of the Plan. |
| 14.3 | The Board has the right to delegate its powers related to this Plan. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
15. AWARDS
NOT PENSIONABLE ETC.
For the avoidance of doubt, any growth in value
from the Grant Date of Deferred Share Bonus Awards under the Plan (or the Shares or ADIs comprising such Awards) is not pensionable and
does not count in relation to the calculation of benefit under programmes such as life cover, income protection or continuation, medical
or such other benefits as the Board may determine.
16. NOTICES
Any notice or other communication under or in connection with the Plan
may be given:
| (a) | by the Company to an Eligible Employee or Participant either personally or sent to him at his place of
work by electronic mail or other electronic means (including the internet or the intranet) or by post addressed to the address last known
to the Company (including any address supplied by the relevant member of the Company) or sent through the Company's internal postal service;
and |
| (b) | to the Company, either personally or by post to the Company secretary. |
Items sent by post shall be pre-paid and shall
be deemed to have been received 72 hours after posting. Items sent by electronic mail or other electronic means shall be deemed to have
been received at the expiration of 24 hours from when they were sent.
The Board may decide the accept notices given
by Participants if received after any time stipulated for receipt.
17. DATA
PROTECTION
Each Participant agrees to the receipt, holding
and processing of information in connection with a Deferred Share Bonus Award and the general administration of the Plan by the Company
and any of their advisers or agents and to the transmission of any such information outside of the European Economic Area (including,
without limitation, to Switzerland and to the United States of America). Each Participant acknowledges that the EU Commission considers
that the United States of America (and various other jurisdictions) do not have adequate data protection laws.
18. SCHEDULES
TO THE PLAN
The Board may establish such schedules to the
Rules as it considers necessary or appropriate. Such schedules may be included in the Plan so as to apply special rules to categories
of Eligible Employees and/or to constitute sub-plans to the Plan for Eligible Employees outside Switzerland.
19. AMENDMENT
AND TERMINATION OF THE PLAN
The Board may at any time change the Plan (including
amending or adding schedules to the Plan) in any way. Changes may affect Deferred Share Bonus Awards already granted provided always that,
unless the change is required by law, no such change may be made which is to the material disadvantage of a Participant without that Participant’s
prior written consent.
The Board shall give notice of any changes to any Participant.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
The Board may terminate the Plan at any time.
Termination will not affect existing Deferred Share Bonus Awards.
20. COMPLIANCE
WITH LAW AND ARTICLES OF INCORPORATION
20.1 Compliance
with Law etc
The Plan is subject to all applicable laws and
the Company’s Articles. If such law or the Articles require, the terms of any provision of the Plan and any Award (including any
outstanding Award) shall be interpreted and/or amended and applied to the extent required to comply fully with such law or the Articles.
20.2 Minder
Initiative
The Plan, in particular, is subject to any mandatory
provisions of Swiss law pertaining to compensation of governing bodies derived from article 95 paragraph 3 of the Swiss Federal Constitution
(the “Minder Initiative”). Any interpretation and/or amendment necessary in respect of any provision of the Plan or
any Award as a result of applicable law and/or the Articles to the detriment of the Participant shall not give rise to any claims by or
other rights whatsoever of the Participant. This applies in particular if the annual general meeting of the Company does not approve the
compensation of the Participant which is subject to approval under the Minder Initiative.
20.3 US
Code Section 409A
If a Participant (other than a Participant whose
benefits are provided under the United States Schedule) is subject to the United States Internal Revenue Code (“US Code”)
(a “US Participant”), and if benefits under this Plan for such US Participant are not exempt from US Code Section 409A,
it is intended that to the maximum extent permitted under all applicable law this Plan will be interpreted and administered to conform
to the requirements of US Code Section 409A as they apply to such US Participant.
20.4 Voluntary
Participation
By accepting any award or grant of securities
under this Plan, Participants shall be deemed to represent and warrant to the Company that such Participant’s participation in the
trade and acceptance of such securities is voluntary and that such Participant has not been induced to participate by expectation of engagement,
appointment, employment or continued engagement, appointment or employment, as applicable.
21. APPLICABLE
LAW
The Plan is governed by and construed in accordance
with the laws of Switzerland, under express exclusion of any provisions of conflict of laws.
The Board may resolve conclusively all questions
of fact or interpretation concerning the Plan and has the authority to resolve any dispute of any kind that arises under or in connection
with the Plan. In the event a dispute escalates to require resolution by a court, the dispute will exclusively be resolved by the Courts
of Basel, Switzerland.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
22. DEFINITIONS
AND INTERPRETATION
In this Plan, unless otherwise required by the Rules:
22.1 Definitions
ADIs means American depositary instruments
being either American Depositary Shares or American Depositary Receipts of the Company as specified in the Grant Notice.
Annual Incentive Award means an award or
rights to participate under the Annual Incentive Plan or any other annual bonus arrangement as the Board shall determine.
Annual Incentive Plan means the rules of
a cash-based incentive plan established by the Board on January 22, 2014 which operates in conjunction with the Plan.
Articles means the articles of incorporation of the Company
as amended from time to time.
Award means a Deferred Share Bonus Award.
Board means the Company’s Board of
Directors or, to the extent permitted by applicable law, the Board’s delegate or, following a Change of Control, those persons who
comprised the Board immediately prior to such Change of Control.
Cessation of Employment occurs, for the
purposes of the Plan, when a Participant ceases to hold an office or employment with the Company PROVIDED THAT a Participant will not
be treated as Ceasing Employment in circumstances in which that Participant is on a leave of absence where the Participant’s right
to re-employment is guaranteed either by statute or contract and employment is not otherwise terminated during such leave of absence (in
which case the participant will Cease Employment at the time of such termination) and similar terms, such as “Ceases Employment”
or “Ceasing to be Employed”, shall be construed accordingly.
Change of Control means any of the following:
| (a) | any person or group of persons who are acting together purchases or otherwise becomes the beneficial owner
or has the right to acquire such beneficial ownership (whether or not such right is exercisable immediately or subject to passage of time
or other conditions) of voting securities representing more than 50% of the combined voting power of all outstanding securities of the
Company; |
| (b) | the Company’s shareholders approve an agreement to merge or consolidate the Company with or into
another corporation as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity are or
will be owned by the former shareholders of the Company; |
| (c) | the shareholders of the Company approve the sale of all or substantially all of the Company’s business
and/or assets to a person or entity which is not a member of the Company, |
provided that an Internal Reorganisation shall not be a Change of Control.
Competitor has the same meaning as under the Novartis AG Long
Term Incentive Plan.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
Compulsory Deferred Share Bonus Award means
a Deferred Share Bonus Award which the Participant must accept in respect of his Annual Incentive Award (or part thereof).
Company means Novartis AG.
Dealing Day means a day on which the Swiss
Exchange (SIX) or, in relation to ADIs, the national securities exchange in the US on which ADIs are listed, is open for business.
Dealing Restrictions means restrictions
on the dealing in Shares or the grant of Awards imposed by any law, regulation or Code of Practice (including the Novartis Global Insider
Trading Policy, as amended or replaced from time to time) or otherwise.
Deferred Share Bonus Award means an award
under the Plan (and includes both Compulsory and Voluntary Deferred Share Bonus Awards).
Determination Date means the date after
the Performance Period has ended on which the Board determines whether (and to what extent) a cash amount is payable to a Participant
under the Annual Incentive Plan having regard to the relevant Performance Targets.
Dividend Equivalents means a right to cash or Shares as described
in Rule 3.
Eligible Employee means any member of the
Executive Committee and the Corporate Executive of the Company or any employee or group of employees of the Company as the Board shall
determine.
Employer means the member of the Company
by or in which the Participant is or, where the context so admits, was an office holder or employed.
Grant Date means the date a Deferred Share Bonus Award (as the
context requires) is made.
Grant Notice means a grant notice provided to a Participant
in accordance with the Rules.
Grant Period means the period of 42 days commencing:
| (a) | the Dealing Day immediately following the day on which the Company announces results for any period; |
| (b) | the day on which the Company’s annual general meeting is held; |
| (c) | any day on which the Board resolves that exceptional circumstances exist which justify the making of an
Award. |
Internal Reorganisation means any event, offer, scheme, share
purchase, merger or arrangement whereby:
| (a) | a Change of Control occurs; and |
| (b) | immediately afterwards the share capital of the company then controlling (whether directly or indirectly)
the Company is owned substantially by the same persons who were shareholders of the Company immediately prior to such event, scheme or
arrangement in substantially the same proportions. |
Lock-In Period has the meaning set out in Rule 4.8.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
Market Value means in relation to a Share or ADI (as appropriate)
on any given day:
| (a) | if the Shares are admitted to trading on the Swiss Exchange (SIX) an amount equal to the closing price
on that day (or if there is no such price on that day the last preceding day for which such price is available); |
| (b) | if the ADIs are listed on a national securities exchange in the US an amount equal to the closing price
on that day (or if there is no such price on that day the last preceding day for which such price is available); |
| (c) | if the Shares are not admitted to trading on the Swiss Exchange (SIX) or the ADIs are not listed on a
national securities exchange in the US, then such value as is determined by the Board. |
Participant means an Eligible Employee who is selected by the
Board to participate in the Plan and is employed by the Company at the Grant Date.
Plan means the Novartis AG Deferred Share Bonus Plan.
Restricted Stock means an award of Shares subject to restrictions
in accordance with the Plan.
Restricted Stock Units means a right to receive Shares or cash
under the Plan (but subject to Rule 4.9 (cash and ADI alternative)).
Retirement means the Cessation of Employment after having attained
retirement age according to applicable local law, if any, in the Participant’s country of employment, or early retirement according
to local laws as approved by the employing entity; or at discretion of the Board of Directors the Cessation of Employment as a result
of a mutual agreement (as approved by the employing entity) with immediate receipt of a retirement benefit.
Rules mean the rules of the Plan (including all Schedules).
Schedule means a schedule to the Rules.
Service means the period of continuous
employment with the Company ending with the relevant Cessation of Employment for the purposes of the Plan PROVIDED ALWAYS THAT the Board
may determine that prior periods of employment with the Company and/or periods of employment with entities outside the Company (but which
are subsequently acquired by the Company) may be taken into account.
Share means a registered share of the Company
with a par value of CHF -.50 or in the case of SARs, notional Shares.
Stock Appreciation Rights or SARs means
an award under the Plan, the future value of which is based on the increase in the value of Shares (from the base value set by the Board
at the time an Award is made) which notionally comprises each SAR from the relevant Grant Date.
Vesting means:
| (a) | in the case of Restricted Stock Units, a Participant being entitled to receive Shares or cash; |
| (b) | in the case of Restricted Stock, restrictions under the Plan ceasing to apply; |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
| (c) | in the case of SARs, a Participant being entitled to receive a cash sum based on the growth in value of
the notional Shares comprising the Deferred Share Bonus Award, |
and “Vest” shall be construed accordingly.
Vesting Date means the date an Award vests
as determined by the Board and specified in the Grant Notice or otherwise as required under the Rules.
Vesting Period means the period between
the date on which an Award is granted and the Vesting Date.
Voluntary Deferred Share Bonus Award means
a Deferred Share Bonus Award which is made as a result of the Participant voluntarily electing to receive his Annual Incentive Award (or
part thereof) in the form of an award under this Plan.
22.2 Interpretation
Unless the context requires otherwise: words importing the singular
include the plural and vice versa; the word “includes” is not a word of limitation; the masculine includes the feminine and
vice versa, headings and boldings are for convenience only and do not affect the interpretation of these Rules.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
SCHEDULE 1
PARTICIPANTS WHO ARE OR BECOME MEMBERS OF THE ECN
1. APPLICATION
OF THIS SCHEDULE
This Schedule shall apply to:
| (a) | Deferred Share Bonus Awards granted to any Participant who at the relevant Grant Date is a member of the
ECN; and |
| (b) | Deferred Share Bonus Awards granted to any Participant who, after the relevant Grant Date, becomes a member
of the ECN. |
Where this Schedule applies relevant Deferred Share Bonus Awards shall
be subject to all the provisions of the Novartis AG Deferred Share Bonus Plan save as modified below.
2. DEFINITIONS
For the purposes of this Schedule the following definition shall apply:
“ECN” means the Executive Committee of
Novartis AG (including permanent attendees to that committee).
