Document:

EXHIBIT 10.2

 EXHIBIT 10.2
 

 PATENT ASSIGNMENT AGREEMENT
 

 This Patent Assignment Agreement (the "Agreement"), effective as of the date that it is signed by the last party to sign it as indicated on the signature page (the "Effective Date") is made by and between ITUS Corporation, formerly known as CopyTele, Inc., having a principal place of business at 900 Walt Whitman Road, 2nd Floor, Melville, New York 11747 ("ITUS"), and AU Optronics Corporation, having a principal place of business at No. 1, Li-Hsin Rd. 2, Hsinchu Science Park, Hsinchu 30078, Taiwan, Republic of China ("AUO") (collectively, the "Parties" or either individually, a "Party").
 

 RECITALS
 

 WHEREAS, Assignor is willing to sell, convey, and assign to Assignee, and Assignee is willing to purchase and receive from Assignor, certain patent rights as further described herein;
 

 NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, the Parties agree as follows:
 

 AGREEMENT
 

 1.0
 DEFINED TERMS
 

 Unless otherwise defined, capitalized terms used herein shall have the following meanings:
 

 1.1
 "Affiliate" means a Person that presently or in the future controls, is controlled by, or is under common control with a Party. For the purposes of this definition, "control" shall mean direct or indirect ownership of greater than fifty percent (50%) of the voting power, capital or other securities of a Person or the power otherwise to direct or cause the direction of the management and policies of the Person.
 

 1.2
 “EPD" means electrophoretic display.
 

 1.3
 "EPD Agreement" means that certain contract titled "Exclusive License Agreement" entered into by and between CopyTele Inc. and AU effective May 27, 2011. For the avoidance of doubt, the EPD Agreement was designated Hearing Exhibit 2 during the Arbitration, and bears control numbers COPYTELE-0000584-614.
 

 1.4
 "EPD Patents" means any and all patents and/or patent applications relating to EPD technology filed by, issued or assigned to, or otherwise owned or controlled by Assignor and/or its Affiliates, Subsidiaries, or predecessor(s) including CopyTele, Inc., anywhere in the world, before the fifth anniversary of the effective date of the EPD Agreement, as well as all divisionals, continuations, continuations-in-part, reissues, reexaminations, utility models, foreign counterpart, parents and/or extensions in connection therewith. For the avoidance of doubt, the EPD Patents include without limitation the patents and patent applications identified in Attachment I to Appendix A, hereto.
 

 1
 

 
  
 1.5
 "Person" means any individual or firm, association, organization, joint venture, trust, partnership, corporation, or other collective organization or entity.
 

 1.6
 "Subsidiary- in respect of a Person means an Affiliate that is controlled by such
 Person as the term control is used in the definition of Affiliate.
 

 2.0
 PATENT ASSIGNMENT
 

 2.1
 Assignment. Assignor agrees to and hereby does assign to AUO its entire right, title and interest in and to the EPD Patents, know-how transferred by ITUS to AUO prior to the Effective Date and trade secrets, if any, and all benefits, privileges, causes of action, and remedies relating thereto throughout the world, including, without limitation, exclusive rights to: (a) apply for and maintain all registrations, renewals and/or extensions thereof, (b) bring actions and recover damages for past, present and future infringement or other violation thereof, and (c) grant licenses or other interests therein (the "Assignment"). The date on which payment of the Purchase Price is received by ITUS and the transfer of the EPD Patents becomes effective shall be referred to herein as the "EPD Closing Date."
 

 2.2
 Recordation. For purposes of recordation of such Assignment with the United States Patent and Trademark Office and foreign patent offices with respect to presently existing EPD Patents, the Parties shall execute within 48 hours of the EPD Closing Date the Form of Patent Assignment Agreement attached as Appendix A. Without limiting Section 2.3. Assignor agrees to execute such further instruments as Assignee believes are necessary to perfect and record the Assignment with respect to existing EPD Patents issued or applied for registration in countries that require assignments in a form other than that attached as Attachment 1 to Appendix A hereto.
 

 2.3
 Further Assurances. If Assignee is unable for any reason, after reasonable effort, to secure the Assignor's signature on any document needed in connection with the actions specified in this Section 2. Assignor hereby irrevocably designates and appoints Assignee and its duly authorized officers and agents as its agent and attorney in fact, which appointment is coupled with an interest, to act for and in its behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this paragraph with the same legal force and effect as if executed by the Assignor.
 

 3.0 
 CONSIDERATION
 

 3.1
 Fee. In consideration of the rights granted Assignee hereunder, Assignee shall pay to Assignor the sum of seven million United States Dollars ($7,000,000) (the "Fee"), which amount will be payable in full on or before December 31, 2014.
 

 3.2
 Payment. Unless otherwise agreed by Assignor in writing, Assignee shall pay the Fee by wire transfer of immediately available funds to Assignor's designated bank account as follows, with any bank processing fees charged by Citibank to be borne solely by Assignor.
  
 Bank Name:                 Citibank, F.S.B.
 San Francisco Private Banking
 Bank Address:              One Sansome Street, 24th Floor
 San Francisco, California 94104
 (415) 627-6037
 Account No.:                Withheld
 ABA Routing No. :       Withheld
 To Credit:                     State Bar Attorney Client Trust, 
 Lieff Cabraser Heimann & 
 Bernstein
  
 
 2
 

 
 
 
 3.3
 Taxes. All taxes imposed as a result of the existence or performance of this Agreement shall be borne and paid by the Party required to do so by applicable law; provided, however, that, if so required by applicable law, Assignee shall either (a) withhold the amount of any national taxes levied by the Government of the Republic of China (Taiwan) on any payment by Assignee hereunder, and shall promptly pay such amount to the appropriate tax authorities of the Government of the Republic of China (Taiwan) or (b) apply for the appropriate exemption. In either case, Assignee shall ensure that Assignor receives the full amount set forth in Section 3.1 on or before December 31, 2014. Assignor shall provide Assignee with reasonable assistance in either seeking an exemption or in obtaining a refund for any taxes paid, and any such refund shall go to Assignee. Assignor will be responsible for payment of any non-Taiwanese taxes on its own net income arising from its receipt of the Fee.
 

 3.4
 Costs and Expenses. The Parties agree that each Party is responsible for its own attorneys' fees, expenses, and costs relating to the preparation and execution of this Agreement.
 

 4.0 WARRANTIES
 

 4.1
 Authorization. Each Party represents and warrants that it has the requisite power and authority to enter into this Agreement, to perform its obligations hereunder, and that the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action on behalf of each Party. The Parties acknowledge that some of the EPD Patents have expired and/or have been abandoned, including without limitation, for failure to pay maintenance fees.
 

 4.2
 No Conflicts. Each Party represents and warrants that it has not and will not enter into any other agreement or understanding in conflict with the provisions contained in this Agreement.
 

