Document:

ex_143632.htm

Exhibit 10.1

 

FIRST US BANCSHARES, INC.

2013 INCENTIVE PLAN

(as amended on May 2, 2019)

 

1.     Purpose; Eligibility.

 

1.1     General Purpose. The name of the Plan is the First US Bancshares, Inc. 2013 Incentive Plan. The purposes of the Plan are to (a) enable the Company and any Affiliate to attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s long range success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the shareholders of the Company; and (c) promote the success of the Company’s business.

 

1.2     Eligible Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors after the receipt of Awards.

 

1.3   Available Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Nonqualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards and (e) Performance Compensation Awards.

 

2.     Definitions.

 

“Affiliate” means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company; provided, that the entity is one with respect to which Common Stock will qualify as “service recipient stock” under Section 409A of the Code.

 

“Applicable Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal and state banking and securities laws, the Code, the rules of any stock exchange or quotation system on which the shares of Common Stock are listed or quoted, and the applicable laws of any other jurisdiction where Awards are granted under the Plan.

 

“Award” means any right granted under the Plan, including an Incentive Stock Option, a Nonqualified Stock Option, a Stock Appreciation Right, a Restricted Award or a Performance Compensation Award.

 

“Award Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronically to any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

 

“Board” means the Board of Directors of the Company, as constituted from time to time.

 

“Cause” means:

 

 With respect to any Employee or Consultant: (a) if the employee is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or (b) if no such agreement exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; (iv) material violation of state or federal banking or securities laws; or (v) conduct that results in the suspension or removal of the employee from his position as an officer, director or employee of the Company or any Affiliate pursuant to an order or requirement by any regulatory agency with authority or jurisdiction over the Company or any such Affiliate.

 

With respect to any Director, a determination by a majority of the disinterested Board members that the Director has engaged in any of the following: (a) malfeasance in office; (b) gross conduct or neglect; (c) false or fraudulent misrepresentation inducing the director’s appointment; (d) wilful conversion of corporate funds; or (e) repeated failure to participate in Board meetings on a regular basis despite having received proper notice of the meetings in advance.

 

The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.

 

“Change in Control” means: (a) one person (or more than one person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that a Change in Control shall not occur if any person (or more than one person acting as a group) owns more than fifty percent (50%) of the total fair market value or total voting power of the Company’s stock and acquires additional stock; (b) one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the stock of such corporation; (c) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or (d) one person (or more than one person acting as a group), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company before such acquisition.

 

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“Code” means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be deemed to include a reference to any regulations promulgated thereunder.

 

“Committee” means a committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section 3.

 

“Common Stock” means the common stock, $0.01 par value per share, of the Company, or such other securities of the Company as may be designated by the Committee from time to time in substitution thereof.

 

“Company” means First US Bancshares, Inc., a Delaware corporation, and any successor thereto.

 

“Consultant” means any individual who is engaged by the Company or any Affiliate to render consulting or advisory services.

 

“Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service; provided, however, that there is no interruption or termination of the Participant’s Continuous Service; provided further, that, if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with a “separation from service,” as defined under Section 409A of the Code. The Committee or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence.

 

“Covered Employee” has the same meaning as set forth in Section 162(m)(3) of the Code, as interpreted by Internal Revenue Service Notice 2007-49.

 

“Director” means a member of the Board or the board of directors of any Affiliate.

 

“Disability” means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment; provided, however, that for purposes of determining the term of an Incentive Stock Option pursuant to Section 6.10 hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10 hereof within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates; provided, however, that, if any Award is subject to Section 409A of the Code, Disability shall only be given effect to the extent consistent with a “disability,” as defined under Section 409A of the Code.

 

“Disqualifying Disposition” has the meaning set forth in Section 14.11.

 

“Dividend Equivalents” has the meaning set forth in Section 7.2(b)(ii).

 

“Effective Date” shall mean the date as of which the Plan is adopted by the Board, subject to approval by the Company’s shareholders at the 2013 Annual Meeting of Shareholders.

 

“Employee” means any person, including an Officer or Director, employed by the Company or an Affiliate; provided, however, that, for purposes of determining eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or a parent or subsidiary corporation within the meaning of Section 424 of the Code. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate. 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, the NASDAQ Stock Market, the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing price on the date immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported in the Wall Street Journal or such other source as the Committee deems reliable. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee in accordance with Section 409A of the Code, and such determination shall be conclusive and binding on all persons.

 

“Free Standing Rights” has the meaning set forth in Section 7.1(a).

 

“Grant Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth in such resolution.

 

“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

 

“Negative Discretion” means the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award in accordance with Section 7.3(d)(iv) of the Plan; provided, that the exercise of such discretion would not cause the Performance Compensation Award to fail to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

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“Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.

 

“Nonqualified Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

 

“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

“Option” means an Incentive Stock Option or a Nonqualified Stock Option granted pursuant to the Plan.

 

“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

“Option Exercise Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.

 

“Outside Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(3) or any successor to such statute and regulation.

 

“Participant” means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.

 

“Performance Compensation Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Section 7.3 of the Plan.

 

“Performance Criteria” means the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan. The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels of performance of the Company (or Affiliate, division, business unit or operational unit of the Company). With respect to the establishment of the Performance Goal(s) for Covered Employees, the Performance Criteria shall be limited to the following: (a) net earnings or net income (before or after taxes); (b) basic or diluted earnings per share (before or after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit or gross profit growth; (f) net operating profit (before or after taxes); (g) return on assets, capital, invested capital, equity, or sales; (h) cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after taxes, interest, depreciation and/or amortization; (j) gross or operating margins; (k) improvements in capital structure; (l) budget and expense management; (m) productivity ratios; (n) economic value added or other value added measurements; (o) share price (including, but not limited to, growth measures and total shareholder return); (p) expense targets; (q) margins; (r) operating efficiency; (s) working capital targets; (t) enterprise value; and (u) completion of acquisitions or business expansion. For all other Participants, the Performance Criteria shall include such other or different criteria as the Committee may deem appropriate.

