PARAGON 28, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM
This Paragon 28, Inc. (the Company) Non-Employee Director Compensation Program (this Program) has been adopted under the Companys 2021 Incentive Award Plan (the Plan) and shall be effective upon the date of the effectiveness of the registration statement on Form S-1 filed by the Company with the U.S. Securities and Exchange Commission that registers existing capital stock of the Company for resale (the IPO). Capitalized terms not otherwise defined herein shall have the meaning ascribed in the Plan.
Effective upon the IPO, annual retainers will be paid in the following amounts to Non-Employee Directors:
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| ||$ ||45,000 || |
Additional Board Service
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| ||$ ||50,000 || |
Additional Committee Service
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| || ||Chair || || ||Non-Chair || |
Audit Committee Member
| ||$ ||20,000 || || ||$ ||10,000 || |
Compensation Committee Member
| ||$ ||15,000 || || ||$ ||7,500 || |
Nominating and Corporate Governance Committee Member
| ||$ ||10,000 || || ||$ ||5,000 || |
All annual retainers will be paid in cash quarterly in arrears promptly following the end of the applicable calendar quarter, but in no event more than 30 days after the end of such quarter. If a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described above, for an entire calendar quarter, the retainer paid to such Non-Employee Director shall be prorated for the portion of such calendar quarter actually served as a Non-Employee Director, or in such position, as applicable.
Election to Receive Restricted Stock Units (RSUs) In Lieu of Annual Retainers
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|General: || ||The Board or the Compensation Committee may, in its discretion, provide Non-Employee Directors with the opportunity to elect to convert all or a portion of their annual retainers into awards of RSUs (Retainer RSU Awards) granted under the Plan or any other applicable Company equity incentive plan then-maintained by the Company, with each such Retainer RSU Award covering a number of shares of Common|
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|IPO RSU Award: || || |
Each Non-Employee Director who (i) has been serving on the Board as of the IPO and (ii) will continue to serve as a Non-Employee Director immediately following the IPO, shall be granted an award of RSUs under the Plan covering a number of shares of Common Stock calculated by dividing (i) $112,500 (or $300,000 for Alf Grunwald and Thomas Schnettler) by (ii) the initial public offering price of a Share as set forth in the Companys final prospectus relating to its IPO filed with the Securities and Exchange Commission (the IPO RSU Award).
The IPO RSU Award will be automatically granted on the Public Trading Date (as defined in the Plan), and will vest in full on the earlier of (i) the first anniversary of the grant date and (ii) immediately before the Annual Meeting following the grant date (except for Messrs. Grunwald and Schnettler, whose IPO RSU Award will vest as to one-third of the shares subject thereto on each anniversary of the applicable grant date such that the shares are fully vested on the third anniversary of the grant date), subject to the Non-Employee Director continuing in service on the Board through such vesting date.
No portion of an IPO RSU Award, Initial RSU Award or Annual RSU Award which is unvested at the time of a Non-Employee Directors termination of service on the Board shall become vested and exercisable thereafter.
Directors who are Employees who subsequently terminate their employment with the Company and any Subsidiary and remain a Director will not receive an Initial RSU Award, but to the extent that they are otherwise eligible, will be eligible to receive, after termination from employment with the Company and any Subsidiary, Annual RSU Awards as described above.
Election to Defer Issuance
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|General: || ||The Board or the Compensation Committee may, in its discretion, provide each Non-Employee Director with the opportunity to defer the issuance of the shares underlying RSUs granted under this Program, including Retainer RSU Awards, Initial RSU Awards and Annual RSU Awards, that would otherwise be issued to the Non-Employee Director in connection with the vesting or grant of the RSUs until the earliest of a fixed date properly elected by the Non-Employee Director, the Non-Employee Directors Termination of Service or a Change in Control. Any such deferral election (Deferral Election) shall be subject to such rules, conditions and procedures as shall be determined by the Board or the Compensation Committee, in its sole discretion, which rules, conditions and procedures shall at all times comply with the requirements of Section 409A of the Code, unless otherwise|
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| || ||specifically determined by the Board or the Compensation Committee. If an individual elects to defer the delivery of the shares underlying RSUs granted under this Program, settlement of the deferred RSUs shall be made in accordance with the terms of the Deferral Election.|
|Election Method: || || |
Each Deferral Election must be submitted to the Company in the form and manner specified by the Board or its Compensation Committee. Deferral Elections must comply with the following timing requirements:
Initial Deferral Election. Each individual who first becomes a Non-Employee Director may make a Deferral Election with respect to the Non-Employee Directors Initial RSU Award and Retainer RSU Awards to be paid in the same calendar year as such individual first becomes a Non-Employee Director (the Initial Deferral Election). The Initial Deferral Election must be submitted to the Company on or before the Initial Election Deadline, and the Initial Deferral Election shall become final and irrevocable as of the Initial Election Deadline.
Annual Deferral Election. No later than the Annual Election Deadline, each individual who is a Non-Employee Director as of immediately before the Annual Election Deadline may make a Deferral Election with respect to the Annual RSU Award and Retainer RSU Awards to be granted in the following calendar year (the Annual Deferral Election). The Annual Deferral Election must be submitted to the Company on or before the applicable Annual Election Deadline and shall become final and irrevocable for the subsequent calendar year as of the applicable Annual Election Deadline.
Change in Control
Upon a Change in Control of the Company, all outstanding equity awards granted under the Plan and any other equity incentive plan maintained by the Company that are held by a Non-Employee Director shall become fully vested and/or exercisable effective as of immediately prior to the closing of such Change in Control, irrespective of any other provisions of the Non-Employee Directors Award Agreement.
The Company shall reimburse each Non-Employee Director for all reasonable, documented, out-of-pocket travel and other business expenses incurred by such Non-Employee Director in the performance of such directors duties to the Company in accordance with the Companys applicable expense reimbursement policies and procedures as in effect from time to time.
The other provisions of the Plan shall apply to the RSUs granted automatically under this Program, except to the extent such other provisions are inconsistent with this Program. All applicable terms of the Plan apply to this Program as if fully set forth herein, and all grants of RSUs hereby are subject in all respects to the terms of the Plan. The grant of RSUs under this Program shall be made solely by and subject to the terms set forth in an Award Agreement in a form to be approved by the Board and duly executed by an executive officer of the Company.
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