 4.3
 Assignor Warranties. Assignor represents and warrants as follows:
 

 4.3.1 
 It is the sole and exclusive owner of the EPD Patents and has all rights, title, interest, and privileges arising from such ownership, free and clear of any liens, security interests, encumbrances, rights or restrictions of any kind or nature;
  
 4.3.2 
 All patents and patent applications meeting the definition of EPD Patents are assigned by virtue of this Agreement when the last Party has executed the Form of Patent Assignment Agreement attached hereto as Appendix A.
 

 4.3.3 
 Neither Assignor, nor, to its knowledge any predecessor owner of any of the EPD Patents has assigned, licensed, granted covenants not to sue, transferred or otherwise conveyed to any other Person any rights, title, interest or privileges with respect to the EPD Patents or other patents or applications that, were they filed by, issued or assigned to, or otherwise owned or controlled by Assignor and/or its Affiliates, Subsidiaries, or predecessor(s) including CopyTele, Inc., would be EPD Patents; and
 

 5.0 
 CONFIDENTIALITY
 

 

 3
 

 
 
 5.1
 Confidentiality Obligation. The terms of this Agreement (but not any patent assignments intended to be publicly filed, such as those based on Appendix A) and all correspondence relating to this Agreement, as well as any non-public financial information exchanged by the Parties hereunder, are confidential, and no Party shall disclose such terms and particulars to any third party except: (i) to the extent that the disclosure of the terms of this Agreement and/or the Parties' Settlement Agreement may be required by applicable law, regulation or order of a governmental authority of competent jurisdiction (including any securities regulatory body or exchange, (ii) during the course of litigation or arbitration so long as the disclosure of such information is subject to the same restrictions as is the confidential information of the other litigating parties, and such restrictions are embodied in a court or arbitral tribunal-entered protective order limiting disclosure to outside counsel and such disclosing Party, (iii) in confidence to the professional legal and financial counsel representing such Party, (iv) in confidence to a Party's Affiliates (v) in confidence to a potential acquirer, investor or lender in connection with a merger, acquisition or financing and its professional legal and financial counsel. Notwithstanding the foregoing, to the extent that the terms of this Agreement and/or the Parties' Settlement Agreement have been disclosed publicly to a governmental authority, the terms of the agreements may no longer be treated as confidential information.
 

 5.1
 Publicity. Neither party shall issue any press release regarding this Agreement
 (except as permitted in Section 5.1 with respect to required filings with a governmental authority) other than the single press release attached in Appendix E to the Settlement Agreement. Nothwithstanding this provision, nothing in this Agreement is intended to or shall limit either Party's ability to disclose the terms of this Agreement as required by law to a governmental authority such as a securities regulatory body. In addition, nothing in this Section 5 is intended to or shall limit either Party's ability to truthfully answer any questions about or discuss the terms of this Agreement with third parties and/or shareholders.
 

 6.0
  NOTICES
 

 All notices, consents, waivers and other communications under this Agreement must be both in writing and by email and written notices shall be deemed to have been duly given: (a) when delivered by hand (including by overnight courier) (with written confirmation of receipt), or (b) within one (1) business day (i.e., a day other than a Saturday or Sunday on which banks are open for business in both New York City and Taipei), if sent by a delivery service (prepaid, receipt requested) or internationally recognized overnight courier or (c) within three (3) business days, if sent by registered or certified mail (postage prepaid, return receipt requested), in each case to the appropriate addresses set forth below (or to such other addresses as a Party may designate by written notice to the other Parties):
 

 For Assignee:
 For Assignor:
 AU Optronics Corporation
 ITUS Corporation
 Attention: Hank Liu
 Attention: Robert Berman, CEO
 No. 1. Li-Hsin Rd. 2 
  12100 Wilshire Blvd, Suite 1275
 Hsinchu Science Park 
  Los Angeles, CA 90025
 Hsinchu 30078
  (310) 309-2122
 Taiwan, Republic of China 
 

 4
 

 
 
 hank.m.liu@auo.eom 
  With a copy to: rberman@ituscorp.com
 linkha@auo.com
  and tstender@ituscorp.com
                                                                                      With a copy to: 
 With a copy to:
   Eric B. Fastiff 
 Lawrence Gotts
   Lieff, Cabraser, Heimann & Bernstein
 Latham & Watkins LLP
   LLP
 555 Eleventh Street, NW
   275 Battery Street, 29th Floor 
 Suite 1000
               San Francisco, CA 94111-1000
 Washington, D.C. 20004-1304
             
 With a copy to:
   With a copy to: 
 lawrence.gotts@lw.com                              efastiff@lchb.com
 

 

 7.
  MISCELLANEOUS
 

 7.2
 Entire Agreement; Amendment. This Agreement cannot be modified, terminated or amended in any respect orally or by conduct of the Parties. Any termination, modification, or amendment may be made only by a writing signed by all Parties.
 

 7.3
 Counterparts. This Agreement may be executed in several counterparts, each of which is deemed to be an original but all of which constitute a one and the same instrument.
 

 7.4
 Interpretation. The headings inserted in this Agreement are for reference only and are not intended to form any part of the operative portion of this Agreement, and they shall not be employed in the interpretation or application of this Agreement. Each Party and counsel have reviewed and approved this Agreement, and accordingly any presumption or rule of construction permitting ambiguities to be resolved against the drafting party shall not be employed in the interpretation or application of this Agreement. "Including" and Include" always mean "including" or "include" without limitation.
 

 7.5
 Arbitration: Governing Law. The rights and obligations of the Parties under this Agreement shall be governed by and construed in accordance with laws of the State of California. Any dispute in connection with this Agreement shall be submitted to arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. The place of arbitration shall be San Francisco, California. The arbitration will be heard before the same panel as heard the Arbitration (to the extent such panel is available). In the event of any such action to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled, in addition to its court costs, to its reasonable attorneys' fees, including without limitation, the costs, expenses and attorneys' fees on any appeal.
 

 7.6
 Integration. This Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof and supersedes any prior or collateral agreements, negotiations and communications in connection with the subject matter covered herein, whether oral or written, and any warranty, representation, promise, or condition in connection therewith not incorporated herein shall not be binding upon either Party or its Affiliates.
 

 

 5
 

 
 [Rest of Page Left Blank; Signature Page Follows]
 

 

 6
 

 
 This Agreement has been duly executed by the Parites to be effective as of the Effective Date.
 

 	 	
	 AU OPTRONICS CORPORATION 
	 ITUS CORPORATION 

	 

	 

	 By: /s/ Linh Ha
	 By: /s/ Robert A. Berman 

	 Name: Linh Ha 
	 Name: Robert A. Berman 

	 Its: General Counsel-Americas 
	 Its: CEO 

	 Dated: 12-28-14
	 Dated: December 29, 2014

 

 

 0
 

 
 APPENDIX A
 

 FORM OF PATENT ASSIGNMENT AGREEMENT
 

 THIS PATENT ASSIGNMENT AGREEMENT (“Patent Assignment”), effective as of
 , is by and among ITUS Corporation, formerly known as CopyTele, Inc.  (“Assignor”), and AU Optronics Corporation (“Assignee”).
 

 Assignor represents and warrants that it owns all right, title, and interest in and to the patents and patent applications listed on Attachment 1 hereto (the “Assigned Patents”).
 

