Document:

Exhibit

Exhibit 10.2 
FORM OF RESTRICTED STOCK UNIT AGREEMENT
THE BANK OF NEW YORK MELLON CORPORATION
LONG‐TERM INCENTIVE PLAN, AS AMENDED
NOTICE OF AWARD - RESTRICTED STOCK UNITS – EXECUTIVE COMMITTEE GENERAL

Subject to the terms and conditions of The Bank of New York Mellon Corporation Long‐Term Incentive Plan, as Amended and Restated (the “Plan”), this Notice of Award - Restricted Stock Units – Executive Committee General (the “Award Notice”), and the Terms and Conditions of Restricted Stock Units – Executive Committee General (the “Terms and Conditions”), The Bank of New York Mellon Corporation (the “Corporation”) grants you restricted stock units (“RSUs”) as reflected below and on the Corporation’s equity award website (the “Equity Website”).  Each RSU represents the opportunity to receive one (1) share of the Corporation’s common stock, par value $.01 (“Common Stock”), upon satisfaction of the terms and conditions as set forth in the Award Notice and the Terms and Conditions (collectively, the “Award Agreement”), subject to the terms of the Plan.

	
			
	Participant
	[PARTICIPANT NAME]

	Grant Date
	[GRANT DATE]

	Number of RSUs
	[NUMBER OF SHARES GRANTED]

	Vesting Schedule – Please refer to Appendix

A Vesting Date may be delayed if and to the extent the Risk Adjustment Process set forth in Exhibit A is not completed by such date subject to Section 4.1 of the Terms and Conditions.
	 

	Risk Adjustment Process - Unvested RSUs (and accrued dividends) are subject to forfeiture based upon the Risk Adjustment Process set forth in Exhibit A.  
	 

THE CORPORATION’S GRANT OF RSUs AS REFLECTED HEREIN IS CONTINGENT UPON YOUR ACKNOWLEDGEMENT AND ACCEPTANCE OF THE AWARD AGREEMENT AND THE PLAN ELECTRONICALLY ON THE EQUITY WEBSITE ON OR BEFORE [GRANT ACCEPT BY DATE] (THE “ACCEPTANCE DEADLINE”).  IF YOU FAIL TO DO SO, THE CORPORATION’S GRANT OF RSUs AS REFLECTED HEREIN SHALL BE NULL AND VOID, AND SHALL NOT BE RE-INSTATED.  

BY ELECTRONICALLY ACKNOWLEDGING AND ACCEPTING THE CORPORATION’S GRANT OF RSUS, YOU AFFIRMATIVELY AND EXPRESSLY AGREE: 

		
	(1)
	SUCH ACKNOWLEDGEMENT AND ACCEPTANCE CONSTITUTES YOUR ELECTRONIC SIGNATURE IN EXECUTION OF THE AWARD AGREEMENT

		
	(2)
	TO BE BOUND BY THE PROVISIONS OF THE AWARD AGREEMENT AND THE PLAN

		
	(3)
	YOU HAVE REVIEWED THE AWARD AGREEMENT AND THE PLAN IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN PROFESSIONAL LEGAL/TAX/INVESTMENT ADVICE PRIOR TO ACCEPTING THE RSUs AND FULLY UNDERSTAND ALL OF THE PROVISIONS OF THE AWARD AGREEMENT AND THE PLAN

		
	(4)
	YOU HAVE BEEN PROVIDED WITH A COPY OR ELECTRONIC ACCESS TO A COPY OF THE PLAN AND THE U.S. PROSPECTUS FOR THE PLAN

		
	(5)
	TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE CORPORATION UPON ANY QUESTIONS ARISING UNDER THE AWARD AGREEMENT AND THE PLAN

PARTICIPANT ACCEPTANCE DATE:   [ACCEPTANCE DATE]
********************************

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EXHIBIT A
Risk Adjustment/Forfeiture Decision Process

For any performance year in which you remain a covered employee, your risk performance will be assessed via a Risk Culture Summary Scorecard (“RCSS”) Score or a Performance Management Platform (“PMP”) Risk Goal Rating. If, in any year, you receive an RCSS Score of 4 or worse, or a PMP Risk Goal Rating of “Below Expectations” or “Unsatisfactory,” your unvested RSUs (including any accrued dividend equivalents) will be subject to review by the Incentive Compensation Review Committee (“ICRC”) for consideration of forfeiture.  If you are no longer a covered employee or have left the Corporation, any unvested portion of the RSUs (including any accrued dividend equivalents) will also be subject to a risk review by the ICRC.  The ICRC is generally comprised of senior managers and senior control managers.

In that event, as part of its review, ICRC will ask –
		
	•
	Did your score/rating reflect poor risk behavior by you in a prior year?

		
	•
	Did you receive an award in that year?

 
If the answer to both questions is yes, ICRC asks the following questions with respect to each of the designated prior years:
 
		
	•
	Financial Impact:  How much did/will the issue cost the Company? 

		
	•
	Reputational Impact:  How much of a regulatory impact did/will it have on the Company?

 
ICRC selects the impact answer that falls into the highest category below to determine the impact forfeiture percentage.