 

Any one or more of the Performance Criteria may be used on an absolute or relative basis to measure the performance of the Company and/or an Affiliate as a whole or any division, business unit or operational unit of the Company and/or an Affiliate or any combination thereof, as the Committee may deem appropriate, or as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Performance Criterion (o) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph. To the extent required under Section 162(m) of the Code, the Committee shall, within the first ninety (90) days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria that it selects to use for such Performance Period. In the event that applicable tax and/or securities laws change to permit the Committee discretion to alter the governing Performance Criteria without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.

 

“Performance Formula” means, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

 

“Performance Goals” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. The Committee is authorized at any time during the first ninety (90) days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), or at any time thereafter (but only to the extent the exercise of such authority after such period would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “performance-based compensation” under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the rights of Participants based on the following events: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or regulatory rules affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively determinable category thereof; and (h) a change in the Company’s fiscal year.

 

“Performance Period” means the one or more periods of time, not less than one fiscal quarter, in duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.

 

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“Permitted Transferee” means, unless otherwise authorized by the Committee (or the Board, as the case may be) in an Award Agreement, a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder) own more than fifty percent (50%) of the voting interests.

 

“Plan” means this First US Bancshares, Inc. 2013 Incentive Plan, as amended and/or amended and restated from time to time.

 

“Related Rights” has the meaning set forth in Section 7.1(a).

 

“Restricted Award” means any Award granted pursuant to Section 7.2.

 

“Restricted Period” has the meaning set forth in Section 7.2(a).

 

“Restricted Stock” has the meaning set forth in Section 7.2(a).

 

“Restricted Stock Unit” has the meaning set forth in Section 7.2(a).

 

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stock Appreciation Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, an amount payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised over (b) the exercise price specified in the Stock Appreciation Right Award Agreement.

 

“Stock for Stock Exchange” has the meaning set forth in Section 6.4.

 

“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.

 

“Vested Unit” has the meaning set forth in Section 7.2(e).

 

3.     Administration.

 

3.1     Authority of the Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the Board. Subject to the terms of the Plan, the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee (or the Board, as the case may be) shall have the authority:

 

(a)     to construe and interpret the Plan and apply its provisions;

 

(b)     to promulgate, amend and rescind rules and regulations relating to the administration of the Plan;

 

(c)     to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

 

(d)     to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve Covered Employees or “insiders” within the meaning of Section 16 of the Exchange Act;

 

(e)     to determine when Awards are to be granted under the Plan and the applicable Grant Date;

 

(f)     to select, subject to the limitations set forth in the Plan, those Participants to whom Awards shall be granted;

 

(g)     to determine the number of shares of Common Stock, if any, to be made subject to each Award;

 

(h)     to determine whether each Option is to be an Incentive Stock Option or a Nonqualified Stock Option;

 

(i)     to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;

 

(j)     to designate an Award (including a cash bonus) as a Performance Compensation Award and to select the Performance Criteria that will be used to establish the Performance Goals;

 

(k)     to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; provided, however, that, if any such amendment impairs a Participant’s rights or increases a Participant’s obligations under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment shall also be subject to the Participant’s consent;

 

(l)     to determine the duration and purpose of leaves of absences that may be granted to a Participant without constituting termination of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies;

 

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(m)     to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments;

 

(n)     to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; and

 

(o)     to exercise discretion to make any and all other determinations that it determines to be necessary or advisable for the administration of the Plan.

 

The Committee also may modify the purchase price or the exercise price of any outstanding Award, including cash buyouts, cancellations, substitutions and exchanges; provided, however, that, if the modification effects a repricing, shareholder approval shall be required before the repricing is effective.

 

3.2     Committee Decisions Final. All decisions made by the Committee (or the Board, as the case may be) pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.

 

3.3     Delegation. The Committee, or if no committee has been appointed, the Board, may delegate administration of the Plan to a committee or committees of one or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. The Committee shall have the power to delegate to a subcommittee any of the administrative powers that the Committee is authorized to exercise (and references in the Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. The members of the Committee shall be appointed by and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members, and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable.

 

3.4     Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors who are also Outside Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3 and/or Section 162(m) of the Code. However, (i) if the Board intends to satisfy the exemption requirements of Rule 16b-3 with respect to Awards to any insider subject to Section 16 of the Exchange Act that are to be approved by the Committee rather than the Board, then the Committee shall be composed solely of a compensation committee of the Board that consists solely of two or more Non-Employee Directors, and (ii) if the Board intends to satisfy the exemption requirements of Section 162(m) of the Code with respect to Awards to any Covered Employee, then the Committee shall be a compensation committee of the Board that consists solely of two or more Outside Directors. Within the scope of such authority, the Board or the Committee may (a) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Awards to eligible persons who are either (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Award or (ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code; or (b) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors who are also Outside Directors.

 

3.5     Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that, within sixty (60) days after institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding.

 

4.     Shares Subject to the Plan.

 

4.1     Subject to adjustment in accordance with Section 11, a total of 1,050,000 shares of Common Stock shall be available for the grant of Awards under the Plan, all of which may, in the Committee’s discretion, be granted as Incentive Stock Options. Any shares of Common Stock granted in connection with Options and Stock Appreciation Rights shall be counted against this limit as one share for every one Option or Stock Appreciation Right awarded. Any shares of Common Stock granted in connection with Awards other than Options and Stock Appreciation Rights shall be counted against this limit as two (2) shares of Common Stock for every one share of Common Stock granted in connection with such Award. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.

 

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4.2     Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner.

 

4.3     Subject to adjustment in accordance with Section 11, no Participant shall be granted, during any one (1) year period, Options to purchase Common Stock and Stock Appreciation Rights with respect to more than 30,000 shares of Common Stock in the aggregate or any other Awards with respect to more than 30,000 shares of Common Stock in the aggregate. If an Award is to be settled in cash, the number of shares of Common Stock on which the Award is based shall not count toward the individual share limit set forth in this Section 4.3.

 

4.4     Any shares of Common Stock subject to an Award that is cancelled, forfeited or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the Plan. Any shares of Common Stock that again become available for future grants pursuant to this Section 4.4 shall be added back as one share if such shares were subject to Options or Stock Appreciation Rights and as two (2) shares if such shares were subject to other Awards. Notwithstanding anything to the contrary contained herein, shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option; (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation; or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.