 Assignor hereby assigns to Assignee all of Assignor’s right, title and interest in and to the Assigned Patents and all benefits, privileges, causes of action, and remedies relating thereto throughout the world, including, without limitation, exclusive rights to: (a) apply for and maintain all registrations, renewals and/or extensions thereof, (b) bring actions and recover damages for past, present and future infringement or other violation thereof, and (c) grant licenses or other interests therein.
 

 Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks and any other applicable governmental entity or registrar (including any applicable foreign or international office or registrar), to record Assignee as the owner of the Assigned Patents, and to issue any and all Assigned Patents to Assignee, as assignee of Assignor’s entire right, title and interest in, to, and under the same. Assignee shall have the right to record this Patent Assignment with all applicable government authorities and registrars so as to perfect its ownership of the Assigned Patents.
 

 Assignor shall provide Assignee, its successors, assigns or other legal representatives, reasonable cooperation and assistance at Assignee’s request and expense (including the execution and delivery of any and all affidavits, declarations, oaths, exhibits, assignments, powers of attorney or other documentation as may be reasonably required) as are requested by Assignee to effect, register, maintain, defend, enforce or otherwise exploit the rights assigned herein, including: (a) the preparation and prosecution of any applications or registrations assigned herein; and (b) the prosecution or defense of any interference, opposition, reexamination, reissue, review, infringement or other proceedings that may arise in connection with any of the rights assigned herein, including, but not limited to, testifying as to any facts relating to the rights assigned herein. If Assignee is unable for any reason, after reasonable effort, to secure the Assignor’s signature on any document needed in connection with the actions specified above, Assignor hereby irrevocably designates and appoints Assignee and its duly authorized officers and agents as its agent and attorney in fact, which appointment is coupled with an interest, to act for and in its behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this paragraph with the same legal force and effect as if executed by the Assignor.
 

 This Patent Assignment and any and all proceedings commenced in connection with or relating to this Agreement, shall be governed by, and construed and enforced in accordance with, the laws of the State of California without regard of the laws that might otherwise govern under the applicable principles of conflict of laws of the State of California.
 

 

 

 

 
 IN WITNESS WHEREOF, the undersigned have caused this Patent Assignment to be executed as of the date above first written.
 ITUS Corporation
 

 

 By: _______________________________
 

 

 Title: ______________________________
 Date: ______________________________
 

 THE [STATE/COMMONWEALTH/COUNTRY] OF [          ]
 

 County of
 

 This instrument was executed before me on this ___ day of _______________, ______, by 
 _____________, the                   (title) of ITUS Corporation, a Delaware corporation, on
 Behalf of said corporation. 
 

 

 _______________________________ 
 Notary Public in and for
 The [State/Commonwealth] of [          ]
 

             _______________________________
 Printed of Typed Name of Notary 
 

 

 My commission expires ___________
 

 

 

 Acknowledged and accepted by:
 

 AU Optronics Corporation 
 

 

 

 

 By: _______________________________
 Title: ______________________________
 Date: ______________________________
 

 

 

 

 
 Appendix A Attachment 1 / EPD Patents
 

 	 	 	 	
	 Patent #
	 Application #
	 Title
	 Countries

	 NOA
	 14/269,099
	 Dual particle electrophoretic display and method of manufacturing same.
	 US

	 8754845
	 13/589,613
	 Manufacturing an EPD
	 US

	 8629833
	 12/932,191
	 SINGLE PARTICLE ELECTROPHORETIC DISPLAY AND METHOD OF MANUFACTURING SAME
	 US

	 8519944
	 12/932,088
	 Dual particle electrophoretic display and method of manufacturing same.
	 US

	 8436807
	 12/931,983
	 Single particle electrophoretic display and method of manufacturing same.
	 US

	 8248362
	 12/932,089
	 Method of Manufacturing an Electrophoretic display
	 US

	 7289101
	 09/640,514
	 Multi-color electrophoretic image display
	 US

	 6194488
	 09/259,769
	 Method for making polymer-coated pigment particles using initiator-treated pigments
	 US

	 6117368
	 08/361,891
	 Black and white electrophoretic particles and method of manufacture
	 US

	 6113810
	 08/383,667
	 Methods of preparing electrophoretic dispersions containing two types of particles with different colors and opposite charges
	 US

	 5964935
	 08/916,895
	 Initiator-treated pigment particles and method for preparing same
	 US

 

 	 	 	 	
	 4889603
	 07/281,701
	 Methods of Eliminating Gas Bubbles in an Electrophoretic Display
	 US

	 4892607
	 07/208,854
	 Chip Mounting Technique for Display Apparatus
	 US

	 4947157
	 07/252,598
	 Apparatus and Methods for Pulsing the Electrodes of an Electrophoretic Display for Achieving Faster Display Operation
	 US

	 4947159
	 07/182,436
	 Power Supply Apparatus Capable of MultiS Mode Operation for an Electrophoretic Display Panel
	 US

	 5006212
	 07/166,430
	 Methods Enabling Stress Free Patterning of Chrome on Layers of Organic Polymers
	 US

	 5077157
	 07/440,787
	 Methods of Fabricating Dual Anode Flat Panel Electrophoretic Display
	 US

	 5250938
	 07/960,572
	 Electrophoretic Display Having Enhanced Operation
	 US

	 5254981
	 07/975,119
	 Electrophoretic Display (EPID) Employing Grey Scale Capability Utilizing Area Modulation
	 US

	 5266937
	 07/796,759
	 Method of Writing Data to an Electrophoretic Display Panel
	 US

	 5276438
	 07/794,969
	 Electrophoretic Display Panel with Internal Mesh Background Screen
	 US

	 5279511
	 07/964,350
	 Method of filling an Electrophoretic Display
	 US

	 5279694
	 07/950,640
	 Chip Mounting Techniques for Display Apparatus
	 US

	 5293528
	 07/841,380
	 Electrophoretic Display Panel & Associated Methods for Providing Single Pixel Erase Capability
	 US

	 5298833
	 07/901,755
	 Black Electrophoretic Particles for an Electrophoretic Image Display
	 US

	 5302235
	 07/719,021
	 Dual Anode Flat Panel Electrophoretic Display Apparatus
	 US

	 5304439
	 08/006,471
	 Electrophoretic Display Panel with Interleaved Local Anode
	 US

	 5315312
	 08/108,846
	 Electrophoretic Display Panel with Tapered Grid Insulators
	 US

	 5345251
	 08/002,623
	 Electrophoretic Display Panel with Interleaved Cathode and Anode
	 US

	 5359346
	 08/088,615
	 Electrophoretic Display Panel and Associated Methods for Blinking Displayed Characters
	 US

	 5380362
	 08/092,749
	 Suspension for Use in Electrophoretic Image Display System
	 US

	 5403518
	 08/161,315
	 Formulation for Improved Electrophoretic Display Suspensions and Related Methods
	 US

	 5411656
	 08/106,395
	 Gas Absorption Additives for Electrophoretic Suspensions
	 US