“Retirement” means the Cessation of Employment
after:
| (a) | having attained age 58 or older, or |
| (b) | in respect of those Participants who satisfied the Rule of 60 at December 31, 2015, having attained
55 or older and having completed as at least 10 years of Service. |
“Rule of 60”
the sum of the Participant’s age plus Service being equal to 60 or more. For the purposes of this definition the Participant’s
age and his Service shall be whole calendar years as at December 31, 2015.
3. LAPSE
OR FORFEITURE OF DEFERRED SHARE BONUS
AWARDS
The words “Subject to Board determination otherwise,” at
the start of Rule 5 shall not apply.
| 4. | CESSATION OF EMPLOYMENT
– INTRODUCTION |
The second paragraph of Rule 6.1 shall not
apply.
| 5. | LEAVING IN SPECIAL CIRCUMSTANCES |
| 5.1 | Rule 6.3(f) shall not apply. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
| 5.2 | Immediately following Rule 6.3 the following shall be added as Rule 6.3A: |
“In determining whether to approve
Retirement under Rule 6.3(a), the Board shall take into consideration the Participant’s satisfaction of certain conditions,
including:
| (a) | whether the Participant is leaving the Company in good standing and not for cause (for example because
of dishonesty, misconduct, gross negligence, violation of this employer’s code of ethics or similar reason); |
| (b) | whether the Participant has returned to his Employer all company property in his possession at his termination; |
| (c) | whether the Participant has cooperated with his Employer in the orderly handover and transition of his
duties and responsibilities prior to his date of termination; |
| (d) | whether the Participant has given his written commitment that for one year following his termination he
will not work for a Competitor and he will refrain from soliciting other employees of the Company to terminate their employment; and |
| (e) | whether the Participant has affirmed his obligation not to disclose confidential information he received
during his employment with the Company and to refrain from using any such information for any purpose not in Company’s business
interests.” |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
SCHEDULE 2
UNITED STATES
1. APPLICATION
OF THIS SCHEDULE
When Deferred Share Bonus Awards under the Plan
are to be granted the Board may determine that this Schedule applies, in which case such Awards shall be subject to all the provisions
of the Novartis AG Deferred Share Bonus Plan save as modified below.
ADIs subject to the Deferred Share Bonus Awards
under the Plan are intended to be registered under the United States Securities Act of 1933.
2. GRANT
OF DEFERRED SHARE BONUS
AWARDS – SHARES SUBJECT TO THE PLAN
| (a) | Subject to Rule 7.3, the aggregate number of ADIs made subject to Deferred Share Bonus Awards under
this Schedule may not exceed 2,780,000, plus any ADIs that were not issued under the Plan as of January 1, 2021; plus any ADIs subject
to outstanding Awards under the Plan as of January 1, 2021 that on or after January 1, 2021 cease for any reason to be subject
to such Awards. |
| (b) | Such ADIs shall be deemed to have been used in payment of Deferred Share Bonus Awards whether they are
actually delivered or the market value equivalent of such ADIs is paid in cash. In the event any Deferred Share Bonus Award is surrendered
or terminated, or expires or is forfeited, the number of ADIs no longer subject thereto shall thereupon be released and shall thereafter
be available for new Deferred Share Bonus Awards under this Schedule. |
| (c) | ADIs comprising Deferred Share Bonus Awards under this Schedule or delivered by the Company in settlement
of Deferred Share Bonus Awards under this Schedule may be derived from authorised and unissued Shares or from Shares or ADIs held in the
treasury of the Company or may be purchased on the open market or by private purchase. |
3. DEFINITIONS
For the purposes of this Schedule the following definition shall apply:
“Retirement” means the Cessation of Employment after
having attained age 55 or older and having completed at least 10 years of Service.
4. STOCK
APPRECIATION RIGHTS
SARs granted under this Schedule shall be subject to such terms and
conditions, not inconsistent with the Plan, as the Board may impose, including, but not limited to, the following:
| (a) | SARs with Participant discretion to exercise |
| (i) | Base Value. The Base Value for SARs per ADI subject to a SAR shall not be less than 100% of the
market value of an ADI at the Grant Date. |
| (ii) | Payment on exercise. On the exercise of a SAR, the Company shall pay to the Participant an amount
equal to the number of ADIs subject to the SAR multiplied by the excess, if any, of the market value of one ADI on the exercise date over
the Base Value. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
| (iii) | Market value. For the purposes of SARs subject to this Schedule, “market value” in
paragraphs 4(a)(i) and 4(a)(ii) of this Schedule on a given date means: |
| (aa) | if the ADIs are listed on a national securities exchange in the United States, the closing sale price
reported as having occurred on the primary exchange with which the Shares are listed and traded (currently the New York Stock Exchange)
on such date or, if there is no such sale on that date, then the last preceding date on which such a sale was reported; |
| (bb) | if the ADIs are not listed on any national securities exchange but is quoted on the National Market System
of the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), the trade price of the last
sale reported on such date or, if there is no such sale on that date, then the last preceding date on which such a sale was reported;
or |
| (cc) | if the ADIs are not listed on a national securities exchange nor quoted on NASDAQ, on a last sale basis
the amount determined by the Board to be the fair market value based upon a good faith attempt to value the Shares accurately. |
| (iv) | Dividend Equivalents. If the Board designates Dividend Equivalents to apply to SARs pursuant to
Rule 4.3(a), such accumulated Dividend Equivalents shall be paid to the Participant immediately upon Vesting. |
| (v) | No deferral of proceeds. Pursuant to the limitations of the United States Treasury Regulation Section 1.409A-1(b)(5)(i)(B)(3),
a Participant may not defer the proceeds of the exercise of a SAR. |
| (b) | SARs without Participant Discretion to exercise |
If a SAR is granted with a fixed exercise date
and the Participant has no discretion to exercise the SAR, Participants may elect to defer the payment of the proceeds of the automatic
exercise of the SAR, and any accumulated Dividend Equivalents, to the date later than the payment date specified in the Deferred Share
Bonus Award provided that the Participant makes such deferred election either as an initial deferral under United States Treasury Regulation
Section 1.409A-2(a) or pursuant to the subsequent deferral provisions of United States Treasury Regulation Section 1.409A-2(b).
The Board shall determine whether such deferral is in the form of Shares (ADIs) or cash. If deferrals are in Shares (ADIs), unless otherwise
directed by the Board such Shares (ADIs), and any accumulated Dividend Equivalents, shall be delivered upon such deferred payment date.
If the deferrals are in cash, the cash proceeds of such automatic exercise of the SARs shall be transferred into the applicable non-qualified
deferred compensation plan of the Company entity which employs the Participant.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
5. CONSEQUENCES
OF VESTING – RESTRICTED STOCK
UNITS
| 5.1 | Participants may elect to defer the payment of Restricted Stock Units, and any accumulated Dividend Equivalents,
to the date later than the payment date specified in the relevant Deferred Share Bonus Award provided that the Participant makes such
a deferred election either as an initial deferral under United States Treasury Regulation Section 1.409A-2(a) or pursuant to
the subsequent deferral provisions of United States Treasury Regulation Section 1.409A-2(b). The Board shall determine whether such
deferral is in the form of Shares (ADIs) or cash. If deferrals are in Shares (ADIs), unless otherwise directed by the Board, such Shares
(ADIs), and any accumulated Dividend Equivalents, shall be delivered from this Plan upon such deferred payment date. If deferrals are
in cash, the cash proceeds of such Awards shall be transferred into the applicable non-qualified deferred compensation plan of the Participant’s
employing Company in the United States. |
| 5.2 | Rule 4.3 shall be amended by inserting the underlined words below: |
“As soon as practicable after the
Vesting (but no later than the 15 th day of the third calendar month after the Vesting)
the Company shall transfer the number of Shares (or pay a cash sum if the Board has determined that the RSU is to be settled in cash)
in respect of which the Deferred Share Bonus Award has Vested to the Participant”.
6. CORPORATE
EVENTS
Should the Board determine that adjustments be
made to Deferred Share Bonus Awards under Rule 7, any such adjustments or modifications must be made in a manner which is consistent
with the provisions of section 409A of the United States Internal Revenue Code (“Code Section 409A”).
7. CODE
SECTION 409A
| 7.1 | Notwithstanding anything under the Plan to the contrary, to the extent applicable, it is intended that
the Plan as it applies to Participants shall comply with the provisions of Code Section 409A and the Plan and all applicable Deferred
Share Bonus Awards be construed and applied in a manner consistent with this intent. In furtherance thereof, any amount constituting a
“deferral of compensation” under Treasury Regulation Section 1.409A-1(b) that is payable to a Participant upon a
separation from service of the Participant (within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due to the
Participant’s death), occurring while the Participant shall be a “specified employee” (within the meaning of Treasury
Regulation Section 1.409A-1(i)) of the Company (as limited by Code Sections 414(b), (c), (m) and (o)), shall not be paid until
the earlier of: |
| (a) | the date that is six months following such separation from service; or |
| (b) | the date of the Participant’s death following such separation from service. |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
| 7.2 | Notwithstanding any provision of the Plan to the contrary, to the extent that a Deferred Share Bonus Award
constituting a “deferral of compensation” subject to Code Section 409A shall be deemed to be vested or restrictions lapse
upon the occurrence of a Change of Control, and if such Change of Control does not constitute a “change in control event”
(as defined in Treasury Regulation Section 1.409A-3(i)), then even though such Award may be deemed to be vested or restrictions lapse,
payment will only be made to the extent necessary to comply with the provisions of Code Section 409A, to the United States participant
on the earliest of: |
| (a) | the United States participant’s separation from service, the date payment otherwise would have been
made pursuant to the regular payment terms of the Award; or |
| (b) | the Participant’s death. |
8. US
EXECUTIVE FINANCIAL RECOUPMENT
PROGRAM
For awards granted on or after January 1,
2021 for US-based roles covered by the Incentive Compensation Restriction and Executive Financial Recoupment Program, as set forth in
Appendix E of the Corporate Integrity Agreement Between the Office of Inspector General of the Department of Health and Human Services
and Novartis Corporation (“2020 Novartis Corporate CIA”) (the “Corporate Executive Financial Recoupment Program”),
the Board temporarily delegates its authority and discretion to make Clawback determinations under section 9 of this Plan, with respect
to incentives awarded under this Plan, to the Recoupment Committee established under the Corporate Executive Financial Recoupment Program,
and to fulfil the obligations entrusted to the respective Recoupment Committee under such Program, for the term of the 2020 Novartis Corporate
CIA.
Covered Executives must agree to accept the terms
and conditions of the Executive Financial Recoupment Program as a condition of accepting awards under this Plan. The terms and conditions
of the Executive Financial Recoupment Program shall apply to all awards made under this Plan to Covered Executives during the term of
the 2020 Novartis Corporate CIA.
At the conclusion of the 2020 Novartis Corporate CIA, this temporary
delegation of authority and discretion shall cease and will revert to the Board. The 2020 Novartis Corporate CIA may be access online
at https://oig.hhs.gov/fraud/cia/agreements/Novartis_Corporation_06302020.pdf.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
SCHEDULE 3
RETENTION SHARE BONUS AWARDS
| 1. | APPLICATION OF THIS
SCHEDULE |
The Rules of the Novartis AG Deferred Share
Bonus Plan shall apply to an award granted in the form of a Retention Share Bonus Award granted or to be granted under this Schedule as
if it were a Compulsory Deferred Share Bonus Award, except as set out in this Schedule.
Where there is any conflict between the Rules and this Schedule,
the terms of this Schedule shall prevail.