 

4.5     If required by the Sarbanes-Oxley Act of 2002 and/or by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, each Participant’s Award shall be conditioned on repayment or forfeiture in accordance with law. In addition, the Committee may establish such conditions for repayment or forfeiture of Awards as the Committee or the Board may adopt by policy for the Company or any Affiliate and in accordance with any requirements of state or federal banking and securities laws and regulatory agencies.

 

5.     Eligibility.

 

5.1     Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees, Consultants and Directors of the Company and its Affiliates and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors following the Grant Date.

 

5.2     Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the Option Exercise Price is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisable after the expiration of five (5) years from the Grant Date.

 

6.     Option Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted shall be subject to the conditions set forth in this Section 6, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Nonqualified Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time, or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

 

6.1     Term. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, no Incentive Stock Option shall be exercisable after the expiration of ten (10) years from the Grant Date. The term of a Nonqualified Stock Option granted under the Plan shall be determined by the Committee; provided, however, that no Nonqualified Stock Option shall be exercisable after the expiration of ten (10) years from the Grant Date.

 

6.2     Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, the Option Exercise Price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

 

6.3     Exercise Price of a Nonqualified Stock Option. The Option Exercise Price of each Nonqualified Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a Nonqualified Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 409A of the Code.

 

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6.4     Consideration. The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) in the discretion of the Committee, upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) through a “cashless” exercise program established with a broker; (iii) by a reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise; (iv) by any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee. Unless otherwise specifically provided in the Award Agreement, the exercise price of Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system), an exercise by an Officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award under the Plan.

 

6.5     Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

 

6.6     Transferability of a Nonqualified Stock Option. A Nonqualified Stock Option may, in the sole discretion of the Committee, be transferable to a Permitted Transferee, upon written approval by the Committee, to the extent provided in the Award Agreement. If the Nonqualified Stock Option does not provide for transferability, then the Nonqualified Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

 

6.7     Vesting of Options. Each Option may, but need not, vest and, therefore, become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions at the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event.

 

6.8     Termination of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement, the terms of which have been approved by the Committee, in the event that an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three (3) months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set forth in the Award Agreement; provided, however, that, if the termination of Continuous Service is for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.

 

6.9     Extension of Termination Date. An Optionholder’s Award Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant’s Continuous Service that is three (3) months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.

 

6.10     Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a) the date twelve (12) months following such termination or (b) the expiration of the term of the Option as set forth in the Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the Award Agreement, the Option shall terminate.

 

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6.11     Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the earlier of (a) the date twelve (12) months following the date of death or (b) the expiration of the term of such Option as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the Award Agreement, the Option shall terminate.

 

6.12     Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonqualified Stock Options. 

 

6.13     Forfeiture by Order of Regulatory Agency. If the Company’s or any of its financial institution subsidiaries’ capital falls below the minimum requirements contained in 12 C.F.R. 3 (Minimum Capital Ratios; Issuances of Directives) or below a higher requirement as determined by the Company’s or such subsidiary’s primary bank regulatory agency, such agency may direct the Company to require Participants to exercise or forfeit some or all of their Options. All Options granted under the Plan are subject to the terms of any such directive.

 

7.     Provisions of Awards Other Than Options.

 

7.1     Stock Appreciation Rights.  

 

(a)     General. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation Right so granted shall be subject to the conditions set forth in this Section 7.1, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free Standing Rights”) or in tandem with an Option granted under the Plan (“Related Rights”).

 

(b)     Grant Requirements. Any Related Right that relates to a Nonqualified Stock Option may be granted at the same time the Option is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive Stock Option must be granted at the same time the Incentive Stock Option is granted.

 

(c)     Term of Stock Appreciation Rights. The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee; provided, however, that no Stock Appreciation Right shall be exercisable later than the tenth (10th) anniversary of the Grant Date.

 

(d)     Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may, but need not, vest and, therefore, become exercisable in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions at the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event.

 

(e)     Exercise and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company an amount equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified in the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on the date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined by the Committee.

 

(f)     Exercise Price. The exercise price of a Free Standing Right shall be determined by the Committee, but shall not be less than one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation Right and related Option exceeds the exercise price per share thereof, and no Stock Appreciation Rights may be granted in tandem with an Option unless the Committee determines that the requirements of Section 7.1(b) are satisfied.

 

(g)     Reduction in the Underlying Option Shares. Upon any exercise of a Related Right, the number of shares of Common Stock for which any related Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any related Option by the number of shares of Common Stock for which such Option has been exercised.

 

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7.2     Restricted Awards.  

 

(a)     General. A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number of shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for such period (the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the Plan shall be evidenced by an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section 7.2, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.

 

(b)     Restricted Stock and Restricted Stock Units.

 

(i)     Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicable, and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends.

 

(ii)     The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. At the discretion of the Committee, each Restricted Stock Unit (representing one share of Common Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). Dividend Equivalents shall be withheld by the Company for the Participant’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit (in any event, no later than sixty (60) days following the date on which such settlement occurs) and, if such Restricted Stock Unit is forfeited, the Participant shall have no right to such Dividend Equivalents.

 

(c)     Restrictions.

 

(i)     Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Participant to such shares and as a shareholder with respect to such shares shall terminate without further obligation on the part of the Company.

 

(ii)     Restricted Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

 

(iii)     The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock and Restricted Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date the Restricted Stock or Restricted Stock Units are granted, such action is appropriate.

 

(d)     Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at the time or times set forth on a schedule established by the Committee in the applicable Award Agreement.

 

(e)     Delivery of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in Section 7.2(c) and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock that have not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share). Upon the expiration of the Restricted Period (in any event, no later than sixty (60) days following the expiration of the Restricted Period) with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding Restricted Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7.2(b)(ii) hereof and the interest thereon or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed with respect to each Vested Unit.

 

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(f)     Stock Restrictions. Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form as the Company deems appropriate.

 

7.3     Performance Compensation Awards.  

 

(a)     General.

 

(i)     The Committee shall have the authority, at the time of grant of any Award described in the Plan (other than Options and Stock Appreciation Rights granted with an exercise price equal to or greater than the Fair Market Value per share of Common Stock on the Grant Date), to designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Section 162(m) of the Code.