 

 

 	 	 	 	
	 5412398
	 08/208,136
	 Electrophoretic Display Panel and Associated Methods for Blinking Displayed Characters
	 US

	 5450069
	 08/264,412
	 Data/ Facsimile Telephone Subset apparatus Incorporating Electrophoretic Displays- (File Wrapper Continuing Procedure)
	 US

	 5459776
	 08/184,852
	 Data/ Facsimile Telephone Subset apparatus Incorporating Electrophoretic Displays- (File Wrapper Continuing Procedure)
	 US

	 5460688
	 08/058,532
	 Dual Anode Flat Panel Electrophoretic Display Apparatus
	 US

	 5707738
	 08/306,134
	 Black Electrophoretic Particles and Method of Manufacture
	 US

	 5783614
	 08/803,716
	 Polymeric -Coated Dielectric Particles and Formulation and Method for Preparing Same
	 US

	 5835577
	 08/363,543
	 Multi-Functional Personal Telecommunications Apparatus
	 US

	 5932633
	 08/916,855
	 Method for Making Polymer-Coated Pigment Particles Using Initiator Treated Pigments
	 US

	 6148066
	 09/149,324
	 Multi-Functional Personal Telecommunications Apparatus
	 US

	 6198809
	 09/096,800
	 Multi-Functional Personal Telecommunications Apparatus
	 US

	 CN1138385A
	 95191133.3
	 1. Portable Telecommunications Device removable Electrphoretic Display (1CN)
	 China

	 CN1149894A
	 95193241.1
	 2. Fluorinated Dielectric Suspension For Electryphoretic Image Displays and related Methods (2CN)
	 China

	 CN1250528A
	 98803360.7
	 3. High Speed Solid State Optical Display (4CN)
	 China

	 CN1250457A
	 98803274.0
	 4. Polymeric Coated Dialectric Particles and Formulation and Method for Preparing Same (5CN)
	 China

	 2958114
	 502927
	 1. Electrophoretic Display Employing Grey Scale Capability Utilizing Area Modulation (2J)
	 Japan

	 2586181
	 11224/95
	 2. Semitransparent Electrophoretic Information Displays (EPID) Employing Mesh-Like Electrodes (6J)
	 Japan

	 2738462
	 510302/91
	 3. Methods of Fabricating Dual Anode, Flat Panel Electrophoretic Display Apparatus (7J)
	 Japan

	 2916260
	 511968/92
	 4. Electrophoretic Display Panel with Tapered Grid Insulators and Associated Methods (10J)
	 Japan

	 2603037
	 507403/92
	 5. Electrophoretic Display Panel with Plural Electrically Independent Anode Elements (12J)
	 Japan

	 2994750
	 515659/91
	 6. Electrophoretic Display Panel with Internal Mesh Background Screen (13J)
	 Japan

	 3002537
	 505133/92
	 7. Methods of Writing Data to an Electrophoretic Display Panel (14J)
	 Japan

	 2825653
	 506132/92
	 8. Electrode Structure for an Electrophoretic Display Apparatus (15J)
	 Japan

	 2740048
	 516215
	 9. Electrophoretic Display Panel with Interleaved Cathode and Anode (23J)
	 Japan

	 2916260
	 511968
	 10. Electrophoretic Display Panel with Tapered grid insulators and Associated Methods (10J)
	 Japan

	 3192150
	 515676
	 11. Formulation for Improved Electrophoretic Display Suspension and Related Methods (31J)
	 Japan

	 0325013
	 88300448.3
	 1. Electrophoretic Display Panel Apparatus (1 EU)*
	 BE DE FR GB IT NL SE

	 0344367
	 88304003.2
	 2. Monolithic Flat Panel Display Apparatus (2 EU)
	 BE DE FR GB IT NL SE

	 0448853
	 90303210.0
	 3. Semi Transparent Electrophoretic Information Displays (EPID) Employing Mesh Like Electrodes (3 EU)
	 AT BE CH DE DK ES FR GB GR IT LI LU NL
 SE

	 0570995
	 93112534.8
	 4. Semi Transparent Electrophoretic Information Displays (EPID) Employing Mesh Like Electrodes (3A EU)
	 AT BE CH DE DK ES FR GB GR IT LI LU NL
 SE

	 0396247
	 90303243.1
	 5. Dual Anode Flat Panel Electrophoretic Display Apparatus (5 EU)
	 AT BE CH DE DK ES FR GB GR IT LI LU NL
 SE

	 0417362
	 89309376.5
	 6. Data/Facsimile Telephone Subset Apparatus Incorporating Electrophoretic Display (6 EU)
	 BE DE FR GB IT NL SE

	 0363030
	 89309317.9
	 7. Apparatus and Methods for Pulsing the Electrodes of an Electrophoretic Display for Achieving faster Display Operation (7 EU)
	 BE DE FR GB IT NL SE

	 0586373
	 91911607.9
	 8. Methods of Fabricating Dual Anodes Flat Panel Electrophoretic Displays (8 EU)
	 BE DE FR GB NL

	 0595812
	 92902841.3
	 9. Electrophoretic Display Employing Grey Scale Capability Utilizing Area Modulation (9 EU)
	 DE FR GB

	 0600878
	 91916261.0
	 10. Electrophoretic Display Panel with Internal Mesh Background Screen (10 EU)
	 BE DE FR GB NL

	 0604423
	 92904723.1
	 11. Method for Writing Data to an Electrophoretic Display Panel (11 EU)
	 BE DE FR GB

	 0607145
	 92905859.2
	 12. Electrode Structure for an Electrophoretic Display Apparatus (12 EU)
	 BE DE FR GB NL

	 0577738
	 92910099.8
	 13. Electrophoretic Display Panel with Semi Conductor Coated Eliments (13 EU)
	 EE DE FR GB NL

	 0575475
	 92907776.6
	 14. Electrophoretic Display Panel with Plural Electricrically Independent Anode Elements (15 EU)
	 BE DE FR GB NL

	 0601075
	 92919087.4
	 15. Electrophoretic Display Panel with Single Character Erasure (16 EU)
	 NL FR GB BE

	 0601072
	 92919073.4
	 16. Electrophoretic Display Panel with Interleaved Local Anode (17 EU)
	 BE DE FR GB NL

	 0632919
	 93904694.2
	 17. Electrophoretic Display Panel for Blinking Displayed Characters (18 EU)
	 BE DE FR GB IT NL

	 0628194
	 93904812.0
	 18. Electrophoretic Display Panel and Associated Methods Providing Single Pixel Erase Capability (19 EU)
	 BE DE FR GB IT NL

	 0679284
	 94905600.6
	 19. Electrophoretic Display Panel with Interleaved Cathode Anode (20 EU)
	 BE DE FR GB IT NL

	 0746639
	 94901175.3
	 20. Method of Filling an Electrophoretic Display (22 EU)
	 BE DE FR GB IT NL

	 0685101
	 94907380.3
	 21. Electrophoretic Display with Arc Driven Individual Pixels (23 EU)
	 BE DE FR GB IT NL