	
						
	Criteria
	Metric
	None
	Low
	Medium
	High

	Financial Impact
	 
	 
	 
	 
	 

	Reputational Impact
	 
	 
	 
	 
	 

As used in this Exhibit A, the term “Company” shall mean the Corporation and its Affiliates.  

Then the ICRC asks how much, if any, control/responsibility you had regarding the situation.  The answer to the last question determines the modifier to be applied to the impact forfeiture percentage.

	
				
	Criteria
	   None 
	Indirect
	Direct

	The Grantee’s role 
& responsibility
	 
	 
	 

Example :[Insert Example] 

The ICRC will submit its recommendations to the Human Resources and Compensation Committee of the Corporation’s Board of Directors for final action and approval.

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THE BANK OF NEW YORK MELLON CORPORATION

TERMS AND CONDITIONS
OF RESTRICTED STOCK UNITS – EXECUTIVE COMMITTEE GENERAL

The Restricted Stock Units (“RSUs”) with respect to Common Stock of The Bank of New York Mellon Corporation (the “Corporation”) granted to you on the Grant Date are subject to the Notice of Award - Restricted Stock Units – Executive Committee General (the “Award Notice”), these Terms and Conditions of Restricted Stock Units – Executive Committee General (the “Terms and Conditions”) and all of the terms and conditions of The Bank of New York Mellon Corporation Long-Term Incentive Plan, as Amended and Restated (the “Plan”), which is incorporated herein by reference.  In the case of a conflict between the Award Notice, these Terms and Conditions and the terms of the Plan, the provisions of the Plan shall govern. Capitalized terms used but not defined herein shall have the same meaning as provided or reflected in the Award Notice or the Plan, as applicable.  For purposes of these Terms and Conditions, “Employer” means the Corporation or any Affiliate that employs you on the applicable date.

SECTION 1:  Restricted Stock Unit Award

1.1    Grant of Award.  Subject to these Terms and Conditions and the terms of the Plan, the Corporation grants you the number of RSUs as reflected in the Award Notice.  The RSUs shall vest in accordance with the Vesting Schedule and shall be subject to the Risk Adjustment Process as reflected in the Award Notice.

1.2    Dividend Equivalents.  Upon the payment of any dividend on the Common Stock occurring during the period preceding the settlement of your RSUs pursuant to these Terms and Conditions, your Employer will accrue an amount in cash, through the local payroll of your Employer, equal to the value of the dividends you otherwise would have received had you actually been the shareholder of record of the number of shares of Common Stock underlying your RSUs, which dividend equivalents shall be subject to the Risk Adjustment Process as reflected in the Award Notice. Your Employer will pay you such dividend equivalents in cash through your local payroll of your Employer without interest pursuant to Section 4 of these Terms and Conditions if and to the extent that the underlying RSUs become vested as provided in the Award Agreement.  

1.3    No Voting Rights.  Prior to the settlement of your RSUs pursuant to these Terms and Conditions, you shall not be entitled to vote the shares of Common Stock underlying the RSUs.

1.4    Nontransferable.  The RSUs shall be transferable only by will or the laws of descent and distribution.  If you purport to make any transfer of the RSUs, except as aforesaid, the RSUs and all rights thereunder immediately shall terminate and be forfeited.

SECTION 2:  Vesting, Forfeiture, Termination of Employment and Disability

2.1    Vesting and Forfeiture.  

(a)    Vesting.  Subject to Sections 3 and 5.4 of these Terms and Conditions, if you remain continuously employed with your Employer through the close of business on the applicable Vesting Date reflected in the Award Notice, the number of RSUs corresponding to such Vesting Date will vest and the Corporation will issue you the underlying shares of Common Stock in accordance with Section 4 of these Terms and Conditions.  Notwithstanding anything to the contrary contained in the Award Agreement and in 

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accordance with Section 4.1, a vesting may be delayed if, on the Vesting Date, you are the subject of ongoing disciplinary or performance management investigations or proceedings concerning the circumstances under which forfeiture or clawback of this award could apply.  In such cases, the applicable portion of the award, if any, will vest following the completion of such investigations and proceedings to the extent the Corporation determines that forfeiture and/or clawback does not apply.

(b)    Forfeiture upon Termination of Employment.  Subject to Sections 2.2 and 2.3 of these Terms and Conditions, if you cease to be continuously employed with your Employer prior to the date that your RSUs become fully vested, you shall cease vesting in your RSUs as of your Termination Date and any unvested RSUs immediately shall terminate and be forfeited, except in situations where vesting would have occurred but for the fact that a determination has not yet been made as to whether a risk adjustment pursuant to Exhibit A is required, in which case vesting shall occur in accordance with the terms of the Award Agreement provided that the Committee determines the effect, if any of a risk adjustment.  As used herein, “Termination Date” shall mean the last day on which you are an employee of your Employer.  