 

(ii)     In addition, the Committee shall have the authority to make an Award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Section 162(m) of the Code.

 

(b)     Eligibility. The Committee will, in its sole discretion, designate within the first ninety (90) days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 7.3. Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period, and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.

 

(c)     Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period (provided any such Performance Period shall be not less than one fiscal quarter in duration), the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply to the Company and the Performance Formula. Within the first ninety (90) days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section 7.3(c) and record the same in writing.

 

(d)     Payment of Performance Compensation Awards.

 

(i)     Condition to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.

 

(ii)     Limitation. A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the Performance Goals for such period are achieved; and (B) the Performance Formula as applied against such Performance Goals determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period. A Participant shall not be entitled to receive dividends on any unearned Performance Compensation Award.

 

(iii)     Certification. Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion in accordance with Section 7.3(d)(iv) hereof, if and when it deems appropriate.

 

(iv)     Use of Discretion. In determining the actual size of an individual Performance Compensation Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate. The Committee shall not have the discretion to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained or (B) increase a Performance Compensation Award above the maximum amount payable under Section 7.3(d)(vi) of the Plan.

 

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(v)     Timing of Award Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants within sixty (60) days following the end of the Performance Period unless otherwise provided in an Award Agreement.

 

(vi)     Maximum Award Payable. Notwithstanding any provision contained in the Plan to the contrary, the maximum Performance Compensation Award payable to any one Participant under the Plan for a Performance Period (excluding any Options and Stock Appreciation Rights) is 30,000 shares of Common Stock or, in the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof on the first or last day of the Performance Period to which such Award relates, as determined by the Committee. The maximum amount that can be paid in any calendar year to any Participant pursuant to a cash bonus Award described in the last sentence of Section 7.3(a) shall be $500,000.

 

8.     Compliance With Applicable Laws. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or sold thereunder unless and until (a) any then applicable requirements of state or federal banking and securities laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committee may require. The Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained.

 

9.     Use of Proceeds from Common Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall constitute general funds of the Company.

 

10.     Miscellaneous.

 

10.1     Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

 

10.2     Shareholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms, and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock certificate is issued, except as provided in Section 11 hereof.

 

10.3     No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate the employment of an Employee with or without notice and with or without Cause pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

 

10.4     Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed to result from either (a) a transfer to the employment of the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another; or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted, or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Section 409A of the Code if the applicable Award is subject thereto.

 

10.5     Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award (provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law); or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.

 

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11.     Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction (such as any recapitalization, reorganization, merger, consolidation, combination or exchange) or other relevant change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and Stock Appreciation Rights, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 and the maximum number of shares of Common Stock with respect to which any one person may be granted Awards during any period stated in Section 4 and Section 7.3(d)(vi) will be equitably adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards, to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to this Section 11, unless the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code, and, in the case of Nonqualified Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification of such Nonqualified Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section 11 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3. Further, with respect to Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, any adjustments or substitutions will not cause the Company to be denied a tax deduction on account of Section 162(m) of the Code. The Company shall give each Participant notice of an adjustment hereunder, and, upon notice, such adjustment shall be conclusive and binding for all purposes.

 

12.     Effect of Change in Control.

 

12.1     Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:

 

(a)     In the event of a Change in Control, all Options and Stock Appreciation Rights shall become immediately exercisable with respect to one hundred percent (100%) of the shares subject to such Options or Stock Appreciation Rights, and/or the Restricted Period shall expire immediately with respect to one hundred percent (100%) of the shares of Restricted Stock or Restricted Stock Units.

 

(b)     With respect to Performance Compensation Awards, in the event of a Change in Control, all incomplete Performance Periods in respect of such Award in effect on the date on which the Change in Control occurs shall end on the date of such change, and the Committee shall (i) determine the extent to which Performance Goals with respect to each such Performance Period have been met based upon such audited or unaudited financial information then available as it deems relevant and (ii) cause to be paid to the applicable Participant partial or full Awards with respect to Performance Goals for each such Performance Period based upon the Committee’s determination of the degree of attainment of Performance Goals or, if not determinable, assuming that the applicable “target” levels of performance have been attained, or on such other basis determined by the Committee. The payment of such partial or full Award shall take place no later than sixty (60) days following the date on which such Change in Control occurs.

 

To the extent practicable, any actions taken by the Committee under the immediately preceding clauses (a) and (b) shall occur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect to the shares of Common Stock subject to their Awards.

 

12.2     In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least ten (10) days’ advance notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. In the case of any Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.

 

12.3     The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.

 

13.     Amendment of the Plan and Awards.

 

13.1     Amendment of the Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided in Section 11 relating to adjustments upon changes in Common Stock and Section 13.3, no amendment shall be effective unless approved by the shareholders of the Company to the extent that shareholder approval is necessary to satisfy any Applicable Laws. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on shareholder approval.

 

13.2     Shareholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

 

13.3     Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.

 

Page 12 of 14

 

 

13.4     No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

 

13.5     Amendment of Awards. The Committee at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Committee may not affect any amendment which would otherwise constitute an impairment of the rights under any Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

 

14.     General Provisions.

 

14.1     Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, confidentiality or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant, a termination of the Participant’s Continuous Service for Cause or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.

 

14.2     Clawback. Notwithstanding any other provisions in the Plan, any Award that is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

 

14.3     Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

 

14.4     Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to establish any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.

 

14.5     Deferral of Awards. Subject to the requirements of Section 409A of the Code, the Committee may establish one or more programs to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria or other event that, absent the election, would entitle he Participant to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.

 

14.6     Recapitalizations. Each Award Agreement shall contain provisions required to reflect the provisions of Section 11.

 

14.7     Delivery. Upon exercise of a right granted under the Plan, the Company shall issue Common Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of the Plan, thirty (30) days shall be considered a reasonable period of time.

 

14.8     No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.

 

14.9      Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with the Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.

 

14.10     Section 409A of the Code. The Plan is intended for Awards to be exempt from or comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period,” as defined in Section 409A of the Code, shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Participant’s termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A of the Code, and neither the Company nor the Committee shall have any liability to any Participant for such excise tax or penalty.

 

14.11     Disqualifying Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two (2) years from the Grant Date of such Incentive Stock Option or within one (1) year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option (a “Disqualifying Disposition”) shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.