	 0708798
	 94920792.2
	 22. Suspension for Use an Electrophoretic Image Display Systems (32 EU)
	 BE DE FR GB IT NL

	 Abandoned
	 12/932,158
	 Four Color Electrophoretic Display
	 US

	 4598960
	 06/728,602
	 Methods and apparatus for connecting closely spaced
	 US

	 4655897
	 06/670,571
	 Electrophoretic display panels and associated methods
	 US

	 4732830
	 06/882,271
	 Electrophoretic Display Panels and Associated Methods
	 US

	 4742345
	 06/799,458
	 Electrophoretic Display Panel Apparatus and Methods Therefor
	 US

	 4746917
	 06/885,538
	 Methods and Apparatus for Operating Electrophoretic Display Between a Display and Non-Display Mode
	 US

	 4772820
	 06/905,570
	 Monolithic Flat Panel Display Apparatus
	 US

	 4833464
	 07/096,037
	 Electrophoretic Information Display Apparatus (EPID) Employing Gray Scale Capability
	 US

	 4850919
	 07/171,114
	 Monolithic Flat Panel Display Apparatus and Methods for Fabrication
	 US

	 4870677
	 07/093,374
	 Data/ Facsimile Telephone Subset Apparatus Incorporating Electrophoretic Displays
	 US

	 5028841
	 07/383,278
	 Chip Mounting Technique for Display Apparatus CIP-Div. App.
	 US

	 5041824
	 07/318,751
	 Semitransparent Electrophoretic Information Display (EPID) Employing Mesh-Like Electrodes
	 US

	 5053763
	 07/345,825
	 Dual Anode Flat Panel Electrophoretic Display Apparatus
	 US

	 5066946
	 07/375,056
	 Electrophoretic Display Panel with Selective Line Erasure
	 US

	 5177476
	 07/746,865
	 Methods of Fabricating Dual Anode Flat Panel Electrophoretic Display
	 US

	 5187609
	 07/675,733
	 Electrophoretic Display Panel with Semiconductor Coated Elements
	 US

	 5223115
	 07/752,184
	 Electrophoretic Display with Single Character Erasure
	 US

	 5223823
	 07/950,966
	 Electrophoretic Display Panel with Plural Electrically Independent Anode Elements
	 US

	 5174882
	 07/796,761
	 Electrode Structure for an Electrophoretic Display Apparatus
	 US

	 5216416
	 07/746,854
	 Electrophoretic Display Panel with Interleaved Local Anode
	 US

	 5247290
	 07/795,659
	 Method of Operation for Reducing Power,Increasing Life and Improving Performance of EPID's
	 US

	 5360689
	 08/065,572
	 Colored Polymeric Dielectric Particles & Methods of Manufacture
	 US

	 5402145
	 08/018,111
	 Electrophoretic Display Panel with Arc Driven Individual Pixels
	 US

	 5467107
	 08/313,987
	 Electrophoretic Display Panel with Selective Character Addressability
	 US

	 5498674
	 08/241,349
	 Colored Polymeric Dielectric Particles & Methods of Manufacture
	 US

	 5499038
	 08/180,197
	 Method of Operation for Reducing Power,Increasing Life and Improving Performance of EPID's
	 US

	 5508720
	 08/190,648
	 Portable Telecommunication Device with Removable Electrophoretic Display
	 US

	 5561443
	 08/304,943
	 Electrophoretic display panel with arc driven individual pixels
	 US

	 5573711
	 08/561,091
	 Planar fluorinated dielectric suspensions for electrophoretic image displays and related methods
	 US

	 5587242
	 08/561,249
	 Colored polymeric dielectric particles and method of manufacture
	 US

	 5627561
	 08/630,555
	 Electrophoretic display panel with selective character addressability
	 US

	 5643673
	 08/141,867
	 Black electrophoretic particles and method of manufacture
	 US

	 5869558
	 08/863,323
	 Black electrophoretic particles and method of manufacture
	 US

	 DES. 383750
	 29/052,063
	 Personal Telecommunications Terminal
	 USex10_1-8k010215.htm

EXHIBIT 10.1

 

SALISBURY BANCORP, INC.

2015 PHANTOM STOCK APPRECIATION UNIT AND LONG-TERM INCENTIVE PLAN

ARTICLE 1 – GENERAL

Section 1.1                      Purpose, Effective Date and Term.  The purpose of this Salisbury Bancorp, Inc. 2015 Phantom Stock Appreciation Units and Long-Term Incentive Plan (the “Plan”) is to promote the long-term financial success of Salisbury Bancorp, Inc., a Connecticut corporation (the “Company”), and its Subsidiaries, including Salisbury Bank and Trust Company (the “Bank”), by providing a means to attract, retain and reward individuals who can and do contribute to such success and to further align their interests with those of the Company’s shareholders.  The “Effective Date” of the Plan is January 1, 2015.  The Plan shall remain in effect as long as any Awards are available under the Plan.

 

Section 1.2                      Administration.  The Plan shall be administered by a committee of the Company’s Board of Directors (the “Committee”), in accordance with Section 5.1.

 

Section 1.3                      Plan Year.  The Plan Year shall be January 1 to December 31 of each year.

 

Section 1.4                      Participation.  Any person who is granted an Award in accordance with the terms of the Plan shall be a “Participant” in the Plan.  Awards under the Plan shall be limited to Eligible Employees and Directors of the Company, the Bank or any other Subsidiary.

 

Section 1.5                      Definitions.  Capitalized terms in the Plan shall be defined as set forth in the Plan (including the definition provisions of Article 9).

 

ARTICLE 2 - AWARDS

 

                Section 2.1                      General.  Each Award under the Plan shall be subject to the terms and conditions of the Plan and such additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to such Award and as evidenced in the Award Agreement.  The only Awards that may be granted under the Plan are Phantom Stock Appreciation Units.  A “Phantom Stock Appreciation Unit” represents the right to receive a cash payment on the Determination Date equal to the positive difference between the Strike Price on the Grant Date and the Tangible Book Value of a share of the Company’s Stock on the Determination Date.  The Determination Date shall be established by the Committee on or before the Grant Date. 

 

               Section 2.2                      Settlement of Phantom Stock Appreciation Units.  A Phantom Stock Appreciation Unit shall be settled on the Determination Date or as otherwise specified in this Plan or the Award Agreement, in accordance with such terms and conditions as may be established by the Committee.   The settlement of a Phantom Stock Appreciation Unit on the Determination Date shall be in cash, subject to applicable tax withholding.

 

                Section 2.3                      Vesting of Awards.  If the right to become vested in an Award under the Plan is conditioned on the completion of a specified period of service with the Company or its Subsidiaries, without achievement of performance measures or other performance objectives (whether or not related to the performance measures) being required as a condition of vesting, and without it being granted in lieu of, or in exchange for, other compensation, then, unless otherwise determined by the Committee and evidenced in the Award Agreement, the required period of service for full vesting shall not be less than three (3) years, subject to acceleration of vesting, in the event of the Participant’s death, Disability, involuntary termination without Cause or the occurrence of a Change in Control, as determined by the Committee and set forth in the Award Agreement.