(c)    Forfeiture upon Termination of Employment for Cause.  Notwithstanding anything to the contrary contained in these Terms and Conditions, if your Employer terminates your employment for Cause, your RSUs, whether vested (but unsettled) or unvested, and including any dividend equivalent rights, immediately shall terminate and be forfeited.  For purposes of these Terms and Conditions, “Cause” shall mean:

(i)    you have been convicted of, or have entered into a pretrial diversion or entered a plea of guilty or nolo contendere (plea of no contest) to a crime or offense constituting a felony (or its equivalent under applicable laws outside of the United States), or to any other crime or offense involving moral turpitude, dishonesty, fraud, breach of trust, money laundering, or any other offense that may preclude you from being employed with a financial institution;

(ii)    you are grossly negligent in the performance of your duties or have failed to perform in any material respect the duties of your employment, including, without limitation, failure to comply with any lawful directive from your Employer or the Corporation, other than by reason of incapacity due to disability or from any permitted leave of absence required by law; 

(iii)    you have violated the Corporation’s Code of Conduct or any of the policies of the Corporation or your Employer governing the conduct of business or your employment; 

(iv)    you have engaged in any misconduct which has the effect of being materially injurious to the Corporation, any Affiliate or your Employer, including, but not limited to, its reputation; 

(v)    you have engaged in an act of fraud or dishonesty, including, but not limited to, taking or failing to take actions intending to result in personal gain; or

(vi)    if you are employed outside the United States, any other circumstances (beyond those listed above) that permit the immediate termination of your employment without notice or payment in accordance with the terms of your employment agreement or Applicable Laws (as defined in Section 5.2).

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The determination of whether your actions will be considered Cause for purposes of these Terms and Conditions will be determined by the Corporation or any of its Affiliates, in its or their sole discretion, as applicable. Any determinations of Cause will be considered conclusive and binding on you.

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2.2    Specified Terminations of Employment.  

(a)    Death.  If you cease to be continuously employed with your Employer by reason of your death prior to the date that your RSUs become fully vested (or if your death occurs following termination of employment during a period in which you have outstanding RSUs), your estate will become fully vested in your RSUs as of your date of death and the Corporation will issue your legal representative or your estate the underlying shares of Common Stock in accordance with Section 4.

(b)    Specified Age & Years of Service Rule.  If you cease to be continuously employed with your Employer (i) on or after your attainment of age 55 and (ii) the combination of your age and years of credited employment with your Employer (in both instances, full and partial years) on your Termination Date equals or exceeds 65 (satisfaction of (i) and (ii) being a “Retirement-Eligible Event”), you will continue to vest in your RSUs in accordance with the Vesting Schedule set forth in the Award Notice so long as you fully comply with the covenants provided in Section 3 hereof.  For purposes of the foregoing, partial years shall be determined based upon the number of days since your prior birthday or the number of days of credited employment since your prior employment anniversary, as the case may be.  

(c)    Termination Providing Transition/Separation Pay.  Provided that you execute and do not revoke a Transition/Separation Agreement and Release acceptable to your Employer, if you cease to be continuously employed with your Employer by reason of a termination by your Employer and in connection with such termination you receive  transition/separation pay from the Corporation or your Employer, you will continue to vest in your RSUs in accordance with the Vesting Schedule set forth in the Award Notice so long as you fully comply with the applicable covenants provided in Section 3 hereof.  For purposes of the foregoing, “transition/separation pay” means any severance, redundancy or ex-gratia compensation payment to you from the Corporation or your Employer in connection with your termination of employment that is in excess of the amount payable to you on account of any notice period to which you are entitled pursuant to the terms of your contract of employment or otherwise (or payment in lieu of such notice).

(d)    Sale of Business.  If you cease to be continuously employed with your Employer due to a sale of a business unit or your Employer and you are not otherwise entitled to transition/separation pay, you will continue to vest in your RSUs in accordance with the Vesting Schedule set forth in the Award Notice so long as you fully comply with the applicable covenants provided in Section hereof.  

(e)    Change in Control.  If your employment is terminated by your Employer without Cause within two (2) years after a Change in Control occurring after the Grant Date, you will continue to vest in your RSUs in accordance with the Vesting Schedule set forth in the Award Notice so long as you fully comply with the applicable covenants provided in Section 3 hereof.  

2.3    Disability.  If you receive current benefits under a long-term disability plan maintained by the Corporation or your Employer while any portion of your RSUs remains unvested, you will continue to vest in your RSUs in accordance with the Vesting Schedule set forth in the Award Notice so long as you fully comply with the applicable covenants provided in Section 3 hereof. 

SECTION 3:  Notice of Resignation, Non-Solicitation, Non-Competition, Confidential Information, Non-Disparagement and Cooperation
        

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3.1    Notice of Resignation.  As consideration for this award, you will provide your Employer with 90 days’ advance written notice of any voluntary termination of your employment with your Employer.