For the purpose of this Schedule the following definition shall apply:
“Initial Conditions” |
means the condition or conditions determined by the Board and applicable to the calculation of the Initial Value. |
|
|
“Initial Period” |
means the period over which the Initial Conditions are measured, as determined by the Board. |
|
|
“Initial Value” |
means the notional cash values applicable to the Participant and attributable to a Retention Share Bonus Award as at the expiry of the applicable Initial Period. |
|
|
“Retention Share Bonus Award” |
means an Award granted under this Schedule to the Plan. |
| 3. | DETERMINATION OF
RETENTION SHARE BONUS
AWARD |
For the purposes of this Schedule, Rule 2.1 shall not apply and
shall be replaced by the following:
| “(a) | The Board may determine that an Award will be provided to the participant
in the form of a Retention Share Bonus Award. |
| (b) | Where the Board determines that a Participant shall be granted a Retention Share Bonus Award, it shall
also determine: |
| (i) | the minimum, target and maximum Initial Value; and |
| (ii) | the Initial Conditions applicable to such Initial Value (unless the Board has delegated setting such conditions, in which case they
shall determine the overall structure, approach and principles to be applied).” |
| 4. | DETERMINING THE NUMBER OF SHARES OR ADIS
SUBJECT TO A RETENTION SHARE BONUS
AWARD |
For the purposes of this Schedule, Rule 2.4 shall not apply and
shall be replaced by the following:
| “(a) | Following the expiry of the Initial Period, the Board shall grant a Retention
Share Bonus Award. The number of Shares or ADIs subject |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
or linked to such Award (“X”) shall be determined
by the Board as follows:
X = A
B
Where:
| A | subject to adjustments below, is the Initial Value as adjusted by the Board to take into account the satisfaction or otherwise of
the Initial Conditions following the expiry of the Initial Period; and |
| B | is Market Value of a Share or ADI (as appropriate) as at such date as the Board may determine as soon as practicable following the
expiring of the Initial Period rounded up, where necessary, to the nearest whole Share or ADI, |
provided that the Board may apply such other method of calculation
as it may determine from time to time.
| (b) | If during the Initial Period the Participant’s role and/or responsibilities have been altered, then: |
| (i) | A (as determined in Rule 2.4(a) above) may, at the discretion of
the Board and in such manner as the Board may determine from time to time, be adjusted to reflect such alteration in role and/or responsibilities; |
| (ii) | the Board may, at its discretion, determine that any or all of A (where relevant,
as adjusted in accordance with Rule 2.4(b)(i)) is paid in cash, subject to the appropriate deductions, to the Participant as soon
as practicable following determination of the cash sum payable. In this event, A in Rule 2.4(a) shall be that part of A not
settled in accordance with this Rule 2.4(b)(ii); |
| (c) | In the event that Rule 2.4(b)(ii) applies and any part of the Initial Value is settled in accordance with that Rule, then
that Participant shall have no right to receive any further benefit or payment or to receive Shares or ADIs in respect of that of the
Initial Value.” |
| 5. | TIMING OF RETENTION
SHARE BONUS AWARDS |
For the purposes of this Schedule, Rule 2.5 shall not apply and
shall be replaced by the following:
“Subject to any Dealing Restrictions which prevent
Retention Share Bonus Awards being granted, the Board shall grant such Retention Share Bonus Awards as soon as practicable within the
first Grant Period following the expiry of the Initial Period.”
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
| 6. | VESTING OF RETENTION
SHARE BONUS AWARDS |
Immediately following Rule 4.1, the following shall be added as
Rule 4.1A:
“To the extent that the Initial Conditions are not
met, there shall be no entitlement to receive a Retention Share Bonus Award.”
| 7. | LEAVING IN SPECIAL CIRCUMSTANCES
- RETENTION SHARE BONUS
AWARDS |
For the purposes of this Schedule,
Rule 6.3 and Rule 6.4 shall apply where a Participant Ceases Employment following the expiry of the Initial Period but prior
to the Vesting Date applicable to a Retention Share Bonus Award.
Immediately following Rule 6.3, the following shall
be added as Rule 6.3A:
| “(a) | If a Participant Ceases Employment during the Initial Period otherwise than
because of a reason set out in Rule 6.3(a) to (e) or Rule 6.4 then the Participant shall have no right to receive
any cash payment or a Retention Share Bonus Award. |
| (b) | If a Participant Ceases Employment during the Initial Period because of a reason set out in Rule 6.3(a) to
(e) or Rule 6.4 then the Board shall, by reference to the Initial Value applicable to that Participant, determine the cash sum
payable to the Participant as follows: |
| (i) | if the Participant, prior to Cessation of Employment, is not required to undertake employment duties for a defined period (“Garden
Leave”) then in respect of that part of his Initial Value which relates to the applicable period of Garden Leave: |
| (aa) | that element of his Initial Value which is referable to individual conditions shall be settled at target;
and |
| (bb) | that element of his Initial Value which is referable to business conditions shall be settled: |
| (A) | if, as at the date of Cessation of Employment, it is impractical to assess the relevant business conditions, at target; or |
| (B) | if, as at the date of Cessation of Employment, it is practical to assess the relevant business conditions, to the extent the Board
determines having regard to the relevant business conditions up to the date of such cessation; |
| (ii) | to the extent that (i) above does not apply then: |
| (aa) | if, as at the date of Cessation of Employment, it is impractical to assess the relevant conditions, at
target; or |
| (bb) | if, as at the date of Cessation of Employment, it is practical to assess the conditions, to the extent the Board determines having
regard to progress towards satisfying such conditions up to the date of such cessation, |
PROVIDED ALWAYS THAT settlement of the
Initial Value shall be reduced to take account of the proportion of the Initial Period during which the Participant was an Eligible Employee.
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
| (c) | In the event that Rule 6.3A(b) applies and any part of the Initial Value is settled in accordance with that Rule, then that
Participant shall have no right to receive any benefit or payment or to receive Shares or ADIs in respect of that Award.” |
| 8. | CHANGE OF CONTROL PRIOR TO
THE VESTING DATE - RETENTION
SHARE BONUS AWARDS |
For the purposes of this Schedule, Rule 7.1(a) shall
apply where a Change of Control occurs following the expiry of the Initial Period but prior to the Vesting Date applicable to a Retention
Share Bonus Award.
Immediately following Rule 7.1(a), the following shall be added
as Rule 7.1A:
| “(a) | If a Change of Control occurs or is anticipated to occur during the Initial
Period then the Initial Value shall vest on the Change of Control or at such earlier point as the Board shall determine and the Board
shall determine the cash sum in respect of such Initial Value that is payable as follows: |
(i) if,
as at the date of the Change of Control, it is impractical to assess the Initial Conditions, at target; or
(ii) if, as at the date of the
Change of Control, it is practicable to assess the applicable Initial Conditions, to the extent the Board determines having regard
to progress towards satisfying such conditions up to the date of the Change of Control,
PROVIDED ALWAYS THAT payment shall be reduced to take account
of the proportion of the Initial Period as has elapsed when the Change of Control occurs and during which the Participant was an Eligible
Employee.
| (b) | In the event that Rule 7.1A(a) applies and a Participant’s Initial Value is settled in accordance with that Rule,
then that Participant shall have no further right to receive any benefit or payment or to receive Shares or ADIs in respect of that Award.” |
Deferred Share Bonus Plan – January 22, 2014 and amended thereafter
Exhibit 4.7
![](https://www.sec.gov/Archives/edgar/data/1114448/000110465924024533/tm246116d1_ex4-7img001.jpg)
Working
Copy Effective January 1, 2024
NOVARTIS
CORPORATION
2011 STOCK INCENTIVE PLAN
FOR NORTH AMERICAN EMPLOYEES,
AS AMENDED
AND RESTATED
(THE
“PLAN”)
(Effective January 1, 2011)
1. Purpose
Novartis Corporation originally
established the Novartis Corporation 2001 Stock Incentive Plan for North American Employees (the “Original Plan”), effective
as of January 1, 2001, which has subsequently been amended from time to time, including the Novartis Corporation 2011 Stock Incentive
Plan for North American Employees (the “Plan”). This document reflects and incorporates amendments to the Plan, which are
effective as of January 1, 2024, and apply to any Eligible Person employed by a member of the Novartis Group on or after that date.
The purpose of the Plan is
to provide a means through which the Company and its Subsidiaries may attract able persons to enter and remain in the employ or in a consulting
relationship with the Company and its Subsidiaries and to provide a means whereby they can acquire and maintain Stock ownership, or be
paid incentive compensation measured by reference to the value of Stock, thereby strengthening their commitment to the welfare of the
Company and its Subsidiaries and promoting an identity of interest between shareholders of Novartis AG and these employees, directors
and consultants. So that the appropriate incentive can be provided, the Plan provides for granting Incentive Stock Options, Nonqualified
Stock Options (including Tradable Options), Stock Appreciation Rights, Restricted Stock Awards or any combination of the foregoing.
The Plan is effective as of
January 1, 2011, and applies to any Eligible Person employed by a member of the Novartis Group on or after that date.
2. Definitions
The following definitions
shall be applicable throughout the Plan.
(a) “ADS”
means a Novartis AG American Depositary Share, each of which represents one ordinary share of Novartis AG, nominal value CHF 0.50 per
share.
(b) “Award”
means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock
or Restricted Stock Unit Award under the Plan.
(c) “Award
Agreement” means the electronic or paper award notice or agreement, if any, between the Company (or one of its Subsidiaries) and
a Participant who was granted an Award which defines rights and obligations of the parties with respect to such Award in addition to those
set forth in the Plan.
(d) “Board”
means the Board of Directors of the Company.
(e) “Cause”
means the Company, a Subsidiary or any other member of the Novartis Group (as the case may be) with which the Participant has an employment,
consulting or other contractual relationship having cause to terminate the Participant’s employment or service with the Novartis
Group in accordance with the provisions of any existing employment, consulting or any other agreement between the Participant and the
Company, such Subsidiary or such other member of the Novartis Group (as the case may be) or, in the absence of such an employment, consulting
or other agreement which defines or describes such cause, upon (i) the determination by the Company, such Subsidiary or such other
member of the Novartis Group (as the case may be), in the applicable entity’s sole discretion, with which the Participant has a
relationship that the Participant has engaged, during the performance of his/her duties to the Company, Subsidiary or such other member
of the Novartis Group, in significant acts or omissions including, but not limited to, dishonesty, willful misconduct, gross negligence
or a material violation of the Company’s Code of Ethics, relating to the business of the Company, such Subsidiary or such other
member of the Novartis Group.
(f) “Cessation
of Employment” occurs, for the purposes of the Plan, when a Participant ceases to hold an office or employment with any member of
the Novartis Group provided that a Participant will not be treated as Ceasing Employment in circumstances in which that Participant is
on a leave of absence where the Participant’s right to re-employment is guaranteed either by statute or contract and employment
is not otherwise terminated during such leave of absence (in which case the participant will Cease Employment at the time of such termination)
and similar terms, such as “Ceases Employment” or “Ceasing to be Employed”, shall be construed accordingly.
(g) “Change
in Control” shall be deemed to occur if:
(i) any
person or group of persons who are acting together purchases or otherwise becomes the beneficial owner or has the right to acquire such
beneficial ownership (whether or not such right is exercisable immediately or subject to passage of time or other conditions) of voting
securities representing more than 50% of the combined voting power of all outstanding securities of Novartis AG;
(ii) Novartis
AG shareholders approve an agreement to merge or consolidate Novartis AG with or into another corporation as a result of which less than
50% of the outstanding voting securities of the surviving or resulting entity are or will be owned by the former shareholders of Novartis
AG;
(iii) Novartis
AG shareholders approve the sale of all or substantially all of the Novartis AG business and/or assets to a person or entity which is
not a member of the Group; provided that an Internal Reorganization shall not be a Change in Control.
(h) “Code”
means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.
(i) “Committee”
means the Policy (Stock) Committee of the Board or such other committee appointed by the Board to administer the Plan.
(j) “Company”
means Novartis Corporation, a New York corporation.
(k) “Date
of Grant” means the date on which the granting of an Award is authorized or such other date as may be specified in such authorization.
(l) “Disability”
and “Disabled” shall have the meaning set forth in Section 22(e) (3) of the Code.
(m) “ECN”
means the Executive Committee of Novartis AG (including permanent attendees to that committee).
(n) “Eligible
Person” means (i) a person regularly employed in the United States or Canada by the Company, a Subsidiary or any other member
of the Novartis Group (including any such person who is working in the United States on secondment or other nonpermanent basis) who makes
a significant contribution to the financial results of any of the foregoing entities; (ii) a director of the Company or a Subsidiary
(including non-employee directors) or (iii) a consultant to the Company or a Subsidiary. An Eligible Person (regardless of whether
such Eligible Person is eligible to apply for Retirement status under the Plan) who either (x) has been notified in writing that
his/her employment or service with the Novartis Group will terminate due to any reason or (y) has notified his/her employing or contracting
Novartis Group Company in writing of his/her intent to resign shall not be eligible to receive Awards under the Plan after his/her date
of written notification.
(o) “Exchange
Act” means the Securities Exchange Act of 1934.