 

  

  

  

Section 2.4                      Deferred Compensation.  It is the Company’s intention that this Plan not be considered a deferred compensation plan within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”).   Accordingly, the Awards are designed so that they shall not be considered “deferred compensation” as defined under Code Section 409A (“Deferred Compensation”).  Payments of Awards are made upon vesting and thus satisfy the “short-term deferral” exception under Code Section 409A. Nonetheless, the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, if necessary to avoid the Awards being treated as Deferred Compensation.  Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section 2.4 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A.  A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action.  Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award if such discretionary authority would contravene Code Section 409A.

 

Section 2.5                      Effect of Separation of Service on Awards.  The Committee shall establish the effect of a Separation of Service on the continuation of rights and benefits available under an Award or this Plan and, in so doing, may make distinctions based upon, among other things, the cause of Separation of Service.  Unless the Committee shall specifically state otherwise at the time an Award is granted and evidences such intent in an Award Agreement, the following provisions shall apply to each Award granted under this Plan:

(a)           Upon the Separation of Service for any reason other than Disability, death, or termination without Cause, Phantom Stock Appreciation Units shall be forfeited.

(b)           Upon the Separation of Service for reason of Disability or death, or due to involuntary termination without Cause (including resignation for “Good Reason”), all Phantom Stock Appreciation Units shall become fully vested and payment of the cash value of the Phantom Stock Appreciation Units shall be made no later than seventy-five (75) days after the Participant’s Separation from Service.

(c)           In the event of a termination for Cause, all Phantom Stock Appreciation Units granted to a Participant under the Plan shall expire and be forfeited.

(d)           The effect of a Change in Control on the vesting of Phantom Stock Appreciation Units is as set forth in Article 4 hereof.

Section 2.6                     Valuation of Awards.

Except as set in Section 4.2 hereof, the cash value of a Phantom Stock Appreciation Unit on any date shall be an amount equal to the positive difference between the then Tangible Book Value of a share of the Company’s Stock reduced by the Strike Price.  Notwithstanding the foregoing, in the event of a Change in Control, the cash value of a Phantom Stock Appreciation Unit shall be determined in accordance with Section 4.2.

 

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ARTICLE 3 - SHARES OF PHANTOM STOCK SUBJECT TO PLAN

 

Section 3.1                      Available Phantom Stock Appreciation Units.  The number of Phantom Stock Appreciation Units available for Award under the Plan shall be Two Million Five Hundred Thousand (2,500,000), subject to adjustment as determined in Section 3.3.

 

                Section 3.2                      Computation of Phantom Stock Appreciation Units Available. 

 

For purposes of this Section 3.2, the number of Phantom Stock Appreciation Units available for future grant shall be reduced by the number of Phantom Stock Appreciation Units previously granted.  To the extent any Phantom Stock Appreciation Units covered by an Award under the Plan are forfeited or are not settled for the benefit of a Participant or beneficiary for any reason, including because the Award is forfeited or canceled, such Phantom Stock Appreciation Units shall not be deemed to have been settled for purposes of determining the maximum number of Phantom Stock Appreciation Units available for delivery under the Plan.

 

Section 3.3                      Corporate Transactions. 

 

In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of shares of Stock or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the shares of Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan and/or under any Award granted under the Plan, then the Committee shall, in such manner as it deems equitable, adjust any or all of (i) the number of Phantom Stock Appreciation Units deemed to be available thereafter for grants to all Participants and individually to any one Participant, (ii) the number of outstanding Phantom Stock Appreciation Units, (iii) the Strike Price of Phantom Stock Appreciation Units, and (iv) in the case of other appropriate transaction, the Tangible Book Value per shares of Stock covered by such Phantom Stock Appreciation Units.  In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Phantom Stock Appreciation Units, in response to changes in applicable laws, regulations, or accounting principles, subject in all respects to the requirements of Code Section 409A.

 

ARTICLE 4 - CHANGE IN CONTROL

 

Section 4.1                      Consequence of a Change in Control.  Except as otherwise provided in the Plan or as determined by the Committee and set forth in the in terms of any Award Agreement:

 

(a)           At the time of a Change in Control, all Phantom Stock Appreciation Units then held by the Participant shall be deemed to have been fully earned and the cash value of outstanding Awards shall be paid to the Participants no later than 75 days after such Change in Control.

 

(b)           In the event of a Change in Control, any performance measure attached to an Award under the Plan shall be deemed satisfied as of the date of the Change in Control.

 

Section 4.2                      Determination of Cash Value on a Change in Control.  In the event of a Change in Control, the cash value of a Phantom Stock Appreciation Unit shall be determined by multiplying the Tangible Book Value of a share of the Company’s stock by the “Price”-to- “Tangible Book Value” multiple of a share of the Company’s common stock (where the Price reflects the merger consideration per share) and then subtracting the Strike Price.

 

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Section 4.3                      Definition of Change in Control.  For purposes of the Plan, unless otherwise provided in an Award Agreement, a “Change in Control” shall be deemed to have occurred upon the earliest to occur of the following (1) a change in ownership of the Company or the Bank under paragraph (i) below, or (2) a change in effective control of the Company or the Bank under paragraph (ii) below, or (3) a change in the ownership of a substantial portion of the assets of the Company or the Bank under paragraph (iii) below:

 

 

(i)           Change in the ownership of the Company or the Bank.  A change in the ownership of the Company or the Bank shall occur on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50% of the total Fair Market Value or total voting power of the stock of such corporation; or

 

 

(ii)           Change in the effective control of the Company or the Bank.  A change in the effective control of the Company or the Bank shall occur on the date that either (1) any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi)(D)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or the Bank possessing 30% or more of the total voting power of the stock of the Company or the Bank; or (2) a majority of members of the Company’s or the Bank’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to the date of the appointment or election, provided that this sub-section (2) is inapplicable where a majority shareholder of the Company or the Bank is another corporation; or

 

               (iii)            Change in the ownership of a substantial portion of the Company’s or Bank’s assets.  A change in the ownership of a substantial portion of the Company’s or the  Bank’s assets shall occur on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company or the Bank that have a total gross Fair Market Value equal to or more than 40% of the total “gross fair market value” of all of the assets of the corporation immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.  There is no Change in Control event under this paragraph (iii) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer; or

 

                             (iv)           For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except to the extent modified herein.

ARTICLE V. ADMINISTRATION

 

  Section 5.1                      Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”).

 

Section 5.2                      Powers of Committee.  The Committee’s administration of the Plan shall be subject to the following:

 

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(a)           Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the Company’s and its Subsidiaries’ Eligible Employees and Directors those persons who shall receive Awards, to determine the time or times of receipt, to determine the number of Phantom Stock Appreciation Units covered by the Awards, to establish the terms, conditions, performance criteria (if any), restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards (subject to the restrictions imposed by Article 6) to cancel or suspend Awards and to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an Award at any time after the grant of the Award, provided, however, that any such action shall be invalid if it violates the requirements of Code Section 409A.