3.2    Non-Solicitation of Clients and Employees.  In the case of a Retirement-Eligible Event or a termination providing transition/separation pay only, as specified  in Sections 2.2(b) and 2.2(c) respectively, you agree that until one (1) year from the Termination Date or, if later, the final vesting date set forth in the Award Notice, you will not directly or indirectly solicit or attempt to solicit or induce, directly or indirectly, (i) any current or prospective client of the Corporation or an Affiliate known to you, to initiate or continue a client relationship with you other than with the Corporation or Affiliate or to terminate or reduce its client relationship with the Corporation or Affiliate, or (ii) any employee of the Corporation or an Affiliate, to terminate such employee’s employment relationship with the Corporation or Affiliate in order to enter into a similar relationship with you, or any other person or any entity.  You expressly agree to (i) advise any person or entity that seeks to employ you of the terms of these covenants; and (ii) immediately notify Human Resources equity administration if you are not in compliance with your obligations above.

3.3    Non-Competition.  In the case of a Retirement-Eligible Event or a termination providing transition/separation pay only, as specified  in Sections 2.2(b) and 2.2(c) respectively, you agree that until one (1) year from the Termination Date or, if later, the final vesting date set forth in the Award Notice, you will not, directly or indirectly, (without the prior written consent of the Corporation), (i) associate (including as a director, officer, employee, partner, consultant, agent or advisor) with a Competitive Enterprise, or (ii) transact business on behalf of a Competitive Enterprise.  For purposes of the Award Agreement, “Competitive Enterprise” means any business enterprise that either (A) is a member of the Corporation’s competitive peer group as disclosed in the Corporation’s proxy statement that was most recently filed with the Securities and Exchange Commission preceding the Termination Date; or (B) is any other business enterprise for whom you would be performing services similar to those performed at the Corporation or any Affiliate within the twelve (12) months preceding the Termination Date.  You expressly agree to (i) advise any person or entity that seeks to employ you of the terms of these covenants; and (ii) immediately notify Human Resources equity administration if you are not in compliance with your obligations above.

3.4    Confidential Information. 

(a)Except as may be permitted in accordance with Section 3.7 below, during the course of your employment with the Corporation or any Affiliate and continuing thereafter, you will not, either directly or indirectly, at any time, while an employee of the Corporation or any Affiliate or thereafter, make known, divulge, reveal, furnish, make available, or use (except for use in the regular course of your duties for the Corporation or its Affiliates) any Confidential Information (as defined below) without the written consent of the Corporation. You also agree that this obligation is in addition to, and not in limitation or preemption of, all other obligations of confidentiality that you may have to the Corporation or its Affiliates under the Code of Conduct, Securities Trading Policy or other rules or policies governing the conduct of their respective businesses, or general or specific legal or equitable principles.  

(b)As used herein, “Confidential Information” means the information you have been given or have access to or become informed of which the Corporation or its Affiliates possess or have access and which relates to the Corporation or its Affiliates, is not  generally known  to  the public or in the trade or is a competitive asset and/or otherwise constitutes a “trade secret,” as that term is defined by Applicable Laws (as defined below), of the Corporation or its Affiliates, including without  limitation, non- public: (i) planning data and marketing strategies; (ii) terms of any new products and investment strategies; (iii) information relating to other officers and employees of the Corporation or its Affiliates; (iv)  financial results and information about the business condition of the Corporation or its Affiliates; (v) terms of any investment, 

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management or advisory agreement or other material contract; (vi) proprietary software and related documents; (vii) customer and potential customer information (for example, client lists, prospecting lists, information about client accounts, pricing strategies, and current or proposed transactions and contact persons at such customers and customer prospects); and (viii) material information or internal analyses concerning customers or customer prospects of the Corporation or its Affiliates or their respective operations, condition (financial or otherwise) or plans.

3.5    Non-Disparagement. Subject to Section 3.7 below, during the course of your employment with the Corporation or any Affiliate and continuing thereafter, you will not, directly or indirectly make, issue, authorize or publish any comments or statements (orally or in writing) to the media, to any individual or entity with whom or which the Corporation, or any of its Affiliates, has a business relationship, or to any other individual or entity, which disparages, criticizes or otherwise reflects adversely upon the Corporation, any of its Affiliates or any of their respective employees, officers or directors.

3.6    Cooperation.  Upon the termination of your employment for any reason or no reason, including but not limited to resignation of employment, you will fully cooperate with the Corporation and its Affiliates upon reasonable notice and at reasonable times, in the prosecution and defense of complaints, investigations, litigation, arbitration and mediation of any complaints, claims or actions  now  in existence or that may be threatened or brought in the future relating to events or occurrences that transpired while employed by the Corporation or any Affiliate.