(p) “Fair
Market Value” on a given date means (i) if the Stock is listed on a national securities exchange in the United States, the
closing sale price reported as having occurred on the primary exchange with which the Stock is listed and traded (currently the New York
Stock Exchange) on such date, or, if there is no such sale on that date, then on the last preceding date on which such a sale was reported;
(ii) if the Stock is not listed on any national securities exchange but is quoted in the National Market System of the National Association
of Securities Dealers Automated Quotation System the trade price of the last sale reported on such date, or, if there is no such sale
on that date, then on the last preceding date on which a sale was reported; or (iii) if the Stock is not listed on a national securities
exchange nor quoted in the National Market System of the National Association of Securities Dealers Automated Quotation System on a last
sale basis, the amount determined by the Committee to be the fair market value based upon a good faith attempt to value the Stock accurately.
(q) “Holder”
means a Participant who has been granted an Award.
(r) “Incentive
Stock Option” means an Option granted by the Committee to a Participant under the Plan which is designated by the Committee as an
“incentive stock option” within the meaning of Section 422 of the Code. Notwithstanding anything in the Plan to the contrary,
no Incentive Stock Option shall be granted under the Plan after December 31, 2020.
(s) “Internal
Reorganization” means any event, offer, scheme, share purchase, merger or arrangement whereby:
(i) a
Change in Control occurs; and
(ii) immediately
afterwards the share capital of the Company then controlling (whether directly or indirectly) Novartis AG is owned substantially by the
same persons who were shareholders of Novartis AG immediately prior to such event, scheme or arrangement in substantially the same proportions.
(t) “Nonqualified
Stock Option” means an Option granted under the Plan which is not designated as an Incentive Stock Option.
(u) “Novartis
AG” means Novartis AG, the parent of the Company, the stock of which is traded on the SIX Swiss Exchange and the ADSs of which are
listed on the New York Stock Exchange.
(v) “Novartis
Group” means Novartis AG and each corporation, partnership, limited liability company or other business organization (each a “Business
Entity”) more than 50% of the voting power of which is owned by Novartis AG either directly or indirectly through one or more intermediate
Business Entities more than 50% of the voting power of each of which is owned either directly by Novartis AG or by another such intermediate
Business Entity.
(w) “Option”
means an Award granted under Section 8 of the Plan.
(x) “Option
Period” means the period described in Section 8(c).
(y) “Option
Price” means the exercise price set for an Option described in Section 8(a).
(z) “Participant”
means an Eligible Person who has been selected by the Committee in its sole discretion to participate in the Plan and to receive an Award
pursuant to Section 6.
(aa) “Plan”
means the Company’s 2011 Stock Incentive Plan, as amended from time to time, and as amended and restated in this document.
(bb) “Restricted
Period” means, with respect to any share of Restricted Stock or any Restricted Stock Unit, the period of time determined by the
Committee during which such Award is subject to the restrictions set forth in Section 10 of the Plan.
(cc) “Restricted
Stock” means shares of Stock issued or transferred to or on behalf of a Participant subject to forfeiture and the other restrictions
set forth in Section 10 of the Plan.
(dd) “Restricted
Stock Award” means an Award of Restricted Stock or Restricted Stock Units granted under Section 10 of the Plan.
(ee) “Restricted
Stock Unit” means the potential right to acquire one share of Stock.
(ff) “Retirement”
means, except as set forth in an Award Agreement, a Participant’s Cessation of Employment for any reason other than Cause or such
other factors as the Committee may consider in its discretion after such Participant has attained age 55 or older and completed 10 or
more Years of Service, or any other date approved by the Committee. Notwithstanding anything in this Plan to the contrary, for purposes
of any Restricted Stock Award granted on or after February 4, 2004, and any Option granted on or after January 1, 2009, (x) no
Cessation of Employment will constitute a “Retirement” without the consent of the Committee (determined in accordance with
procedures described in Addendum B); and (y) for any Participant whose Cessation of Employment occurs on or after January 1,
2015, no such Cessation of Employment will constitute a “Retirement” unless the Participant executes (and does not revoke)
a general release of claims acceptable to the Company.
(gg) “Securities
Act” means the Securities Act of 1933, as amended.
(hh) “Stock”
means ADSs or such other authorized shares of stock of Novartis AG as from time to time may be authorized for use under the Plan.
(ii) “Stock
Appreciation Right” or “SAR” means an Award granted under Section 9 of the Plan.
(jj) “Strike
Price” means the price set for an SAR described in Section 9(a).
(kk) “Subsidiary”
means any corporation or other legal entity that is organized in the United States (including under the laws of any State) or Canada and
more than 50% of whose stock having general voting power (or, in the case of a legal entity other than a corporation, more than 50% of
the voting interests in which) is owned, directly or indirectly, by Novartis AG.
(ll) “Tradable
Options” is defined in Section 8(h).
(mm) “Years
of Service” means the total period of employment with Novartis AG and its Subsidiaries, including prior periods of service without
regard to any intervening break in service; provided, however, that no Years of Service shall be granted under this Plan for service with
an entity that is not part of the Novartis Group, or for an entity prior to it becoming part of the Novartis Group unless the Committee
approves the granting of such service. A Participant’s prior service as an independent contractor or service with a staffing agency
will not be included in the calculation of Years of Service under this Plan. Notwithstanding anything to the contrary contained above
a Participant’s prior service with Chiron Corporation, Alcon, Inc. and Fougera Pharmaceuticals, Inc. (“Fougera”)
(applicable with respect to Fougera to “Continuing Employees” as defined in the merger agreement relating to the acquisition
of Fougera) shall be included as Years of Service for calculation of eligibility for Retirement under paragraph 2(ff).
3. Effective
Date, Duration and Shareholder Approval
The Plan is effective as of
January 1, 2024. The Plan shall have no expiration date and administration of the Plan shall continue in effect until all matters
relating to the payment of Awards previously granted have been settled.
4. Administration
The Plan shall be administered
by the Committee composed of at least three persons. The majority of the members of the Committee shall constitute a quorum. The acts
of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the Committee
shall be deemed the acts of the Committee.
Subject to the provisions
of the Plan, the Committee, in its sole discretion, shall have exclusive power to:
(i) Select
the Eligible Persons to participate in the Plan;
(ii) Determine
the nature and extent of the Awards to be made to each Participant;
(iii) Determine
the time or times when Awards will be made to Eligible Persons;
(iv) Determine
the duration of each Restricted Period;
(v) Determine
the conditions to which the payment of Awards may be subject;
(vi) Prescribe
the form of Award Agreement, if any, or other form or forms evidencing Awards; and
(vii) Cause
records to be established in which there shall be entered, from time to time as Awards are made to Eligible Persons, the date of each
Award, the number of Incentive Stock Options, Nonqualified Stock Options, SARs, Restricted Stock Units and shares of Restricted Stock
awarded by the Committee to each Eligible Person, and the expiration date and the duration of any applicable Restricted Period.
(viii) Modify
existing Awards as it determines to be appropriate and consistent with the Plan and applicable law.
The Committee shall have the
authority, subject to the provisions of the Plan, to establish, adopt, or revise such rules and regulations and to make all such
determinations relating to the Plan as it may deem necessary or advisable for the administration of the Plan. The Committee’s interpretation
of the Plan or any documents evidencing Awards granted pursuant thereto and all decisions and determinations by the Committee with respect
to the Plan shall be final, binding, and conclusive on all parties unless otherwise determined by the Board.
5. Grant
of Awards; Shares Subject to the Plan
The Committee may, from time
to time, grant Awards of Options, Stock Appreciation Rights, Restricted Stock Units or Restricted Stock, under the Plan to one or more
Eligible Persons; provided, however, that:
(a) Subject
to Section 12, the aggregate number of shares of Stock made subject to all Awards may not exceed 161,000,000; plus any shares of
Stock that were not issued under the Original Plan as of the Effective Date; plus any shares of Stock subject to outstanding awards under
the Original Plan as of the Effective Date that on or after the Effective Date cease for any reason to be subject to such awards;
(b) Such
shares shall be deemed to have been used in payment of Awards whether they are actually delivered or the Fair Market Value equivalent
of such shares is paid in cash. In the event any Option, SAR not attached to an Option or Restricted Stock Award, shall be surrendered,
terminate, expire, or be forfeited, the number of shares of Stock no longer subject thereto shall thereupon be released and shall thereafter
be available for new Awards under the Plan; and
(c) Stock
delivered by the Company in settlement of Awards under the Plan may be authorized and unissued Stock or Stock held in the treasury of
Novartis AG or held by another member of the Novartis Group or may be purchased on the open market or by private purchase.
6. Eligibility
Participation shall be limited
to Eligible Persons selected by the Committee.
7. Chairman’s
Discretionary Authority
Notwithstanding any vesting
dates or exercise periods set by the Committee, the Chairman of the Board of the Company may, in his/her sole discretion, for any individual
Participant, accelerate the exercisability of any form of stock grant made available under this Plan, delay or defer the expiration of
any such grant (but not beyond its original Grant Period) or, in the case of any Nonqualified Stock Option, set a different Option Period
which may be longer or shorter than ten years, which actions shall not affect the terms and conditions of any such Option other than with
respect to exercisability, expiration and/or the Option Period applicable thereto. Notwithstanding anything to the contrary expressed
above, any actions to accelerate, change, delay or defer any stock grant which affects the entire type of grant to Participants receiving
such a grant in any given year can only be made by the consent of the Stock Committee and the Compensation Committee of the Board of Directors
of the parent, Novartis AG.
8. Stock
Options
The Committee is authorized
to grant one or more Incentive Stock Options or Nonqualified Stock Options to any Participant; provided, however, that no Incentive
Stock Options shall be granted to any Participant who is not an employee of the Company or a Subsidiary. Each Option so granted shall
be subject to the following conditions or to such other conditions as may be reflected in any applicable Award Agreement.
(a) Option
Price. The exercise price (“Option Price”) per share of Stock for each Option shall be set by the Committee at the time
of grant but, with respect to Incentive Stock Options shall not be less than the Fair Market Value of a share of Stock at the Date of
Grant.
(b) Manner
of Exercise and Form of Payment. Options which have become exercisable may be exercised by delivery of a notice of exercise to
the Committee or its designee, in a form prescribed by the Committee or its designee, accompanied by payment of the Option Price. The
Option Price shall be payable by bank draft or certified personal check and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised (provided that such Stock has been held by the Participant for at least six months) or, in the discretion
of the Committee, either (i) in other property having a fair market value on the date of exercise equal to the Option Price, or (ii) by
delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly to the Company an amount of sale or
loan proceeds sufficient to pay the Option Price.
(c) Vesting,
Option Period and Expiration. Options shall vest and become exercisable in such manner and on such date or dates determined by the
Committee, which vesting shall take place no sooner than three years after the date of grant, unless a shorter period is designated as
provided in subparagraph (d) below. Options shall be exercisable as soon as administratively practicable following their vesting.
Options shall expire after such period (the “Option Period’) as may be determined by the Committee, which Option Period (i) in
the case of Incentive Stock Options shall be ten years and (ii) in the case of Nonqualified Stock Options shall be ten years unless
the Committee shall specify a longer period than ten years in individual circumstances, as determined by the Committee, on the basis of
national tax law other than U.S. law concerning the valuation of the Option at grant and on the resulting tax liability of the Participant,
which different period shall not affect the terms and conditions of any such Option other than with respect to the Option Period. If an
Option is exercisable in installments, such installments or portions thereof which become exercisable shall remain exercisable until the
Option expires. Unless otherwise stated in the applicable Option Award Agreement or unless otherwise extended in the exercise of its discretion
by the Committee, the Option shall expire earlier than the end of the Option Period in the following circumstances:
(i) If
prior to the end of the Option Period, the Holder shall undergo a Cessation of Employment, the vested Option shall expire on the earlier
of the last day of the Option Period or the date that is ninety days after the date of separation. In such event, the Option shall remain
exercisable by the Holder until its expiration, only to the extent the Option was exercisable at the time of such Cessation of Employment.