 

Page 13 of 14

 

 

14.12     Section 16 of the Exchange Act. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 14.12, such provision, to the extent possible, shall be interpreted and/or deemed amended so as to avoid such conflict.

 

14.13     Section 162(m) of the Code. To the extent the Committee issues any Award that is intended to be exempt from the deduction limitation of Section 162(m) of the Code, the Committee may, without shareholder or grantee approval, amend the Plan or the relevant Award Agreement retroactively or prospectively to the extent that it determines necessary in order to comply with any subsequent clarification of Section 162(m) of the Code required to preserve the Company’s federal income tax deduction for compensation paid pursuant to any such Award.

 

14.14     Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. If no valid beneficiary designation form is on file with the Company at the time of a Participant’s death, the default beneficiary of such Participant shall be the Participant’s spouse, if any, then to any children equally, per stirpes.

 

14.15     Expenses. The costs of administering the Plan shall be paid by the Company.

 

14.16     Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remaining provisions shall not be affected thereby.

 

14.17     Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the construction of the provisions hereof.

 

14.18     Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.

 

14.19     Effective Date of the Plan. The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or, in the case of a stock Award, shall be granted) unless and until the Plan has been approved by the shareholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

 

14.20     Termination or Suspension of the Plan. The Plan shall terminate automatically on March 22, 2023. No Award shall be granted pursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board may suspend or terminate the Plan at any earlier date pursuant to Section 13.1 hereof. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated. Unless the Company determines to submit Section 7.3 of the Plan and the definition of “Performance Goal” and “Performance Criteria” to the Company’s shareholders at the first shareholder meeting that occurs in the fifth (5th) year following the year in which the Plan was last approved by shareholders (or any earlier meeting designated by the Board), in accordance with the requirements of Section 162(m) of the Code, and such shareholder approval is obtained, then no further Performance Compensation Awards shall be made to Covered Employees under Section 7.3 after the date of such annual meeting, but the Plan may continue in effect for Awards to Participants not in accordance with Section 162(m) of the Code.

 

14.21     Choice of Law. The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of the Plan, without regard to such state’s conflict of law rules.

 

* * * * * 

 

As adopted by the Board of Directors of United Security Bancshares, Inc. on March 22, 2013. Amendment adopted by the Board of Directors of First US Bancshares, Inc. on February 27, 2019.

 

As approved by the shareholders of United Security Bancshares, Inc. on May 16, 2013. Amendment adopted by the shareholders of First US Bancshares, Inc. on May 2, 2019.

 

Page 14 of 14ttoo-ex101_250.htm

Exhibit 10.1

 

 

 

 

     [****]SUPPLY AGREEMENT [****]

 (GE Healthcare [****] Products – [****])

 

		
	
1. GEHC

 

GE HEALTHCARE BIO-SCIENCES CORP.

100 Results Way

Marlborough, MA  01752 

 

(“GEHC”)

 
	
2. PURCHASER

 

T2 BIOSYSTEMS, INC.

101 Hartwell Ave.

Lexington, MA 02421

 

(“Purchaser”)

	
3.   PRODUCTS

 
PRODUCTCODEPACK SIZE[****][****][****]
 
	
4. COMBINATION PRODUCTS

 

Combination Products shall mean:  

Kits sold under the Purchaser’s own label that incorporates the Product that is described in Box 3.  

 

Combination Products specifically exclude the Products sold on a stand-alone basis whether under the Purchaser’s own label or not and whether or not the pack size has been modified by the Purchaser.

 

 

 

	
5. MINIMUM PURCHASE REQUIREMENT

 

 Annual Minimum Purchase Requirement the greater of [****] packs or [****]% of previous calendar year and renewing at the start of each calendar year throughout the Term.

 
	
6. FIELD

 

Clinical diagnostics and life sciences research market

 

	
7. LICENSED TRADEMARKS

 

None

 
	
8. TERRITORY

 

Worldwide

	
9.  EFFECTIVE DATE AND TERM

 

Effective Date: ____March 1, 2019________ 

 

Term: 3 years, with successive two year auto-renewal periods thereafter up to 8 years.

 

 

 

In witness whereof, the parties hereto have caused their respective duly authorized representatives to execute this Agreement the day and year first above written.

 

 

For and on behalf ofFor and on behalf of

 

GE HEALTHCARE [****].T2 BIOSYSTEMS, INC.

 

 

Signature________________________Signature__________________________

 

Name (capitals) ___________________Name (capitals) ___________________________

 

Title ____________________________ Title________________________________

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

Date ____________________________ Date________________________________

 

 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

2 of 13

 

 

[****] SUPPLY AGREEMENT [****]

(GE Healthcare [****])

 

	
1.
	
Definitions

 

"Affiliate" means any entity that directly or indirectly controls, is controlled by or is under common control with a party, for so long as such control continues. For the purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the controlled entity, whether through the ownership of voting securities, partnership, other ownership interests, by contract or otherwise. 

 

“Combination Products” means the apparatus, instrument, device or product listed on Box 4, Page 1  that conforms to quality and workmanship standards and incorporates one or more Products. 

 

"Confidential Information" means, with respect to a party, subject to the exceptions set forth herein, any information of a confidential, proprietary or secret nature, in whatever form or media, relating to such party or any of its Affiliates or their respective businesses or operations, whether or not technical in nature and whether or not the information has been provided or disclosed prior to or after the date of this Agreement (together with any notes, summaries, reports, analyses or other material derived by Recipient of such information or its Representatives that contain or otherwise reflect such information). Such information shall include, without limitation: (i) the existence and terms of this Agreement; (ii) information of technical or scientific nature relating to or concerning know-how, technical data, computer programs and systems, designs, data bases, inventions, manufacturing or engineering techniques and procedures, equipment, materials, product designs and specifications, test and quality assurance procedures, research and research projects, and plans for future development; (iii) information of business nature, including trade secrets, prices of the Products and any other pricing information, sales data, customer lists and other information related to customers, customer purchase history, marketing or sales plans, distribution details, product plans, business strategies, costs, profits, formulae, markets, information related to suppliers, customers, agents and/or consultants and information relating to employees, training methods; (iv) all information that is designated as "confidential" or "proprietary" by the Disclosing Party at the time of disclosure; and (v) information entrusted to a party or any of its Affiliates by any other person on a confidential basis.