3.7    Governmental Authorities.  Nothing in the Award Agreement prohibits or interferes with your right to disclose any relevant and necessary information in any action or proceeding relating to the Award Agreement or as otherwise required by law or legal process. In addition, nothing in the Award Agreement prohibits or interferes with your or your attorney’s right: (a) to initiate communications directly with or report or disclose  possible violations of law or regulation to, any governmental agency or entity, legislative body, or any self-regulatory organization, including but not limited to the U.S. Department of Justice (“DOJ”), the U.S. Securities and  Exchange  Commission (“SEC”), the U.S. Financial Industry Regulatory  Authority (“FINRA”), the U.S. Equal Employment Opportunity Commission (“EEOC”), or U.S. Congress, and such reports or disclosures do not require prior notice to, or authorization from, the Corporation; (b) to participate, cooperate, or testify in any action, investigation or proceeding with, provide information to, or respond to any inquiry from any governmental agency or legislative body, any self-regulatory organization, including but not limited to the IRS, SEC, FINRA, the EEOC, DOJ, U.S. Congress (“Governmental Authorities”), or the Corporation’s Legal or Compliance Departments and such communications do not require prior notice to, or authorization from the Corporation.  However, with respect to such communications, reports, participation, cooperation or testimony to the Governmental Authorities, as set forth above in clauses (a) and (b) of this Section, you may not disclose privileged communications with the Corporation’s counsel.  To the extent permitted by law, upon receipt of a subpoena, court order or other legal process compelling the disclosure of any information, you will give prompt written notice to the Corporation so as to provide the Corporation ample opportunity to protect its interests in confidentiality to the fullest extent possible unless the subpoena, court order or other legal process pertains to an action described above in clauses (a) or (b) of this Section, in which event no such notice is required. Notwithstanding any confidentiality and non-disclosure obligations you may have, you are hereby advised as follows pursuant to the U.S. Federal Defend Trade Secrets Act of 2016: “An  individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other  document filed in a lawsuit or other proceeding, if such filing is made under seal.  An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may 

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disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

3.8    Existing Obligations.  The terms of the Award Agreement shall not in any way (a) limit your obligations pursuant to any other agreements with the Corporation or any of its Affiliates or other corporate plans or policies applicable to you; or (b) limit the Corporation’s or your Employer’s rights to exercise any remedies it may have under Applicable Laws or under the terms of such other agreements, plans or policies.

3.9    Failure to Comply with Covenants.  If you fail to comply with any of the foregoing applicable covenants, the RSUs shall be immediately forfeited and may be subject to repayment as provided in Section 5.4 of these Terms and Conditions.

SECTION 4:  Settlement

4.1    Time of Settlement.  Vested RSUs shall be settled as soon as administratively practicable following each Vesting Date as reflected in the Award Notice and in all events no later than two and one‐half (2 1⁄2) months following the end of the calendar year in which the RSUs vest; provided, if you are a “specified employee” under Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), upon separation from service and if such settlement is deferred compensation conditioned upon a separation from service and not compensation you could receive without separating from service, then settlement shall not be made until the first day following the six (6) month anniversary of your separation from service (or upon your death, if earlier).

4.2    Form of Settlement.  Vested RSUs shall be settled in the form of Common Stock delivered in book‐entry form.  Notwithstanding the foregoing, the Corporation may, in its sole discretion, settle any vested RSUs in the form of a cash payment to the extent settlement of the RSUs in shares of Common Stock is prohibited under local law or would require you, your Employer, the Corporation or any Affiliate to obtain the approval of any governmental and/or regulatory body in your country of residence (or country of employment, if different).  Alternatively, the Corporation may, in its sole discretion, settle the vested RSUs in the form of Common Stock but require an immediate sale of such shares of Common Stock (in which case, these Terms and Conditions shall give the Corporation the authority to issue sales instructions on your behalf).  Accrued dividend equivalents corresponding to vested RSUs, if any, shall be settled in the form of cash, payable without interest, on the next administratively practicable pay date following vesting of such RSUs.    

SECTION 5:  Other Terms and Conditions

5.1    No Right to Employment.  Neither the award of RSUs nor anything else contained in these Terms and Conditions nor the Plan shall be deemed to limit or restrict the right of your Employer to terminate your employment at any time, for any reason, with or without Cause.

5.2    Compliance with Laws.  Notwithstanding any other provision of these Terms and Conditions, you agree to take any action, and consent to the taking of any action by the Corporation and your Employer with respect to the RSUs awarded hereunder necessary to achieve compliance with applicable laws, regulations or relevant regulatory requirements or interpretations in effect from time to time (“Applicable Laws”).  Any determination by the Corporation in this regard shall be final, binding and conclusive.  The Corporation shall in no event be obligated to register any securities pursuant to the U.S. Securities Act of 1933 (as the same shall be in effect from time to time) or other applicable foreign securities laws, or to take 

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any other affirmative action in order to cause the delivery of shares in book-entry form or otherwise therefore to comply with any Applicable Laws.  For the avoidance of doubt, you understand and agree that if any payment or other obligation under or arising from these Terms and Conditions, including without limitation dividend equivalent rights, or the Plan is in conflict with or is restricted by any Applicable Laws, the Corporation may reduce, revoke, cancel, clawback or impose different terms and conditions to the extent it deems necessary or appropriate, in its sole discretion, to effect such compliance.  If the Corporation determines that it is necessary or appropriate for any payments under these Terms and Conditions to be delayed in order to avoid additional tax, interest and or penalties under Section 409A of the Code, then the payments would not be made before the date which is the first day following the six (6) month anniversary of the date of your termination of employment (or upon earlier death).   