(ii) For
Options granted prior to February 4, 2003, if the Holder dies or the Holder’s employment with the Novartis Group is terminated
by reason of Retirement prior to the end of the Option Period and while still in the employ or service of the Company, a Subsidiary or
another member of the Novartis Group, or within thirty days of Normal Termination, such Holder becomes Disabled, the Option shall become
100% vested and nonforfeitable and shall expire on the earlier of the last day of the Option Period or the date that is (i) one year
with respect to an Incentive Stock Option and (ii) three years with respect to a Nonqualified Stock Option after the date of death,
Disability or Retirement of the Holder. In the event of death, the Option shall remain exercisable by the person or persons to whom the
Holder’s rights under the Option pass by will or the applicable laws of descent and distribution until its expiration, only to the
extent the Option was exercisable by the Holder at the time of death.
(iii) Notwithstanding
anything in the Plan to the contrary, for Options granted on or after February 4, 2003, if a Holder’s employment with all members
of the Novartis Group is terminated by reason of death, Disability or Retirement (approved by the Stock Committee as provided in Section 2(ff)
for Options granted on or after January 1, 2009) prior to the end of the Option Period, the Option shall become 100% vested and nonforfeitable
and shall expire on the last day of the Option Period.
(iv) Notwithstanding
anything in the Plan to the contrary, for Options granted on or after February 1, 2006, if a Holder’s employment with all members
of the Novartis Group is terminated by reason of (1) Cessation of Employment by the Participant with written approval of the Stock
Committee or (2) by the member of the Novartis Group with which the Participant has an employment, consulting or other contractual
relationship, without Cause, and within thirty days of such Cessation of Employment such Holder becomes Disabled, the Option shall become
100% vested and nonforfeitable and shall expire on the last day of the Option Period.
(v) Notwithstanding
anything in the Plan to the contrary, for Options granted on or after January 1, 2015, if a Participant Ceases Employment Clause
1 in ADDENDUM B regarding Cessation of Employment shall apply to such Options.
(d) Other
Terms and Conditions. An Option granted under the Plan may be evidenced by an Award Agreement, which may contain such provisions as
may be determined by the Committee and, except as may be specifically stated otherwise in such Award Agreement, such Option shall be subject
to the following terms and conditions:
(i) Each
Option issued pursuant to this Section 8 or portion thereof that is exercisable shall be exercisable for the full amount or for any
part thereof, subject to any limitations that may be imposed on the partial exercise in the discretion of the Committee to reflect the
need for administrative convenience.
(ii) Each
ADS purchased through the exercise of an Option issued pursuant to this Section 8 shall be paid for in full at the time of the exercise.
Each Option shall cease to be exercisable, as to any share of Stock, when the Holder purchases the share or exercises a related SAR or
when the Option expires.
(iii) Subject
to Sections 8(h) and 11(l), Options issued pursuant to this Section 8 shall not be transferable by the Holder except by
will or the laws of descent and distribution and shall be exercisable during the Holder’s lifetime only by him.
(iv) Each
Option issued pursuant to this Section 8 shall vest and become exercisable by the Holder in accordance with the vesting schedule
established by the Committee and set forth in the Award Agreement, consistent with the requirements of subparagraph(c) above.
(v) Any
Award Agreement may contain a provision that, upon demand by the Committee for such a representation, the Holder shall deliver to the
Committee at the time of any exercise of an Option issued pursuant to this Section 8 a representation in the form prescribed by the
Committee that the shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of an
Option issued pursuant to this Section 8 shall be a condition precedent to the right of the Holder or such other person to purchase
any shares. In the event certificates for Stock are delivered under the Plan with respect to which such investment representation has
been obtained, the Committee may cause a legend or legends to be placed on such certificates to make appropriate reference to such representation
and to restrict transfer in the absence of compliance with applicable federal or state securities laws.
(vi) Any
Incentive Stock Option Award Agreement shall contain a provision requiring the Holder to notify the Company in writing immediately after
the Holder makes a disqualifying disposition of any Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying
disposition is any disposition (including any sale) of such Stock before the later of (a) two years after the Date of Grant of the
Incentive Stock Option or (b) one year after the date the Holder acquired the Stock by exercising the Incentive Stock Option.
(e) Incentive
Stock Option Grants to 10% Shareholders. Notwithstanding anything to the contrary in this Section 8, if an Incentive Stock Option
is granted to a Holder who owns stock representing more than ten percent of the voting power of all classes of stock of Novartis AG or
of a Subsidiary, the Option Period shall not exceed five years from the Date of Grant of such Option and the Option Price shall be at
least 110 percent of the Fair Market Value (on the Date of Grant) of the Stock subject to the Option.
(f) $100,000
Per Year Limitation for Incentive Stock Options. To the extent the aggregate Fair Market Value (determined as of the Date of Grant)
of Stock for which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans
of the Company and its Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be treated as Nonqualified Stock Options.
(g) Voluntary
Surrender. The Committee may permit the voluntary surrender of all or any portion of any Nonqualified Stock Option issued pursuant
to this Section 8 and its corresponding SAR, if any, granted under the Plan to be conditioned upon the granting to the Holder of
a new Option for the same or a different number of shares as the Option surrendered or require such voluntary surrender as a condition
precedent to a grant of a new Option to such Participant. Such new Option shall be exercisable at an Option Price, during an Option Period,
and in accordance with any other terms or conditions specified by the Committee at the time the new Option is granted, all determined
in accordance with the provisions of the Plan without regard to the Option Price, Option Period, or any other terms and conditions of
the Nonqualified Stock Option surrendered.
(h) Tradable
Options. The Committee may grant Nonqualified Stock Options that the Holder may sell on or after the date such Options become vested
to a Market Maker in accordance with procedures established from time to time by the Committee and by the Market Maker. For purposes of
this Section 8(h), the term “Market Maker” shall mean UBS AG, or any other entity identified from time to time by the
Committee. Upon the sale by a Holder of such Options to the Market Maker, and notwithstanding any other provision of this Plan to the
contrary, such Options shall not expire until the last day of the Option Period.
9. Stock
Appreciation Rights
Any Option granted under the
Plan may include SARs, either at the Date of Grant or, except in the case of an Incentive Stock Option, by subsequent amendment. The Committee
also may award SARs to Eligible Persons independent of any Option. An SAR shall confer on the Holder thereof the right to receive in shares
of Stock, cash or a combination thereof the value equal to the excess of the Fair Market Value of one share of Stock on the date of exercise
over the Strike Price of the SAR, with respect to every share of Stock for which the SAR is granted. An SAR shall be subject to such terms
and conditions not inconsistent with the Plan as the Committee shall impose, including, but not limited to, the following:
(a) Strike
Price. The Strike Price per share of Stock for which an SAR is granted shall be set by the Committee at the time of grant, but (i) with
respect to an SAR granted in connection with an Option the Strike Price shall be equal to the Option Price of such Option and (ii) with
respect to an SAR granted independently of an Option, the Strike Price shall not be less than 100% of the Fair Market Value of a share
of Stock at the Date of Grant.
(b) Vesting.
SARs granted in connection with an Option shall become exercisable, be transferable and shall expire according to the same vesting schedule,
transferability rules and expiration provisions as the corresponding Option. An SAR granted independently of an Option shall become
exercisable, be transferable and shall expire in accordance with a vesting schedule, transferability rules and expiration provisions
as established by the Committee and reflected in an Award Agreement.
(c) Automatic
Exercise. If on the last day of the Option Period (or in the case of an SAR granted independently of an Option, the period established
by the Committee after which the SAR shall expire), the Fair Market Value of the Stock exceeds the Strike Price, the Holder has not exercised
the SAR or the corresponding Option (if any), and neither the SAR nor the corresponding Option (if any), has expired, such SAR shall be
deemed to have been exercised by the Holder on such last day and the Company shall make the appropriate payment there for.
(d) Payment.
Upon the exercise of an SAR, the Company shall pay to the Holder an amount equal to the number of shares subject to the SAR multiplied
by the excess, if any, of the Fair Market Value of one share of Stock on the exercise date over the Strike Price. The Company shall pay
such excess in cash, in shares of Stock valued at Fair Market Value, or any combination thereof, as determined by the Committee. Fractional
shares shall be settled in cash.
(e) Method
of Exercise. A Holder may exercise an SAR after such time as the SAR vests by filing an irrevocable notice with the Committee or its
designee, in a form prescribed by the Committee or its designee, specifying the number of SARs to be exercised, and the date on which
such SARs were awarded.
(f) Expiration.
Each SAR shall cease to be exercisable, as to any share of Stock, when the Holder exercises the SAR or exercises a related Option, with
respect to such share of Stock. An SAR shall expire ten years after its Date of Grant, unless the Committee shall specify a shorter period.
10. Restricted
Stock and Restricted Stock Unit Awards
(a) Award
of Restricted Stock and Restricted Stock Units.
(i) The
Committee shall have the discretion and authority (1) to grant Restricted Stock and Restricted Stock Units, (2) to issue or
transfer Restricted Stock and Restricted Stock Units to Eligible Persons, and (3) to establish terms, conditions and restrictions
applicable to such Restricted Stock and Restricted Stock Units, including the Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock or Restricted Stock Units shall be granted or become vested, the number of shares
or units to be covered by each grant and the consideration, if any, required to be paid by a Participant for an award of Restricted Stock
or Restricted Stock Units.
(ii) The
Holder of a Restricted Stock Award shall execute and deliver to the Company (or acknowledge by electronic means) any Award Agreement issued
with respect to the Restricted Stock and Restricted Stock Units setting forth the restrictions applicable to such Restricted Stock and
Restricted Stock Units. If the Committee determines that the Restricted Stock shall be held in escrow rather than delivered to the Holder
or held in a brokerage account by the Company (or in such other form as the Committee determines to be appropriate) pending the release
of the applicable restrictions, the Holder additionally shall execute and deliver to the Company (1) an escrow agreement satisfactory
to the Committee, and (2) the appropriate blank stock powers with respect to the Restricted Stock covered by such agreements. If
a Holder shall fail to execute or acknowledge by electronic means any required Restricted Stock Award Agreement and, if applicable, an
escrow agreement and stock powers, the Award shall be null and void. Subject to the restrictions set forth in Section 10(b), the
Holder shall generally have the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted
Stock, but, beginning with grants issued on or after January 1, 2011, shall not have a right to receive dividends or dividend equivalents
or a right to vote on shareholder matters in connection with such Restricted Stock unless or until such restrictions have lapsed Upon
the Award of Restricted Stock, the Committee may cause a Stock certificate registered in the name of the Holder to be issued and, if it
so determines, deposited together with the Stock powers with an escrow agent designated by the Committee. If an escrow arrangement is
used, the Committee shall cause the escrow agent to issue to the Holder a receipt evidencing any Stock certificate held by it registered
in the name of the Holder. The Committee may also elect to hold such Restricted Stock in such form as it determines to be appropriate.
(b) Restrictions.
(i) Restricted
Stock and Restricted Stock Units awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted
Period, and to such other terms and conditions as may be set forth in any applicable Award Agreement: (1) if an escrow arrangement
is used, the Holder shall not be entitled to delivery of any Stock certificate; (2) the shares of Restricted Stock shall be subject
to the restrictions on transferability set forth in the Award Agreement; and (3) the shares or units shall be subject to forfeiture
to the extent provided in subparagraph (d) below and in the Award Agreement and, to the extent such shares of Restricted Stock are
forfeited, any Stock certificates that have been issued shall be returned to the Company, and all rights of the Holder to such shares
and as a shareholder shall terminate without further obligation on the part of the Company.
(ii) The
Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock or Restricted Stock Units whenever
it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Restricted
Stock Award, such action is appropriate.
(c) Restricted
Period. The Restricted Period of Restricted Stock and Restricted Stock Units shall commence on the Date of Grant and shall expire
from time to time as to that part of the Restricted Stock and Restricted Stock Units indicated in a schedule established by the Committee
and set forth in any Award Agreement. For annual Awards made on or after January 1, 2024, unless otherwise provided by the Committee,
such annual Awards will vest in substantially equal thirds (each a tranche), with one-third of the annual Award vesting on each annual
anniversary of the Date of Grant. Nothing in the foregoing sentence will preclude the Committee from applying individual terms and conditions
to Awards other than annual Awards.
(d) Forfeiture
Provisions.
(i) For
Awards granted up to and including December 31, 2014, if a Holder Ceases Employment by reason of death, Disability or Retirement
(as approved by the Committee as provided in Section 2(ff)), all restrictions on the Award shall expire. Except to the extent determined
by the Committee and reflected in the underlying Award Agreement, in the event a Holder Ceases Employment (either by the Holder or by
the Company) during a Restricted Period for any reason other than death, Disability or Retirement, that portion of the Award with respect
to which restrictions have not expired shall be completely forfeited.