 

“End User” means an individual or entity that purchases a Combination Product solely for its internal use and not for resale.

 

"Field" means the field of use set for th Box 6, Page 1.

 

“Intellectual Property Rights” means all worldwide (i) inventions, whether or not patentable; (ii) patents and patent applications; (iii) trademarks, service marks, trade dress, logos, internet domain names and trade names, whether or not registered, and all goodwill associated therewith, (including the Trademarks); (iv) copyrights and related rights, whether or not registered; (v) computer software, data, databases, files and documentation and other materials related thereto; (vi) trade secrets and confidential, technical and business information; (vii) all rights therein provided by bilateral or international treaties or conventions; and (viii) all rights to sue or recover and retain damages and costs and attorney’s fees for past, present and future infringement or misappropriation of any of the foregoing.

 

”Licensed Trademarks” means those Trademarks listed in Schedule 3 that GEHC has granted Purchaser the right to use.

 

“Minimum Purchase Requirement” means Purchaser’s minimum purchase obligation in each calendar year as set forth in Box 5, Page 1

. 

“Permitted Affiliate” means an Affiliate of Purchaser that is permitted to sell Products solely in connection with Combination Products under the terms and conditions of this Agreement; provided that Purchaser shall ensure that, (i) each such Affiliate complies with the terms of this Agreement and all applicable law, including all export, anti-money laundering and restricted country treaties, statutes, or other relevant laws or regulations and (ii) subject to GEHC’s right to stop Purchaser from selling Products under this Agreement, upon notice thereof, Purchaser shall also cause such Affiliate to immediately stop selling Products upon written notice from GEHC.  

 

“Permitted Distributor” means the third parties that have a valid and existing agreement with Purchaser permitted such parties to sell Combination Products; provided that Purchaser shall ensure that , (i) each such third party complies with 

the terms of this Agreement and all applicable law, including all export, anti-money laundering and restricted country treaties, statutes, or other relevant laws or regulations and (ii)subject to GEHC’s right to stop Purchaser from selling Products under this Agreement, upon notice thereof, Purchaser shall also cause such third parties to immediately stop selling Products upon written notice from GEHC.

 

”Permitted Manufacturer” means a third party manufacturer that Purchaser engages to manufacture Combination Products and incorporate the Products into Combination Products under the terms and conditions of this Agreement; provided that Purchaser shall ensure that (i) each such third party manufacturer complies with the terms of this Agreement and all applicable law, including all export, anti-money laundering and restricted country treaties, statutes, or other relevant laws or regulations and (ii) subject to GEHC’s right to stop Purchaser from selling Products under this Agreement, upon notice thereof, Purchaser shall also cause such third parties to immediately stop manufacturing Products upon written notice from GEHC.  

 

“Products” means, collectively, the products listed on Box 3, Page 1, and which, pursuant to the terms of this Agreement, will be incorporated into and sold as a part of the Combination Products. 

 

”Territory” means those jurisdictions sert forth in Box 7, Page 1.

 

“Trademarks” means all trademarks, service marks, logos, internet domain names and trade names, whether or not registered, and all goodwill associated therewith, associated or used in connection with the Products (including without limitation “GE,” “GEHC,” “General Electric”, “Amersham”, [****] and “Whatman”) together with all other trade dress, labels, designs, markings, notices or other means of identification which are part of or applied to any Product or its packaging.

 

For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) the use herein of the plural shall include the single and vice versa and the use of the masculine shall include the feminine; (b) the use of the term “including” or “includes” means “including [includes] but [is] not limited to”; (c) the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Agreement as a whole and not to any particular provision.  Additional terms may be defined throughout this Agreement. 

 

	
2.
	
Supply of Products; Limitations

 

2.1Subject to the terms and conditions of this Agreement, GEHC hereby appoints Purchaser, and Purchaser hereby accepts the appointment, as a non-exclusive re-seller of the Products, without modification, solely as part of the Combination Products to End Users within the Field in the Territory.  

 

2.2Pursuant to Section 2.1, Purchaser may sell Combination Products incorporating Products through its Permitted Affiliates or Permitted Distributors and Purchaser may engage Permitted Manufacturers to manufacture  Combination Products on behalf of Purchaser; provided that (i) Purchaser shall be fully responsible and liable for the acts and/or omissions of any Permitted Affiliate, Permitted Distributor or Permitted Manufacturer and (ii) Purchaser shall cause each Permitted Affiliate, Permitted Distributor and Permitted Manufacturer to fully comply with the terms and conditions of this Agreement.

 

2.3 Intentionally Omitted.

 

2.4Subject to Section 4, Purchaser acknowledges that in the performance of this Agreement one or more Affiliates of GEHC may manufacture, sell and/or deliver the Products purchased hereunder; provided that such Affiliate shall comply with the terms and conditions of this Agreement and GEHC shall remain liable for the performance of any obligations hereunder by its Affiliate.

 

	
3.
	
Rights  and Limitations 

 

3.1   No right or license under the Patent Rights, or otherwise, is granted to Purchaser, any Permitted Affiliates or Permitted Manufacturers to use the Products for any purpose other than as expressly provided herein.  In no event shall Purchaser, its Permitted Affiliates, Permitted Distributors or any Permitted Manufacturer (i) sell, offer for sale or otherwise distribute Products as a stand-alone product or in connection with any product other than the Combination Products; (ii) sell, offer for sale or otherwise distribute Products for use outside the Field; or (iii) alter, modify, reverse engineer, decompile, disassemble, deconstruct, improve or otherwise the Products or create any derivative works based upon Products.

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

3 of 13

 

 

3.2Unless otherwise agreed to by the parties in writing, Purchaser will ensure that all sales of Products shall be to End Users and under terms that prohibit such End User’s from making, have made, modifying, selling, re-selling or otherwise transfering or distributing Products in any manner or by any means, on a stand-alone basis or as part of an assembly or system. For the avoidance of doubt, Purchaser shall be free to sell Combination Products through Permitted Distributors.