5.3    Tax Withholding.  Regardless of any action the Corporation or your Employer take with respect to any or all income tax (including U.S. federal, state and local taxes or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Corporation and your Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of the RSUs, the subsequent sale of any shares of Common Stock acquired pursuant to the RSUs and the receipt of any dividends or dividend equivalents, and (b) do not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items. Further, if you are or become subject to taxation in more than one country, you acknowledge that the Corporation and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one country.
Prior to the delivery of shares of Common Stock upon the vesting of your RSUs, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Corporation shall be authorized to withhold a sufficient number of whole shares of Common Stock otherwise issuable upon the vesting of the RSUs that have an aggregate Fair Market Value sufficient to pay the Tax-Related Items required to be withheld with respect to the shares of Common Stock.  In cases where the Fair Market Value of the number of whole shares of Common Stock withheld is greater than the Tax-Related Items required to be withheld, the Corporation shall make a cash payment to you equal to the difference as soon as administratively practicable.  The cash equivalent of the shares of Common Stock withheld will be used to settle the obligation to withhold the Tax-Related Items.  In the event that withholding in shares of Common Stock is prohibited or problematic under Applicable Laws or otherwise may trigger adverse consequences to the Corporation or your Employer, your Employer is authorized to withhold the Tax-Related Items required to be withheld with respect to the shares of Common Stock in cash from your regular salary and/or wages or any other amounts payable to you.  In the event the withholding requirements are not satisfied through the withholding of shares of Common Stock by the Corporation or through your regular salary and/or wages or other amounts payable to you by your Employer, no shares of Common Stock will be issued to you (or your estate) upon vesting of the RSUs unless and until satisfactory arrangements have been made by you with respect to the payment of any Tax-Related Items that the Corporation or your Employer determines, in its sole discretion, must be withheld or collected with respect to such RSUs.  By accepting this grant of RSUs, you expressly consent to the withholding of shares of Common Stock and/or withholding from your regular salary and/or wages or other amounts payable to you as provided for hereunder.  All other Tax-Related Items related to the RSUs and any shares of Common Stock delivered in payment thereof are your sole responsibility.

Depending on the withholding method, the Corporation or your Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, 

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including maximum applicable rates in your jurisdiction(s), in which case you may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Common Stock.  If the obligation for Tax-Related Items is satisfied by withholding in shares of Common Stock, you shall be deemed to have been issued the full number of shares of Common Stock subject to the vested RSUs, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items.

5.4    Forfeiture and Repayment. If, directly or indirectly:

(a)    during the course of your employment with your Employer, you violate any obligations set forth in the Award Agreement (including without limitation those obligations set forth in Section 3 of these Terms and Conditions) or engage in conduct or it is discovered that you engaged in conduct that is materially adverse to the interests of the Corporation or its Affiliates, including failures to comply with the Corporation’s or any of its Affiliate’s rules or regulations, fraud, or conduct contributing to any financial restatements or irregularities; 

(b)    during the course of your employment with your Employer and, unless you have post‐termination obligations or duties owed to the Corporation or its Affiliates pursuant to an individual agreement set forth in subsection (d) below, for one (1) year thereafter, you engage in solicitation and/or diversion of customers or employees;  

(c)    during the course of your employment with your Employer, you engage in competition with the Corporation or its Affiliates; 

(d)    following termination of your employment with your Employer for any reason, with or without Cause, you violate any post-termination obligations or duties owed to the Corporation or its Affiliates (including without limitation those obligations set forth in Section 3 of these Terms and Conditions) or any agreement with the Corporation or its Affiliates, including without limitation, any employment agreement, confidentiality agreement or other agreement restricting post-employment conduct; or

(e)    any compensation that the Corporation or its Affiliates has promised or paid to you is required to be forfeited and/or repaid to the Corporation or its Affiliates pursuant to applicable regulatory requirements;

then the Corporation may cancel all or any portion of the RSUs and/or require repayment of any shares of Common Stock (or the value thereof) or other amounts which were acquired pursuant to the RSUs (including dividends and dividend equivalents).  The Corporation shall have sole discretion to determine what constitutes grounds for forfeiture and/or repayment under this Section 5.4, and, in such event, the portion of the RSUs that shall be cancelled and the sums or amounts that shall be repaid.  For purposes of the foregoing, you expressly and explicitly authorize the Corporation to issue instructions, on your behalf, to any brokerage firm and/or third party administrator engaged by the Corporation to hold the shares of Common Stock and other amounts acquired pursuant to the RSUs to re-convey, transfer or otherwise return such shares and/or other amounts to the Corporation.  

5.5    Governing Law and Choice of Forum.  The Award Notice and these Terms and Conditions shall be construed and enforced in accordance with the laws of the State of New York, other than any choice of law provisions calling for the application of laws of another jurisdiction.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or these Terms and Conditions, the parties hereby submit to and consent to the exclusive jurisdiction of the State of New York and agree that such litigation shall be conducted only in the courts of New York County, New 

9

York, or the federal courts for the United States for the Southern District of New York, and no other courts, where this grant is made and/or to be performed and agree to such other choice of forum provisions as are included in the Plan.

10

5.6    Nature of Plan.  By participating in the Plan, you acknowledge, understand and agree that:

(a)     The Plan is discretionary in nature and limited in duration, and may be amended, cancelled, or terminated by the Corporation, in its sole discretion, at any time.  