(ii) Notwithstanding
anything in the Plan to the contrary, for Awards granted on or after January 1, 2015, if a Participant Ceases Employment Clause 1
in ADDENDUM B regarding Cessation of Employment shall apply to such Awards.
(e) Delivery
of Stock. Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock and Restricted Stock Units covered
by a Restricted Stock Award, the restrictions set forth in Section 10 (b) and any Award Agreement shall be of no further force
or effect with respect to shares of Restricted Stock and Restricted Stock Units which have not then been forfeited. If an escrow arrangement
is used for shares of Restricted Stock, upon such expiration, the Company shall deliver to the Holder, or his/her beneficiary, without
charge, the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired
(to the nearest full share) and any cash dividends or Stock dividends credited to the Holder’s account with respect to such Restricted
Stock and the interest thereon, if any. With respect to Restricted Stock Units, unless a Holder has made a proper and timely deferral
election under Section 17 below, the Company shall credit (net of any tax withholding) shares of Stock reflecting the number of Restricted
Stock Units which have not then been forfeited and to which the Restricted Period has expired to a brokerage account in the name of the
Holder or his/her beneficiary (or hold such shares in such other form as the Committee determines to be appropriate) until the Holder
or his/her beneficiary provides direction regarding the delivery of such shares of Stock. The Company will coordinate with the equity
plan third party administrator to deliver such shares of Stock as soon as administratively practicable following vest date.
(f) Stock
Restrictions. To the extent a certificate is issued representing Restricted Stock awarded under the Plan, each such certificate shall
bear the following legend until the end of the Restricted Period with respect to such Stock:
(i) “Transfer
of this certificate and the shares represented hereby is restricted pursuant to the terms of a Restricted Stock Agreement, dated as of
, between Novartis Corporation and a copy of such Agreement is on file at the offices of the Company at 608 Fifth Avenue New York, New
York 10020.”
(ii) Stop
transfer orders shall be entered with Novartis AG’s transfer agent and registrar against the transfer of legended securities.
(g) Deferral
of Restricted Stock Unit Awards. Effective for Restricted Stock Units awarded on or after January 1, 2014, Participants may elect
to defer the cash proceeds of vested Restricted Stock Units at the end of the Restricted Period; provided that the Participant makes such
a deferred election either as an initial deferral under Treasury Regulation Section 1.409A-2(a) or pursuant to the subsequent
deferral provisions of Treasury Regulation Section 1.409A-2(b). The cash proceeds of any deferred Restricted Stock Unit award shall
be transferred into the applicable non-qualified deferred compensation plan of the Participant’s employing Novartis Group Company
and shall be payable to the Participant in accordance with the terms of the applicable nonqualified deferred compensation plan.
11. General
(a) Additional
Provisions of an Award. Awards under the Plan also may be subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate including, without limitation, provisions to assist the Participant
in financing the purchase of Stock upon the exercise of Options, provisions for the forfeiture of or restrictions on resale or other disposition
of shares of Stock acquired under any Award, provisions giving the Company the right to repurchase shares of Stock acquired under any
Award in the event the Participant elects to dispose of such shares, and provisions to comply with Federal and state securities laws and
Federal and state tax withholding requirements. Any such provisions shall be reflected in the applicable Award agreement. The Committee
shall not be required to provide uniform terms for Awards to all Participants and, in determining the provisions to be included in Awards
made to any Participant, may take into account such considerations as it considers reasonable or appropriate (which, without limitation,
may include tax considerations related to such Participant’s residence or nationality).
(b) Clawback
Provision.
(i) The
granting and vesting of any form of grant under this Plan is subject to the Participant’s adherence to and compliance with all applicable
laws, all policies adopted by Novartis AG or any member of the Novartis Group to comply with such laws, including but not limited to the
Novartis AG Policy Governing the Recovery of Erroneously Awarded Compensation, as well as all internal rules of Novartis, including
but not limited to the Code of Ethics, the Global Conflict of Interest guideline, Doing Business Ethically policy, Insider Trading
policy, Anti-Harassment policy (for US employees), the Duty to comply with Law and Cooperate policy (for US employees), Confidentiality
policy or any provision of the other policies and guidelines of Novartis Group Companies applicable to a Participant’s work (all
such policies and internal rules collectively “Guidelines”). These Guidelines, which may be amended from time to time
through publication on the Novartis intranet or otherwise, form an integrated part of this incentive plan.
(ii) Accordingly,
in case the Committee, in its sole discretion, determines that the Participant has violated applicable laws or Guidelines in a substantial
or material way (including, but not limited to fraud, bribes, scientific misconduct, illegal marketing practices such as off-label promotion,
or offering kickbacks, etc.) (collectively “Misconduct”), or if a Participant incurs a Cessation of Employment for Cause
or Misconduct, the Committee may determine in its sole discretion that any or all of the grants to the Participant shall not vest and
will be rescinded in and for any period in which such Cause or Misconduct occurred or was discovered, and, to the extent that such incentive
grants have already vested and have been exercised, traded or converted by the Participant or moved to his or her individual account,
the Participant shall agree promptly to repay any or all of the incentive already received for any period in which such Cause or Misconduct
occurred or was discovered. In the event of the Participant’s failure to disgorge such amounts illegitimately received by him or
her under the above provision, the Participant agrees that the Company may sue him or her for recovery of such proceeds on the basis of
breach of contract, and that the Company is entitled to equitable relief to prevent the Participant’s disposition or diversion of
such assets, and that the Participant will be liable to the Company for its reasonable attorneys fees and costs in recovering such amounts.
In the event a Participant is determined by the Committee to have engaged in Misconduct or incurs a Cessation of Employment for Cause
or Misconduct, the Committee may determine in its sole discretion that any or all vested but unexercised Stock Options (including Tradable
Options) shall immediately be forfeited regardless of when the Cause or Misconduct occurred or was discovered. This provision is effective
as to all outstanding grants under this Plan, no matter when made.
(iii) In
addition to the foregoing, for grants made under this Plan on or after January 1, 2021, for US-based roles covered by the Incentive
Compensation Restriction and Executive Financial Recoupment Program (as set forth in Appendix E of the 2020 Novartis Corporate CIA, hereinafter
“Corporate Executive Financial Recoupment Program”) of the Corporate Integrity Agreement Between the Office of Inspector General
of the Department of Health and Human Services and Novartis Corporation (“2020 Novartis Corporate CIA”) (such roles hereinafter
referenced as “Covered Executives”), the Committee temporarily delegates its authority and discretion to make Clawback determinations
under this section 11 (b) of this Plan, with respect to grants awarded under this Plan, to the Corporate Recoupment Committee established
under the Corporate Executive Financial Recoupment Program and to fulfil the obligations entrusted to the Corporate Recoupment Committee
under such Program, for the term of the 2020 Novartis Corporate CIA.
Covered Executives must agree to accept
the terms and conditions of the Corporate Executive Financial Recoupment Program as a condition of accepting awards under this Plan. The
terms and conditions of the Corporate Executive Financial Recoupment Program shall apply to all awards made under this Plan to Covered
Executives during the term of the 2020 Novartis Corporate CIA.
At the conclusion of the 2020 Novartis
Corporate CIA , this temporary delegation of authority and discretion shall cease and will revert to the Committee.
The 2020 Novartis Corporate CIA may be
accessed online at:
https://oig.hhs.gov/fraud/cia/agreements/Novartis_Corporation_06302020.pdf.
(c) Privileges
of Stock Ownership. Except as otherwise specifically provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder until such shares have been issued to that person.
(d) Government
and Other Regulations. The obligation of the Company to make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions
of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell and shall be prohibited from offering
to sell or selling any shares of Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the
Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration pursuant to an available exemption there from and the terms
and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the
Securities Act any of the shares of Stock to be offered or sold under the Plan. If the shares of Stock offered for sale or sold under
the Plan are offered or sold pursuant to an exemption from registration under the Securities Act, the Company may restrict the transfer
of such shares and may legend any Stock certificates representing such shares in such manner as it deems advisable to ensure the availability
of any such exemption.
(e) Tax
Withholding. Notwithstanding any other provision of the Plan, the Company or a Subsidiary, as appropriate, shall have the right to
deduct from all Awards cash and/or Stock, valued at Fair Market Value on the date of payment, in an amount necessary to satisfy all Federal,
state or local taxes as required by law to be withheld with respect to such Awards and, in the case of Awards paid in Stock, the Holder
or other person receiving such Stock may be required to pay to the Company or a Subsidiary prior to delivery of such Stock, the amount
of any such taxes which the Company or a Subsidiary is required to withhold, if any, with respect to such Stock. Subject in particular
cases to the disapproval of the Committee, the Company or a Subsidiary may accept shares of Stock of equivalent Fair Market Value in payment
of such withholding tax obligations if the Holder of the Award elects to make payment in such manner. Effective for any Awards paid in
Stock that vest on or after January 1, 2014 (regardless of when such Awards were granted), including but not limited to Awards granted
under the Long Term Performance Plan and the Leveraged Stock Savings Plan, Stock withholding shall be mandatory, and neither the Company
nor any Subsidiary may accept cash or shares of Stock of equivalent Fair Market Value from the Holder or other person receiving such Stock
in payment of such withholding tax obligations.
(f) Minder
Initiative. The Plan, in particular, is subject to any mandatory provisions of Swiss law pertaining to compensation of governing bodies
derived from article 95 paragraph 3 of the Swiss Federal Constitution (the “Minder Initiative”). Any interpretation and/or
amendment necessary in respect of any provision of the Plan or any Award as a result of applicable law and/or the Articles to the detriment
of the Participant shall not give rise to any claims by or other rights whatsoever of the Participant. This applies in particular if the
annual general meeting of Novartis AG does not approve the compensation of the Participant which is subject to approval under the Minder
Initiative.
(g) Claim
to Awards and Employment or Service Rights. No employee or other person shall have any claim or right to be granted an Award under
the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. Neither the Plan nor any action
taken hereunder shall be construed as a contract of employment or as giving any Participant any right to be retained in the employ or
service of the Company, a Subsidiary or any member of the Novartis Group. By accepting any Award or grant of securities under the Plan,
Participants shall be deemed to represent and warrant to the Company that such Participant’s participation in the trade and acceptance
of such securities is voluntary and that such Participant has not been induced to participate by expectation of engagement, appointment,
employment or continued engagement, appointment or employment, as applicable.
(h) Designation
and Change of Beneficiary. Each Participant may file with the Committee a designation in a form prescribed by the Committee of one
or more persons as the beneficiary who shall be entitled to receive the rights or amounts payable with respect to an Award due under the
Plan upon his/her death. A Participant may, from time to time, revoke or change his/her beneficiary designation without the consent of
any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior
to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation
is filed by the Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of
death, his or her estate.
(i) Payments
to Persons Other Than Participants. If the Committee shall find that any person to whom any amount is payable under the Plan is unable
to care for his/her affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his/her
estate (unless a prior claim there for has been made by a duly appointed legal representative) may, if the Committee so directs the Company,
be paid to his/her spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by
the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Committee and the Company there for.
(j) No
Liability of Committee Members. No member of the Committee shall be personally liable by reason of any contract or other instrument
executed by such member or on his/her behalf in his/her capacity as a member of the Committee nor for any mistake of judgment made in
good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director
of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against
any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s own fraud or willful bad faith; provided, however,
that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the
Company’s Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
(k) Governing
Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
(l) Funding.
No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company
maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered
fund for such purposes. Holders shall have no rights under the Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights
as other employees under general law.
(m) Nontransferability.
A person’s rights and interest under the Plan, including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered (including, but not limited to, pursuant to a “domestic relations order”
(as that term is defined in Code Section 414(p)(1)(B))) except, in the event of a Holder’s death, to a designated beneficiary
to the extent permitted by the Plan, or in the absence of such designation, by will or the laws of descent and distribution; provided,
however, the Committee may, in its sole discretion, allow in an Award Agreement for transfer of Awards other than Incentive Stock
Options to other persons or entities as long as such transferability does not adversely impact the ability of Novartis AG to register
the Stock underlying Awards pursuant to the Securities Act.
(n) Reliance
on Reports. Each member of the Committee and each member of the Board shall be fully justified in relying, acting or failing to act,
and shall not be liable for having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant
of the Company and its Subsidiaries and upon any other information furnished in connection with the Plan by any person or persons other
than himself.