 

3.3All rights not expressly granted by GEHC hereunder are reserved to GEHC. Without limiting the generality of the foregoing, GEHC and Purchaser expressly acknowledge that nothing contained herein shall be construed or interpreted as a grant, by implication or otherwise, of any rights other than the limited right expressly granted in Section 2 and 3, either expressly, by implication or by estoppel. 

 

3.4Notwithstanding anything herein to the contrary, GEHC reserves the right to: (i) make, use and sell Products for itself, and to grant licenses to others in respect thereof, for any purpose whatsoever; and (ii) sell, offer for sale and/or have sold, either by itself, its Affiliates or any other person or entity, the Products on a stand-alone basis or in combination with other products, instruments or devices.  

 

3.5 Intentionally Omitted.

 

	
4.
	
Change Control 

 

4.1 Notwithstanding anything to the contrary contained in this Agreement, GEHC reserves the right,  in its sole discretion, without incurring any liability to Purchaser, its Permitted Affiliates or Permitted Distributors, exercisable upon written notice to Purchaser to  in accordance with Exhibit 1 (i) alter the specifications for any Product; (ii) discontinue the manufacture, purchase or sale of any Product; (iii) commence the manufacture and/or sale of new products having features that make any Product wholly or partially obsolete. The receipt by Purchaser of notice from GEHC discontinuing the manufacture or sale of any Product shall be deemed an amendment to the product specifications included in [****].  Sufficient notice  shall include via GEHC’s website, electronic mail, fax or letter. 

 

4.2In addition to the Last Time Purchase, GEHC shall use reasonable efforts to fill all pending orders (if any) from Purchaser (and its Permitted Affiliates) for any such altered or discontinued Product that has been accepted by GEHC, but not yet shipped, on the date GEHC gives notice pursuant to this Section 4.1.

 

	
5.
	
Ordering; Delivery; Forecasts

 

5.1Purchaser (directly or through a Permitted Affiliate) will order Products from GEHC under the terms and conditions of sale contained in this Agreement. Only Purchaser and its Permitted Affiliates may submit a purchase order to GEHC for Products. When used in this Section 5, “Purchaser” shall mean Purchaser,its Permitted Affiliates.

 

5.1.1 GEHC shall not have any obligation to sell or provide Products to any Permitted Affiliate that is or becomes a competitor of GEHC, either directly or indirectly.

 

5.1.2Purchaser acknowledges that this Agreement covers the purchase of Product by Purchaser,its Affiliates within the Territory only.

 

 

5.2Each time Purchaser wishes to purchase Products from GEHC, it shall submit a purchase order to GEHC.  Such purchase orders shall be submitted in writing by means and in a form as specified from time to time by GEHC.  Each purchase order shall specify (i) the purchase order number; (ii) the [****] number of Products; (iii) the quantities of Products ordered; and (iv) the shipping address.

 

5.3Upon receipt of a purchase order in accordance with this Agreement, GEHC shall send an order acknowledgement within 24-hours after entering the order. GEHC shall fulfill purchase orders to the extent the volume is equal to the volumes contained in a binding forecast delivered by Purchaser and shall use reasonable efforts fo fulfill any orders for Product placed by Purchaser that are not covered by the binding forceast out of GEHC’s available inventory at such time .All purchase orders are subject to (i) GEHC’s on-going credit review and approval and (ii) GEHC’s on-going determination that Purchaser and the proposed purchase order comply with all applicable laws and regulations. In the 

event that GEHC rejects a purchase order hereunder, the parties shall promptly discuss the reasons for such rejection and use reasonable good faith efforts to resolve the reason for rejection.  In addition, in the event that Purchaser delivers a request to amend an accepted purchase order, GEHC agrees to use good faith efforts to amend the purchase order.

 

5.4Purchase orders from Purchaser to GEHC shall be placed through GEHC’s customer service in the region for which the purchase order has been placed (i.e. Purchaser’s orders for the United States shall be through GEHC’s US customer service, Purchaser’s orders for the United Kingdom shall be through GEHC’s customer service covering the United Kingdom, etc.). GEHC shall have no obligation to fulfill orders placed in the wrong region.

 

5.5In the event that any terms or conditions in a purchase order conflict with, or are in addition to, the terms and conditions of this Agreement, the terms and conditions of this Agreement shall control and such conflicting or additional terms in purchase order shall have no force or effect. No modification or waiver of the terms of this Agreement will be effective unless in writing explicitly amending this Agreement and signed by both parties.  Orders will be deemed accepted by GEHC upon Purchaser’s receipt of GEHC’s order confirmation with any modifications to requested quantities or delivery dates on Purchaser’s purchase order made by GEHC on the front of the order confirmation as the final agreement between GEHC and Purchaser.

 

5.6GEHC will select the method of shipment and the carrier to be used for shipment of Products ordered hereunder All Products shipped hereunder shall be delivered [****] in the United States, Puerto Rico and Canada, and [****] in any other country. It is hereby agreed that [****] delivery terms are not supported by GEHC. Partial deliveries of Product hereunder shall be permitted.

 

5.7Risk of loss and full legal and equitable interest and title in and to Products, shall pass to Purchaser upon delivery [****]. GEHC will not be responsible for any loss or damage to Products following delivery [****]. 

 

5.8Products cannot be returned without prior written authorization by GEHC.  Except for Products returned pursuant to Sections 5.10 and 12.4, a fee may be applied to shipments returned for exchange or credit. 

 

5.9GEHC will use all reasonable endeavors to deliver Products on the agreed delivery date and will use all reasonable endeavors to avoid delay in delivery on the notified delivery dates. Failure to deliver by the specified date will not be a sufficient cause for cancellation, nor will GEHC be liable for any direct, indirect, consequential or economic loss due to delay in delivery. 

 

5.10Purchaser shall notify GEHC within [****] business days in writing of any short delivery or defects reasonably discoverable on careful examination.  GEHC’s sole obligation shall be, at its option, (i) in the case of defective Products, to replace, repair or provide Purchaser with a refund for such Products, in accordance with Section 12.4 or (ii) in the case of short delivery, at Purchaser’s option, refund the purchase price actually paid for any undelivered Products or promptly deliver the remaining Products.