(b)    The grant of RSUs under the Plan is a one-time benefit and does not create any contractual or other right to receive RSUs or benefits in lieu of such awards in the future.  Future awards, if any, will be at the sole discretion of the Corporation, including, but not limited to, the form and timing of the award, the number of shares of Common Stock subject to the award, the vesting provisions applicable to the award and the purchase price (if any).  

(c)    Your participation in the Plan is voluntary, and the value of your RSUs is an extraordinary item of compensation and is outside the scope of your employment (and your employment contract, if any).  As such, your RSUs are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, dismissal, termination or end of service payments, bonuses, long-service awards, pension or retirement benefits, or similar payments.  

(d)    No claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the termination of your employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any).  In consideration of the grant of the RSUs, you expressly agree not to institute any such claim against the Corporation, any of its Affiliates or your Employer. 

5.7    Data Privacy.  Pursuant to applicable personal data protection laws, the Corporation hereby notifies you of the following in relation to your personal data and the collection, processing and transfer of such data in relation to the Corporation’s grant of your RSUs and your participation in the Plan.  The collection, processing and transfer of your personal data is necessary for the Corporation’s administration of the Plan and your participation in the Plan, and your denial and/or objection to the collection, processing and transfer of personal data may affect your participation in the Plan.  As such, by accepting your award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described herein.  

The Corporation and your Employer hold certain personal information about you, including your name, home address and telephone number, email address, personal bank account details, date of birth, social security number, passport or other employee identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Corporation, details of all RSUs or any other entitlement to shares of Common Stock or equivalent benefits awarded, canceled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (the “Data”).   The Data may be provided by you or collected, where lawful, from third parties, and the Corporation or your Employer will process the Data for the exclusive purpose of implementing, administering and managing your participation in the Plan and other aspects of the employment relationship.  The Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by Applicable Laws and regulations.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Corporation’s organization only by those persons requiring access 

11

for purposes of the implementation, administration and operation of the Plan and other aspects of the employment relationship and for your participation in the Plan.

The Corporation and your Employer will transfer the Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and the Corporation and your Employer may each further transfer the Data to any third parties (locally and overseas) assisting the Corporation in the implementation, administration and management of the Plan.  These recipients may be located in your country of residence, or elsewhere throughout the world, such as countries in the European Economic Area, the United States or India.  By accepting your award, you hereby authorize them to collect, receive, process, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares on your behalf to a broker or other third party with whom you may elect to deposit any shares acquired pursuant to the Plan.  

You may, at any time, exercise your rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of the Data, (b) verify the content, origin and accuracy of the Data, (c) request the correction, integration, update, amendment, deletion, or blockage (for breach of Applicable Laws) of the Data, (d) to oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and your participation in the Plan, and (e) withdraw your consent to the collection, processing or transfer of the Data as provided hereunder (in which case, your award will be null and void).  You may seek to exercise these rights by contacting your local Human Resources manager or the Corporation’s Human Resources Department.

Finally, upon request by the Corporation or your Employer, you agree to provide an executed data privacy consent form (or any other agreements or consents as may be required by the Corporation and/or your Employer) that the Corporation and/or your Employer may deem necessary to obtain from you for the purpose of administering your participation in the Plan in compliance with data privacy laws in your country, either now or in the future.  You understand and agree that you will not be able to participate in the Plan if you fail to provide any such consent or agreement requested by the Corporation or your Employer.  

5.8    Insider Trading/Market Abuse Laws.  You may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the shares of Common Stock are listed and in applicable jurisdictions including the United States and your country or your broker’s country, if different, which may affect your ability to accept, acquire, sell or otherwise dispose of shares of Common Stock, rights to shares of Common Stock (e.g., RSUs) or rights linked to the value of shares of Common Stock under the Plan during such times as you are considered to have “inside information” regarding the Corporation (as defined by the laws in the applicable jurisdictions).  Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed inside information.  Furthermore, you could be prohibited from (a) disclosing the inside information to any third party and (b) “tipping” third parties or causing them otherwise to buy or sell securities (third parties include fellow employees).  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Corporation.  You acknowledge that it is your responsibility to comply with any applicable restrictions, and you should speak to your personal advisor on this matter.
5.9    Electronic Delivery and Acceptance.  The Corporation may, in its sole discretion, deliver any documents related to current or future participation in the Plan by electronic means.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or 

12

electronic system established and maintained by the Corporation or a third party designated by the Corporation.
5.10    Severability.  The provisions of these Terms and Conditions are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.  Alternatively, the Corporation, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to render it valid and enforceable to the full extent permitted under Applicable Laws.
5.11    Liability for Breach.  You shall indemnify the Corporation and hold it harmless from and against any and all damages or liabilities incurred by the Corporation (including liabilities for attorneys’ fees and disbursements) arising out of any breach by you of these Terms and Conditions, including, without limitation, any attempted transfer of RSUs in violation of Section 1.4 of these Terms and Conditions.