(o) Relationship
to Other Benefits. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.
(p) Expenses.
The expenses of administering the Plan shall be borne by the Company.
(q) Pronouns.
Masculine pronouns and other words of masculine gender shall refer to both men and women.
(r) Titles
and Headings. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control.
(s) Grant
Acceptance and Data Validation Provisions. Within 6 months of the Date of Grant of an equity award under this Plan, a Participant
must logon to the equity platform provider website and accept the award agreement that reflects the specific provisions of the given grant.
Failure to accept an equity award within 6 months of the Date of Grant will result in the Participant’s equity award cancellation
without compensation or recourse.
12. Changes
in Capital Structure
Awards granted under the Plan
and any Award Agreements shall be subject to equitable adjustment or substitution, as determined by the Committee in its sole discretion,
as to the number, price or kind of a share of Stock or other consideration subject to such Awards (i) in the event of changes in
the outstanding ADS or in the capital structure of Novartis AG by reason of stock dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Date
of Grant of any such Award, (ii) in the event of any change in applicable laws or any change in circumstances which results in or
would result in any substantial dilution or enlargement of the rights granted to, or available for, Participants in the Plan, or (iii) upon
the occurrence of any other event which otherwise warrants equitable adjustment because it interferes with the intended operation of the
Plan. In addition, in the event of any such corporate or other event, the aggregate number of shares of Stock available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be conclusive. The Company shall give each Participant notice
of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
For Awards made up to and
including December 31, 2014, Notwithstanding the above, in the event of any of the following: (i) Novartis AG is merged or consolidated
with another corporation or entity and, in connection therewith, consideration is received by shareholders of Novartis AG in a form other
than stock or other equity interests of the surviving entity; (ii) all or substantially all of the assets of Novartis AG are acquired
by another person; (iii) the reorganization or liquidation of Novartis AG; or the execution by Novartis AG of a written agreement
to undergo an event described in clauses (i), (ii) or (iii) above, then the Committee may, in its sole discretion, cancel
any outstanding Awards and pay to the Holders thereof, in cash, the value of such Awards based upon the price per share of Stock received
or to be received by other shareholders of Novartis AG in the event. The terms of this Section 12 may be varied by the Committee
in any particular Award agreement.
For Awards made on or after
January 1, 2015, Section 13 of the Plan applies.
13. Change
in Control and other Corporate Events
For Awards made up to and
including December 31, 2014, except to the extent stated otherwise in any individual Award Agreement, or except as otherwise provided
in the exercise of discretion by the Compensation Committee of Novartis AG, upon the occurrence of a Change in Control (i) all outstanding
Options and freestanding SARs shall become immediately exercisable in full and (ii) all restrictions with respect to outstanding
shares of Restricted Stock and Restricted Stock Units shall lapse.
For Awards made on or after
January 1, 2015, Clause 2 in ADDENDUM B regarding Change in Control and other Corporate Events applies.
14. Nonexclusivity
of the Plan
Neither the adoption of this
Plan by the Board nor, if applicable, the submission of this Plan to the shareholders of the Company or Novartis AG for approval shall
be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable
generally or only in specific cases.
15. Amendment
and Termination
The Board or the Committee
may, at any time, or from time to time, amend, terminates or suspend and, if suspended, reinstate, the Plan in whole or in part in its
sole discretion; provided that any such amendment shall be contingent on obtaining the approval of the shareholders of the Company or
Novartis AG if the Committee determines that such approval is necessary to comply with any requirement of law or rule of any stock
exchange on which the equity securities of Novartis AG are traded. The Board or the Committee may not cancel, reduce or otherwise alter
outstanding vested Awards in a manner adverse to a Participant unless it obtains the express written consent of the affected individual
Participant.
16. Canadian
Participants
Addendum A hereto shall apply
at all times to Participants who are Canadian residents.
17. Code
Section 409A
Anything under the Plan to
the contrary notwithstanding, to the extent applicable, it is intended that the Plan shall comply with the provisions of Code Section 409A
and the Plan and all applicable Awards be construed and applied in a manner consistent with this intent. In furtherance thereof, any amount
constituting a “deferral of compensation” under Treasury Regulation Section 1.409A-1(b) that is payable to a Participant
upon a separation from service of the Participant (within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due
to the Participant’s death), occurring while the Participant shall be a “specified employee” (within the meaning of
Treasury Regulation Section 1.409A-1(i)) of the Novartis Group (as limited by Code Sections 414(b), (c), (m) and (o)),
shall not be paid until the earlier of (x) the date that is six months following such separation from service or (y) the date
of the Participant’s death following such separation from service. Notwithstanding any provision of the Plan to the contrary, to
the extent that an Award constituting a “deferral of compensation” subject to Code Section 409A shall be deemed to be
vested or restrictions lapse upon the occurrence of a Change in Control, and such Change in Control does not constitute a “change
in control event” (as defined in Treasury Regulation Section 1.409A-3(i)), then even though such Award may be deemed to be
vested or restrictions lapse, payment will be made to the extent necessary to comply with the provisions of Code Section 409A, to
the Participant on the earliest of (i) the Participant’s separation from service, the date payment otherwise would have been
made pursuant to the regular payment terms of the Award, or (iii) or the Participant’s death.
18. Exclusive
Provisions
This Plan and any Award Agreement
entered into with Participants contemplated by this Plan and consistent with this Plan’s terms, contains the entire provisions with
respect to the subject matter hereof, and supersedes all prior negotiations, instruments and oral understandings.
19. Diagnostic
Transaction
Contingent upon the closing
of the sale of Novartis AG’s direct or indirect ownership in the blood transfusion diagnostics business of Novartis Vaccines &
Diagnostics, Inc. to an affiliate of Grifols, S.A. pursuant to the terms of a Stock and Asset Purchase Agreement (“SAPA”)
(the “Diagnostics Transaction”), the Awards of Participants under the Plan who become Transferred Employees (as such term
is defined in the SAPA, and as such term may be modified in any global employee services agreement or any other transactional document
relating to the Diagnostics Transaction), shall become fully vested, and Options (including Tradable Options) for such Transferred Employees
shall become exercisable (and Tradable Options shall become sellable to the Market Maker), on the Closing Date (as defined in the SAPA)
of the Diagnostics Transaction.
20. Restructuring
For Awards granted on or before
December 31, 2014, if, on or after January 1, 2014 a Participant under the Plan incurs a Cessation of Employment as a direct
result of an event that the Participant’s employing Novartis Group Company certifies to the Committee is an approved, group restructuring
plan (which must be certified by the requesting Novartis Group Company to the U.S. Stock Committee as having been approved by the member
of the Novartis Corporation Board of Directors who is also the Chief Financial Officer of Novartis International AG (the “Group
CFO”), or if the Group CFO is not a member of the Board, by the member of the Board so selected by the Board entitling such Participant
to enhanced severance benefits under the Severance Pay Plan for Employees of Novartis Group Companies in the United States (a “Restructuring”),
such Participant shall become vested in a pro rata portion of his/her Award, and a pro rata portion of Options (including Tradeable Options)
shall become exercisable (and Tradable Options shall become sellable to the Market Maker). Such pro ration shall be determined by dividing
(i) the number of completed months from the date the Award was granted through the date of Cessation of Employment, by (ii) the
total number of months during the vesting period. Such pro rata vesting of Awards and the ability to exercise such previously unvested
Options (and the ability to sell such previously unvested Tradable Options to the Market Maker) is contingent on the execution (and non-revocation)
by the Participant of a general release of claims acceptable to the Company. A Participant who incurs a Cessation of Employment due to
a Restructuring and who applies for and is granted Retirement status under the Plan shall have his/her Awards treated under the Retirement
provisions of the Plan rather than this Section 20. A Participant (regardless of whether such Participant is eligible to apply for
Retirement status under the Plan) who has been notified in writing that his/her employment with the Novartis Group will terminate due
to a Restructuring shall not be eligible to receive Awards under the Plan after the date of notification.
21. Vaccines
Transaction
Contingent upon the closing
of the sale of Novartis AG’s direct or indirect ownership in certain portions of the vaccines business of Novartis Vaccines and
Diagnostics, Inc. to an affiliate of GlaxoSmithKline plc pursuant to the terms of a Sale and Purchase Agreement (“SAPA”)
(the “GSK Vaccines Transaction”), the Awards of Participants under the Plan who become Transferred Employees (as such term
is defined in the SAPA), shall on the Closing Date (as defined in the SAPA) of the GSK Vaccines Transaction become vested on a pro rata
basis, and Options (including Tradable Options) for such Transferred Employees shall become exercisable (and Tradable Options shall become
sellable to the Market Maker) on a pro rata basis. Such pro ration (not to exceed 1) shall be determined by dividing (i) the number
of completed and partial years (rounded to the next highest full year) from the date the Award was granted through the later of (x) January 31,
2015 or (y) the Closing Date, by (ii) the total number of years during the vesting period. For the avoidance of doubt, and pursuant
to the exercise of discretion by the Compensation Committee of Novartis AG, the Change in Control vesting provisions of Section 13
of the Plan shall not apply to the GSK Vaccines Transaction. Also for the avoidance of doubt, the post-employment exercise period under
Section 8 for Options (including Tradable Options) shall be measured from the Closing Date. A Participant who does not become
a Transferred Employee and who is eligible for, applies for and is granted Retirement status under the Plan shall have his/her Awards
treated under the Retirement provisions of the Plan rather than this Section 21. A Participant who becomes a Transferred Employee
will not be eligible to have his/her Awards treated under the Retirement provisions of the Plan rather than this Section 21.
22. OTC
Transaction
Contingent upon the closing
of the contribution of Novartis AG’s direct or indirect ownership in Novartis Consumer Health, Inc. to a new joint venture
between an affiliate of Novartis AG and an affiliate of GlaxoSmithKline plc pursuant to the terms of a Contribution Agreement (“CA”)
(the “OTC Transaction”), the Awards of Participants under the Plan who become Transferred Employees (as such term is defined
in the CA), shall on the Closing Date (as defined in the CA) of the OTC Transaction become vested on a pro rata basis, and Options (including
Tradable Options) for such Transferred Employees shall become exercisable (and Tradable Options shall become sellable to the Market Maker)
on a pro rata basis. Such pro ration (not to exceed 1) shall be determined by dividing (i) the number of completed and partial years
(rounded to the next highest full year) from the date the Award was granted through the later of (x) January 31, 2015 or (y) the
Closing Date, by (ii) the total number of years during the vesting period. For the avoidance of doubt, and pursuant to the exercise
of discretion by the Compensation Committee of Novartis AG, the Change in Control vesting provisions of Section 13 of the Plan shall
not apply to the OTC Transaction. Also for the avoidance of doubt, the post-employment exercise period under Section 8 for Options
(including Tradable Options) shall be measured from the Closing Date. A Participant who does not become a Transferred Employee
and who is eligible for, applies for and is granted Retirement status under the Plan shall have his/her Awards treated under the Retirement
provisions of the Plan rather than this Section 22. A Participant who becomes a Transferred Employee will not be eligible
to have his/her Awards treated under the Retirement provisions of the Plan rather than this Section 22.
23. Animal
Health Transaction
Contingent upon the closing
of the sale of Novartis AG’s direct or indirect ownership in Novartis Animal Health US, Inc. to an affiliate of Eli Lilly and
Company pursuant to the terms of a Sale and Purchase Agreement (“SAPA”) (the “Animal Health Transaction”), the
Awards of Participants under the Plan who become Transferred Employees (as such term is defined in the SAPA), shall on the Closing Date
(as defined in the SAPA) of the Animal Health Transaction become vested on a pro rata basis, and Options (including Tradable Options)
for such Transferred Employees shall become exercisable (and Tradable Options shall become sellable to the Market Maker) on a pro rata
basis. Such pro ration (not to exceed 1) shall be determined by dividing (i) the number of completed and partial years (rounded to
the next highest full year) from the date the Award was granted through the later of (x) January 31, 2015 or (y) the Closing
Date, by (ii) the total number of years during the vesting period. For the avoidance of doubt, and pursuant to the exercise of discretion
by the Compensation Committee of Novartis AG, the Change in Control vesting provisions of Section 13 of the Plan shall not apply
to the Animal Health Transaction. Also for the avoidance of doubt, the post-employment exercise period under Section 8 for Options
(including Tradable Options) shall be measured from the Closing Date. A Participant who does not become a Transferred Employee
and who is eligible for, applies for and is granted Retirement status under the Plan shall have his/her Awards treated under the Retirement
provisions of the Plan rather than this Section 23. A Participant who becomes a Transferred Employee will not be eligible
to have his/her Awards treated under the Retirement provisions of the Plan rather than this Section 23.