 

(b)           The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.  The Committee shall have the power to determine whether and when Awards shall be forfeited in accordance with the requirements of the Company’s Claw-Back Policy adopted on December 21, 2012, or any subsequent Claw-Back Policy adopted by the Company.

 

                                (c)           The Committee will have the authority to define terms not otherwise defined herein.

 

(d)           Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.

 

(e)           In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the certificate of incorporation and bylaws of the Company and applicable state corporate law.

 

                Section 5.3                      Delegation by Committee.  Except to the extent prohibited by applicable law, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it.   The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Awards so granted.  Any such allocation or delegation may be revoked by the Committee at any time.

 

Section 5.4                      Information to be Furnished to Committee.  As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties.  The records of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect.  Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.

 

Section 5.5                      Committee Action.   The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. All actions of the Committee shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.

 

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ARTICLE 6 - AMENDMENT AND TERMINATION

 

Section 6.1                      General.  The Board may, as permitted by law, at any time, amend or terminate the Plan, and may amend any Award Agreement, provided that no amendment or termination (except as provided in Section 2.4, Section 3.3 and Section 6.2) may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award which was granted under the Plan prior to the date such amendment is adopted by the Board.

 

Section 6.2                      Amendment to Conform to Law and Accounting Changes.  Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the Committee may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by the Securities Exchange Commission or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Award affected thereby, which in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of the Company.  By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 or Section 2.4 to any Award granted under this Plan without further consideration or action.

 

ARTICLE 7 – SOURCE OF BENEFITS

 

Section 7.1                      Benefits Payable From General Assets.  Amounts payable hereunder shall be paid exclusively from the general assets of the Bank, and no person entitled to payment hereunder shall have any claim, right, security interest, or other interest in any fund, trust, account, insurance contract, or asset of the Company or any Subsidiary from which payments may be made.  The rights of each Participant hereunder shall be solely those of an unsecured creditor of the Company.  The Company’s liability for payment of any benefits hereunder shall be evidenced only by this Plan and each Award Agreement entered into between the Company and a Participant.

 

Section 7.2                      Investments to Facilitate Payment of Benefits.  The Company shall not be obligated to invest in any specific asset or fund.  However, in order to provide the means for the payment of any liabilities under this Plan, the Company may elect to do so and, in such event, no Participant shall have any interest whatever in such asset or fund.

 

Section 7.3                      Trust.  Nothing contained in this Plan, and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Company, provided, however, that the Company may establish a separate trust to accumulate funds to discharge its obligations hereunder.  Provided, further, however, that such a trust does not cause the Plan to be considered to be funded for purposes of Title I of ERISA.  The Participant and his or her beneficiary shall have no right, title or interest in any such trust.

 

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ARTICLE 8 - GENERAL TERMS

 

Section 8.1                      No Implied Rights.

 

(a)           No Contractual Right to Employment or Future Awards.  The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan.  No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to receive a future Award under this Plan.

 

(b)           No Rights as a Shareholder.  No Award under the Plan shall confer upon the holder thereof any rights as a shareholder of the Company.

 

Section 8.2                      Transferability.  Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order, as defined in the Code or Title I of ERISA.

 

Section 8.3                      Designation of Beneficiaries.  A Participant hereunder may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such beneficiary designation.  Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise; provided, however, that if the Committee is in doubt as to the entitlement of any such beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.

 

Section 8.4                      Non-Exclusivity.  The adoption of this Plan by the Board shall not be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including, without limitation, the granting of Phantom Stock Appreciation Units otherwise than under the Plan.

 

Section 8.5                      Award Agreement.  Each Award granted under the Plan shall be evidenced by an Award Agreement.  A copy of the Award Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant, and the Committee may but need not require that the Participant sign a copy of the Award Agreement.

 

Section 8.6                      Form and Time of Elections.  Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.

 

Section 8.7                      Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

 

Section 8.8                      Tax Withholding.  Where a Participant is entitled to receive a cash payment upon the vesting of a Phantom Stock Appreciation Unit Award, the Company shall have the right to require such Participant to pay to the Company the amount of any tax which the Company is required to withhold with respect to such vesting to cover the minimum amount required to be withheld.

 

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Section 8.9                      Action by Company or Subsidiary.  Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by action of one or more members of the Board (including a committee of the Board) who are duly authorized to act for the Board, or (except to the extent prohibited by applicable law or applicable rules of any stock exchange) by a duly authorized officer of the Company or such Subsidiary.

 

Section 8.10                      Successors.  All obligations of the Company under this Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.

 

Section 8.11                      Indemnification.  To the fullest extent permitted by law and the Company’s articles of organization, each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance with Section 5.3, or an Eligible Employee of the Company shall be indemnified and held harmless by the Company against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute.  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 charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

Section 8.12                      Restriction on Alienation of Benefits.   No right or benefit under this Plan or an Award Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge; any attempt to alienate, sell, assign, pledge, encumber, or charge the same shall be void.  No right or benefit under this Plan or under any Award Agreement shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit.

 

Section 8.13                      Governing Law.  The Plan will be administered in accordance with the laws of the State of Connecticut.

 

Section 8.14                      Validity.  If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision has never been included herein.

 

Section 8.15                      Notice.  Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Plan, any Award Agreement, shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the Company at its principal executive office.  Such notices, demands, claims and other communications shall be deemed given:

 

(a)           in the case of delivery, by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;

 

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(b)           in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; or

 

(c)           in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise;

 

provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received.  In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service provider.  Communications that are to be delivered by the U.S. mail or by overnight service to the Company shall be directed to the attention of the Company’s Chief Executive Officer and to the Corporate Secretary.

 

Section 8.16                      Dispute Resolution/Arbitration.  The parties shall attempt in good faith to resolve any claim, controversy, or dispute of whatever nature arising between the parties (a “Dispute”), including, but not limited to, those arising out of or relating to this Plan, the Award Agreement, or any other related documents, whether arising out of contract, tort, statute, or otherwise, promptly by negotiations between the parties.  If the Dispute cannot be settled through direct negotiations, the parties shall participate in mediation administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to arbitration.  Thereafter, any unresolved Dispute shall be settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules.  The arbitration proceedings shall be conducted before a neutral arbitrator who is a member of the Bar of the State of Connecticut, has been actively engaged in the practice of law for at least fifteen (15) years and has substantial experience in connection with business transactions and interpretation of contracts.  Upon the request of either party, the arbitrator’s award shall include findings of fact and conclusions of law.  Either party may seek review of the arbitrator’s award before an arbitration review panel, comprised of three (3) arbitrators qualified in the same manner as the initial arbitrator (as set forth above).  Review by the arbitration review panel must be requested in writing within ten (10) days of the initial arbitrator’s award of such review shall be waived.  The arbitration review panel shall be entitled to review all findings of fact and conclusions of law and conduct the review process in such manner as deemed appropriate by the arbitration review panel.  The arbitration review panel shall have authority to modify the award under review in its discretion.  Unless otherwise deemed appropriate by the arbitrator(s), the prevailing party shall be entitled to an award of all reasonable out-of-pocket costs and expenses (including attorneys’ and arbitrators’ fee) related to the arbitration proceeding.  The decision of the arbitrator(s), after exhausting the review provided above, shall be deemed the “arbitration award” and may be enrolled as a final judgment as otherwise provided by law.