5.12    Waiver.  You acknowledge that a waiver by the Corporation of any provision of these Terms and Conditions shall not operate or be construed as a waiver of any other provision of these Terms and Conditions, or of any subsequent breach of these Terms and Conditions.
5.13    Additional Requirements.  The Corporation reserves the right to impose other requirements on the RSUs, any payment made pursuant to the RSUs, and your participation in the Plan, to the extent the Corporation determines, in its sole discretion, that such other requirements are necessary or advisable for legal or administrative reasons.  Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

****************************

13Exhibit 10.1

 

COMPENSATION AGREEMENT

 

This Compensation
Arrangement (this “Agreement”) is made and entered into as of this 2nd day of August, 2018, by and between
Precision Optics Corporation, Inc., a Massachusetts corporation (together with its successors and assigns, the “Company”),
and Joseph N. Forkey (the “Executive”).

 

WHEREAS, the Company
is currently employing the Executive as the Company’s President and Chief Executive Officer;

 

WHEREAS, the Board
of Directors of the Company (the “Board”) has determined that it is in the best interest of the Company and
its stockholders for the Executive to continue in such position and to compensate Executive appropriately pursuant to the terms
and conditions set forth herein;

 

NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt
of which mutually is acknowledged, the Company and the Executive (each individually, a “Party”, and together,
the “Parties”) agree as follows:

 

1.        COMPENSATION.

 

		(a)	Base Salary. Beginning July 1, 2018, the Company shall pay to the Executive a base salary
of not less than $200,000 per year in accordance with the Company’s regular payroll practices in effect from time to time,
but no less frequently than monthly. The Executive may receive raises at the discretion of the Board of Directors. The Executive
may also receive a bonus at the discretion of the Board of Directors.

 

		(b)	Option Grant. As soon as practical after the execution of this Agreement the Executive will
be granted an equity award consisting of 350,000 stock options, taken from the Company’s 2011 Equity Incentive Plan, to purchase
350,000 shares of Company common stock (the “Options”). The exercise price for such Options shall be the closing
stock price of the Company’s common stock on the date of grant, or $0.73 per share, whichever is higher. The Options shall
vest and be exercisable and non-forfeitable as follows: (i) one–half of the Options shall vest if the Company achieves revenues
of $1.5 million or higher for two consecutive fiscal quarters; and (ii) one-half of the Options shall vest if the Company’s
common stock is trading at $1.00 or higher for fifteen consecutive trading days. For vesting criterion (i), revenues will be those
reported on the Company’s 10Q and 10K financial statements, and vesting will occur on the filing date of the first 10Q or
10K for which the criterion is satisfied. If the Company undergoes a Change in Control Transaction, any remaining unvested Options
shall vest immediately prior to the Change in Control. The life of the options will be ten years from the date of the grant. The
exercise price and number of shares issuable under the Options shall be adjusted to reflect stock splits and similar transactions.

 

		(c)	Deferred Equity Compensation. With a retroactive start date of January 1, 2017, Executive
shall earn 50,000 shares of the Company’s common stock per fiscal quarter, until the quarter ending June 30, 2018. Executive
must be employed at the Company on the last day of each quarter in order to earn such stock. Stock earned by Executive will be
issued to Executive from the Company’s 2011 Equity Incentive Plan in three installments of 100,000 shares each. The first
issuance will occur on the date this Agreement is signed; the second will occur on January 1, 2019; the third will occur on January
1, 2020. For purposes of clarity, the Executive remains entitled to receive any shares previously earned, even if Executive is
not employed at the Company at the time of issuance. However, the Executive will not be eligible to receive earned stock before
the scheduled issuance dates defined above, except in the event that the Company is sold. In the event that the Company is sold,
all outstanding stock earned by Executive prior to the sale of the Company, but not yet issued, will be issued to Executive immediately
prior to the close of the sale of the Company. Company shall pay and bear sole responsibility for the employer’s portion
of payroll taxes when the shares are issued.

 

 

 

 

    	 	1	 

     

    

 

2.        SEVERABILITY.

 

If any provision
or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted
by law.

 

3.        GOVERNING
LAW/JURISDICTION.

 

This Agreement
shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts without reference
to principles of conflict of laws.

 

4.        COUNTERPARTS.

 

This Agreement may
be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears
thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the
signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

 

5.        SECTION 409A
COMPLIANCE.

 

It is the
intention of the Company and the Executive that this Agreement and the payments provided for herein meet the requirements of
Section 409A of the Code, to the extent applicable to this Agreement and such payments. The Company and the Executive
agree to cooperate in good faith in preparing and executing, at such time as sufficient guidance is available under
Section 409A and from time to time thereafter, such amendments to this Agreement, if any, as the Executive may
reasonably request solely for the purpose of assuring that this Agreement and the payments provided hereunder meet the
requirements of Section 409A. Nothing in this Agreement shall require the Company to increase the Executive’s
compensation or make the Executive whole for any requested changes.

 

IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the date first written above.

 

 

	 	Precision Optics
Corporation, Inc.
	 	 
	 	/s/ Peter Woodward                             
	 	Peter Woodward
	 	Chairman of the
Board of Directors
	 	 
	 	 
	 	Executive
	 	 
	 	/s/ Joseph N. Forkey                           
	 	Joseph N. Forkey
	 	 

 

 

 

    	 	2

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