ADDENDUM
A
ADDENDUM FOR CANADIAN PARTICIPANTS
ADDENDUM B
Clauses applicable to Awards made on or after January 1, 2015
1. Cessation
of Employment
(a) General:
Unless Clause 1.(b), Clause 1.(c), Clause 1.(d), or Clause 1.(f) applies, an Award that has not vested will lapse or be forfeited
on the day the Participant Ceases Employment.
(b) Cessation
of Employment as a result of Retirement: For Awards granted on or before December 31, 2015, if a Participant Ceases Employment
because of Retirement his/her Award shall vest on the day the Participant Ceases Employment. For Awards granted on or after January 1,
2016 and prior to January 1, 2024, if a Participant Ceases Employment because of Retirement his/her Award (i) shall vest on
the day the Participant Ceases Employment if the Award has been outstanding for 12 months or more on the day the Participant Ceases Employment,
and (ii) shall vest on a pro rata basis if the Award has been outstanding for fewer than 12 months on the day the Participant Ceases
Employment. The pro ration described in clause (ii) of the preceding sentence shall be determined by dividing (x) the number
of completed months from the date the Award was granted through the date of Cessation of Employment, by (y) the total number of months
during the vesting period.
For annual Awards granted on or after
January 1, 2024, if a Participant Ceases Employment because of Retirement, his/her Award (i) shall vest on the day the Participant
Ceases Employment if the Award has been outstanding for 12 months or more on the day the Participant Ceases Employment, and (ii) shall
vest on a pro rata basis with respect to each tranche if the Award has been outstanding for fewer than 12 months on the day the Participant
Ceases Employment. The pro ration described in clause (ii) of the preceding sentence shall be determined by dividing (x) the
number of completed months from the date the Award was granted through the date of Cessation of Employment, by (y) the total number
of months during the vesting period with respect to each tranche. By way of example, if a Participant who received an annual Award in
January 2024 Ceases Employment because of Retirement in July 2024 after completing 5 months in the vesting period for the January 2024
annual Award, the Participant will be vested in 5/12 of the tranche vesting in January 2025, 5/24 of the tranche vesting in January 2026,
and 5/36 of the tranche vesting in January 2027.
For any Awards other than annual Awards
granted on or after January 1, 2024 with a cliff vesting schedule, if a Participant Ceases Employment because of Retirement his/her
Award (i) shall vest on the day the Participant Ceases Employment if the Award has been outstanding for 12 months or more on the
day the Participant Ceases Employment, and (ii) shall vest on a pro rata basis if the Award has been outstanding for fewer than 12
months on the day the Participant Ceases Employment. The pro ration described in clause (ii) of the preceding sentence shall be determined
by dividing (x) the number of completed months from the date the Award was granted through the date of Cessation of Employment, by
(y) the total number of months during the vesting period.
In determining whether to approve Retirement
under this Clause 1.(b), the Committee shall take into consideration the Participant’s satisfaction of certain conditions, including:
(i) whether
the Participant is leaving the Novartis Group in good standing and not for Cause or because of dishonesty, misconduct, gross negligence,
violation of this employer’s code of ethics or similar reason;
(ii) whether
the Participant has returned to his/her employer all company property in his/her possession at his/her Cessation of Employment;
(iii) whether
the Participant has cooperated with his/her employer in the orderly handover and transition of his/her duties and responsibilities prior
to his/her date of Cessation of Employment;
(iv) to
the extent permitted by applicable law, whether the Participant has given his/her written commitment that for one year following his/her
Cessation of Employment he/she will not work for a Competitor and for one year following his/her Cessation of Employment (two years for
ECN and Level 10/9 Participants) he/she will refrain from soliciting other employees of the Novartis Group to terminate their employment;
and
(v) whether
the Participant has affirmed his/her obligation not to disclose confidential information he/she received during his/her employment with
the Novartis Group and to refrain from using any such information for any purpose not in Novartis Group’s business interests; and
(vi) whether
the Participant has satisfied such other requirements established by the Committee as apply to Participants generally, including but not
limited to submission of and compliance with the terms and conditions of the Initial Request for Retirement Status Treatment of Stock
Incentive Plan Grants (Form A) and Certification at Termination Request for Accelerated Vesting of Stock Incentive Plan Grants (Form B),
or any successors thereto, and the requirement that for any Participant whose Cessation of Employment occurs on or after January 1,
2015, no such Cessation of Employment will constitute a “Retirement” unless the Participant executes (and does not revoke)
a general release of claims acceptable to the Company.
(c) Cessation
of Employment by the employer other than for Cause:
(i) For
Awards granted prior to January 1, 2024, if a Participant Ceases Employment because his/her employment is terminated by the Participant’s
employer (whether or not by notice) other than for Cause, his/her Award shall vest on the day the Participant Ceases Employment in respect
of a proportion of the Award (corresponding to such proportion of the vesting or Restriction Period as has elapsed when the Participant
Ceases Employment), which pro ration shall be determined by dividing (i) the number of completed months from the date the Award was
granted through the date of Cessation of Employment, by (ii) the total number of months during the vesting period. Such pro rata
vesting of Awards and the ability to exercise such previously unvested Options (and the ability to sell such previously unvested Tradable
Options to the Market Maker) is contingent on the execution (and non-revocation) by the Participant of a general release of claims acceptable
to the Company.
(ii) For
annual Awards granted on or after January 1, 2024, if a Participant Ceases Employment because his/her employment is terminated by
the Participant’s employer (whether or not by notice) other than for Cause, his/her Award shall vest on the day the Participant
Ceases Employment in respect of a proportion of the Award (corresponding to such proportion of the vesting or Restriction Period for each
tranche as has elapsed when the Participant Ceases Employment), which pro ration shall be determined by dividing (i) the number of
completed months from the date the Award was granted through the date of Cessation of Employment, by (ii) the total number of months
during the vesting period for each tranche. Such pro rata vesting of Awards is contingent on the execution (and non-revocation) by the
Participant of a general release of claims acceptable to the Company. By way of example, if a Participant who received an annual Award
in January 2024 Ceases Employment because his/her employment is terminated by the Participant’s employer (whether or not by
notice) other than for Cause in July 2025, the Participant will have already vested in the tranche of his/her January 2024 annual
Award that vested in January 2025, the Participant will vest in 17/24 of the tranche that will vest in January 2026, and 17/36
of the tranche that will vest in January 2027.
(iii) For
any Awards other than annual Awards granted on or after January 1, 2024 with a cliff vesting schedule, if a Participant Ceases Employment
because his/her employment is terminated by the Participant’s employer (whether or not by notice) other than for Cause, his/her
Award shall vest on the day the Participant Ceases Employment in respect of a proportion of the Award (corresponding to such proportion
of the vesting or Restriction Period as has elapsed when the Participant Ceases Employment), which pro ration shall be determined by dividing
(i) the number of completed months from the date the Award was granted through the date of Cessation of Employment, by (ii) the
total number of months during the vesting period. Such pro rata vesting of Awards is contingent on the execution (and non-revocation)
by the Participant of a general release of claims acceptable to the Company.
(iv) A
Participant who has been notified in writing that he/she will be Ceasing Employment under this Clause 1(c) shall not be eligible
to receive Awards under the Plan after the date of notification.
(d) Cessation
of Employment following a sale: If a Participant Ceases Employment because of:
(i) his/her
employer ceasing to be a member of the Novartis Group; or
(ii) the
business for which the Participant works is transferred to a person which or who is not a member of the Novartis Group,
his
or her Award shall vest on the day the Participant Ceases Employment in respect of a proportion of the Award (corresponding to such proportion
of the vesting or Restriction Period as has elapsed when the Participant Ceases Employment), which pro ration shall be determined
by dividing (i) the number of completed months from the date the Award was granted through the date of Cessation of Employment, by
(ii) the total number of months during the vesting period; provided
that the Board may determine that some or all of the Awards held by relevant Participants shall be exchanged in accordance with Clause
2.(b) (exchange of awards).
(e) Cessation
of Employment as a result of death or disability: If a Participant Ceases Employment as a result of his/her death or Disability, then
Awards held by that Participant shall vest on the day the Participant Ceases Employment. Effective January 1, 2016, if a Participant
Ceases Employment on account of his/her death or Disability on or after the date on which the Fair Market Value of the Stock is determined
for purposes of granting Awards and prior to the Date of Grant with respect to such Awards, no Award shall be granted to the Participant,
but the Stock Committee shall recommend to the member of the Novartis Group that employed the Participant that a fully vested cash payment
be issued to the Participant (or his/her estate) equal to the value of the Award that would have been granted on the Date of Grant if
the Participant had still been an employee of the Novartis Group on the Date of Grant.
(f) Assignments
and Transfers: If a Participant is sent on an international assignment or is transferred to another entity within the Novartis Group
this will not be considered as Ceasing Employment under the Plan. The treatment of assignments and transfers is subject to the rules of
the “Internal Transfer Policy for Shareplans”.
2. Change
in Control and other Corporate Events
(a) Change
in Control: If a Change in Control occurs or is anticipated to occur, unvested Awards shall vest at the effective time of such Change
in Control (or such earlier date or time that the Board may determine) PROVIDED ALWAYS THAT if, in respect of an Award, the Change in
Control in respect of which this Clause 2.(a) applies on or before the first anniversary of the Date of Grant then the Award shall
vest in respect of a proportion of the Award (corresponding to such proportion of the vesting period as has elapsed when the Change in
Control or earlier date the Board determines), which pro ration shall be determined by dividing (i) the number of completed months
from the date the Award was granted through the date of the Change in Control (or earlier date determined by the Board), by (ii) the
total number of months during the vesting period.
Notwithstanding the preceding paragraph
of this Clause 2.(a), the Board may in its discretion with no obligation to do so, allow a greater proportion of an Award to vest; provided
that this paragraph does not apply to ECN members.
Alternatively, the Board may determine
that some or all Awards will be automatically exchanged under Clause 2.(b).
(b) Exchange
of Awards: If an Award is exchanged, then:
(i) the
exchanged award will be in respect of or by reference to shares in any company determined by the company offering the exchange;
(ii) the
exchanged award shall have equivalent terms to those of the Award that was exchanged;
(iii) the
exchanged award will be subject to the Plan as it had effect in relation to the old Award immediately before the exchange;
(iv) with
effect from the exchange, the Plan will apply as if references to ADSs are references to shares over which the exchanged award has been
granted;
(v) the
Plan shall apply with such other adjustments as the Board may decide.
(c) Demerger,
variations of share capital and other corporate events: If the Board becomes aware that Novartis AG is or is expected to be affected by
any variation of share capital, rights issue, sub-division, consolidation or reduction of share capital, demerger, distribution (other
than an ordinary dividend), liquidation or other event (other than a Change in Control) which, in the opinion of the Board, could affect
the current or future value of Novartis AG shares, the Board may:
(i) adjust
Awards in such manner as it considers appropriate;
(ii) allow
Awards (for all or some Participants) to vest in whole or in part, subject to any conditions that the Board may impose;
require some or all Awards
to be exchanged under Clause 2.(b).
ADDENDUM C
NOVARTIS LAUNCH LEADER PLAN FOR UNITED STATES AND CANADIAN PARTICIPANTS
(EFFECTIVE FOR AWARDS GRANTED ON OR AFTER JANUARY
1, 2021)
| 1. | Application of this addendum |
Where Awards are granted under the Novartis Launch
Leader Plan (the “NLLP”) to Participants who are United States or Canadian employees, then except as provided in this Addendum
C, the rules of the Novartis AG Long Term Incentive Plan (LTIP), including but not limited to Schedule 7 to the LTIP, shall apply
to such Awards. Awards under the NLLP may be granted in addition to the Awards under other long-term incentive programs within the LTIP
or other plans.
| 2. | Cessation of Employment |
Notwithstanding Section 6 of Schedule 7 to the LTIP, the provisions
of Addendum B of the Plan, including but not limited to provisions relating to Retirement, shall apply to NLLP Awards covered by this
Addendum C.
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