 

ARTICLE 9 - DEFINED TERMS; CONSTRUCTION

 

Section 9.1                      In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply:

 

(a) “Award” means an Award of Phantom Stock Appreciation Units under the Plan.

 

(b) “Award Agreement” means the document (in whatever medium prescribed by the Committee) which evidences the terms and conditions of an Award under the Plan.  Such document is referred to as an agreement regardless of whether Participant signature is required.

 

(c) “Board” means the Board of Directors of the Company.

 

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(d) If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of termination for “cause,” then, for purposes of this Plan, the term “Cause” shall have meaning set forth in such agreement.  In the absence of such a definition, “Cause” means the Participant’s personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

 

(e) “Change in Control” has the meaning ascribed to it in Section 4.2.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended, and   any rules, regulations and guidance promulgated thereunder, as modified from time to time.

 

(g) “Code Section 409A” means the provisions of Section 409A of the Code and any rules, regulations and guidance promulgated thereunder.

 

(h) “Committee” means the Committee acting under Article 5.

 

(i) “Determination Date” means the date that an Award vests in the Participant and the cash value of the Award is determined.  The Determination Date shall be the last day of the Plan Year that is the end of the third Plan Year after the Grant Date of an Award, unless otherwise specified by the Committee.

 

(j) “Director” means a member of the Board of Directors of the Company or a Subsidiary.

 

(k) If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of “Disability” or “Disabled,” then, for purposes of this Plan, the terms “Disability” or “Disabled” shall have meaning set forth in such agreement.  In the absence of such a definition, “Disability” or “Disabled” means that a Participant:  (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering the Company’s Eligible Employees.

 

(l) “Eligible Employee” means any employee of the Company or any Subsidiary who the Committee believes has made a key contribution to the organization. Directors who are also employees of the Company or a Subsidiary shall be considered Eligible Employees under the Plan.

 

(m) “Fair Market Value” means, with respect to a share of Stock on a specified date, the average of the closing prices of such Stock for the thirty (30) consecutive-day period ending on the day prior to such date.

 

(n)  “Good Reason” means, with respect to an Eligible Employee, any of the following:

 

(I) a material reduction in the Employee’s base salary not warranted by general across the board reductions due to economic necessity;

 

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(II) a material reduction in the Eligible Employee’s incentive bonus and other benefits generally provided to employees generally (except due to general across the board reductions due to economic necessity);

 

(III) a material reduction in the Eligible Employee’s authority, duties or responsibilities such that the Eligible Employee no longer holds a position with responsibilities consistent with Eligible Employee’s training and experience; or

 

(IV) the permanent relocation of the Eligible Employee’s principal place of business to a location that is more than 35 miles from the Eligible Employee’s workplace at the initial effective date of this Plan;

 

provided that for a termination to be deemed for Good Reason, the Eligible Employee must give, within the ninety (90) day period commencing on the initial existence of the condition(s) constituting Good Reason, written notice of the intention to terminate for Good Reason, and, upon receipt of such notice, the Bank shall have a thirty (30) day period within which to cure such condition(s); and provided further that the Bank may waive such right to notice and opportunity to cure.  In no event may facts or circumstances constituting “Good Reason” arise after the occurrence of facts or circumstances that the Bank relies upon, in whole or in material part, in terminating the Eligible Employee for Cause.

 

(o) “Grant Date” means the date that an Award is granted to a Participant by the Committee.

 

(p) “Participant” means any individual who has received, and currently holds, an outstanding Award under the Plan.

 

(q) “Separation of Service” means the first day occurring on or after a grant date on which the Participant ceases to be an Eligible Employee or Director of, or service provider to, the Company or any Subsidiary, regardless of the reason for such cessation, subject to the following:

 

(I)           The Participant’s cessation as an Eligible Employee or service provider shall not be deemed to occur by reason of the transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries.

 

(II)           The Participant’s cessation as an Eligible Employee or service provider shall not be deemed to occur by reason of the Participant’s being on a leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s services.

 

(III)           If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed (or to whom the Participant is providing services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Eligible Employee of or service provider to the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Separation of Service caused by the Participant being discharged by the entity for whom the Participant is employed or to whom the Participant is providing services.

 

(IV)           A service provider whose services to the Company or a Subsidiary are governed by a written agreement with the service provider will cease to be a service provider at the time the term of such written agreement ends (without renewal); and a service provider whose services to the Company or a Subsidiary are not governed by a written agreement with the service provider will cease to be a service provider on the date that is ninety (90) days after the date the service provider last provides services requested by the Company or any Subsidiary (as determined by the Committee).

 

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(V)           Notwithstanding the forgoing, in the event that any Award under the Plan constitutes Deferred Compensation, the term Separation of Service shall be interpreted by the Committee in a manner consistent with the definition of “Separation from Service” as defined under Code Section 409A.

 

(r) “Service” means service as an Eligible Employee, consultant or non-employee Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus.

 

(s) “Stock” means the common stock of the Company, $.10 par value per share.

 

(t) “Strike Price” means the price established with respect to a Phantom Stock Appreciation Unit.  The “Strike Price” of each Phantom Stock Appreciation Unit shall not be less than 100% of the Tangible Book Value of a share of Stock on the Grant Date. 

 

(u) “Subsidiary” means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect to the Company as defined in Code Section 424(f) and shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than fifty percent (50%) of the capital or profits interests.

 

(v) “Tangible Book Value” means, with respect to a share of Stock on a specified date, the tangible book value as determined in accordance with Generally Accepted Accounting Principles (GAAP) as of the last day of the quarter ending on or immediately preceding the valuation date, with adjustments made, in the sole discretion of the Committee, to exclude accumulated other comprehensive income (ACOI).

 

Section 9.2                      In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:

 

(a)           actions permitted under this Plan may be taken at any time and from time to time in the actor’s reasonable discretion;

 

(b)           references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time;

 

(c)           in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”;

 

(d)           references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality;

 

(e)           indications of time of day mean Connecticut time;

 

(f)           “including” means “including, but not limited to”;

 

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(g)           all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified;

 

(h)           all words used in this Plan will be construed to be of such gender or number as the circumstances and context require;

 

(i)           the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions;

 

(j)           any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and

 

(k)           all accounting terms not specifically defined herein shall be construed in accordance with accounting principles generally accepted in the United States of America.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, a designated officer of Salisbury Bancorp, Inc. has executed this Plan as of 24th day of November, 2014.

 

ATTEST:                                                                SALISBURY BANCORP, INC.

/s/ Shelly L. Humeston                             By: /s/ Richard J. Cantele, Jr.                                                                          

Shelly L Humeston                                          Name: Richard J. Cantele, Jr.

Secretary                                                                Title:  President and Chief Executive Officer

 

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