 

5.11 If Purchaser fails to accept delivery of any Products within [****] business days after receiving notice from GEHC that Products are ready for delivery, GEHC may dispose of or store such Products at Purchaser's reasonable expense. 

 

5.12Where delivery of any Product requires an export license or other authorization before shipment, GEHC shall not be responsible for such license or authorization, or any loss, liability, fee or expense in any way connected theretoprovided that GEHC agrees to reasonably cooperate with Purchaser as necessary to provide relevant Product information .

 

5.13Each year during the term of this Agreement, Purchaser shall have the obligation to purchase the greater of the Minimum Purchase Requirement or the binding forecasted amount. If Purchaser fails to purchase the greater of the Minimum Purchase Requirement for the binding forecasted amount in any applicable year set forth, then following the conclusion of such period, [****].

 

5.14Purchaser agrees that, each quarter during the term of the Agreement, it will provide GEHC with its forecast of the quantity and required delivery date of the Products that Purchaser will require to purchase from GEHC during the [****] following months. Prior to the beginning of each calendar quarter, Purchaser shall deliver a purchase order for the quantity of Product required by Purchaser in the first three months of the forecaset and the first [****] months of each such forecast shall be binding on Purchaser and the [****] following months shall be 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

4 of 13

 

non-binding. For clarification, no Products will be shipped to Purchaser until a relevant purchase order is received and processed by GEHC as set forth herein. If Purchaser's actual needs for Products exceeds the binding forecast, GEHC shall use commercially reasonable efforts to supply Purchaser with the excess Product, but shall bear no liability to Purchaser if GEHC cannot supply such excess quantity.

 

5.15    Each year during the term of this Agreement, Purchaser shall have the option to place an annual blanket order covering Purchaser’s requirements for Products during such year. 

 

	
6.
	
Pricing; Payments

 

6.1The price of Products will be in accordance with GEHC’s current list price minus any discount in accordance with Schedule 1. A quotation stating the exact purchase price to be paid by Purchaser to GEHC will be provided separately by GEHC.  The quote will be reissued annually by GEHC no later than December 1.  The prices are based on use of the Products solely in accordance with the requirements of this Agreement.  GEHC will deliver an invoice to Purchaser in connection with each delivery of Products hereunder.  Purchaser will timely pay the purchase price in accordance with the terms set forth herein. 

 

6.2All payments hereunder shall be due and payable to GEHC [****] days from the date of invoice issued by GEHC.  In the event of late payment GEHC, after notice to Purchaser, reserves the right to (i) suspend deliveries and/or cancel any of its outstanding obligations; and/or (ii) charge interest at the higher of (A) [****] per annum or (B) the highest rate per annum permitted under applicable law, in each case calculated on a daily basis from the date such amount first becomes due until such amounts are paid in full. Purchaser shall reimburse GEHC for reasonable costs (including attorney’s fees) relating to collection of any unpaid amounts. GEHC may set-off any outstanding amounts due to GEHC by Purchaser against any and all payments due by GEHC to Purchaser hereunder.  

 

6.3All payments due and payable by Purchaser to GEHC under this Agreement are exclusive of any Value Added Tax (“VAT”), sales and use tax, goods and services tax and similar indirect taxes. In the event that any VAT, sales and use tax, goods and services tax and similar indirect taxes are properly due under any applicable law, regulation or otherwise, this shall be charged by GEHC in addition to any other payments due hereunder and shall be payable by Purchaser on receipt of a valid invoice issued by GEHC, unless Purchaser provides GEHC with valid exemption documentation allowing GEHC not to charge the relevant indirect taxes. In addition and in the case of US domestic transactions only (i) in the event GEHC is assessed taxes, interest and penalty by any taxing authority, Purchaser agrees to reimburse GEHC for any such taxes, including any interest or penalty assessed thereon; and (ii) each party is responsible for any personal property or real estate taxes on property that the party owns or leases, for franchise and privilege taxes on its business, and for taxes based on its net income or gross receipts..

 

6.4The price payable by Purchaser for Product hereunder does not include the cost of handling, freight, shipping, packaging of Products for shipment, charges, levies, duties, assessments and other fees of any kind imposed by any governmental authority, or the cost of insurance from the time the Product leaves GEHC’s premises. Such costs shall be invoiced to Purchaser who shall pay such costs together with the prices hereunder.

 

	
7.
	
Records and Audits

 

7.1Purchaser shall at all times during the term of this Agreement, and for a period of five (5) years thereafter, keep true and accurate records relating to its sale of Combination Products in sufficient detail to enable GEHC to determine Purchaser’s, Permitted Affiliates,’ Permitted Distributors’ and Permitted Manufacturers’ compliance with this Agreement.  Such records shall also include full-lot traceability by product serial number to enable GEHC to identify all End Users of the Products sold by Purchaser, its Permitted Affiliates and Permitted Distributors.  In the event that GEHC is required to, or determines in its sole discretion to, conduct a product recall or withdrawal of the Products, GEHC shall promptly notify Purchaser and Purchaser will reasonably cooperate with GEHC in connection with such recall or withdrawal, as required by  law.  GEHC agrees that, in the event of a recall, it shall reimburse Purchaser for the cost of returning or reasonable costs for destroying any Products and GEHC shall promptly replace the Product subject to the recall or reimburse Purchaser for the cost thereof.

 

7.2GEHC shall have the right, at its own expense, to appoint an independent auditor reasonably acceptable to Purchaser to review Purchaser's and/or its Permitted Affiliates’ records that are necessary to verify compliance with this Agreement.  For avoidance of doubt, the scope of such audit shall include all records required to be maintained under Section 7.1. Such audits shall be performed upon reasonable advance notice during normal business hours and may not be called for more frequently than once in any calendar year.  The foregoing restriction is hereby waived by if any such audit reveals that Purchaser, its Permitted Affiliate or Permitted Distributor has failed to comply with the terms and conditions of this Agreement. 

 

7.3 GEHC shall permit an agreed upon third party, upon reasonable prior notice and GEHC’s scheduled availability and during normal business hours, to view the manufacturing operations for and conduct audits of GEHC’s production and quality control procedures for the purchased Product and GEHC records as necessary to determine conformance with the terms of this Agreement. However, GEHC shall not be obliged to share information which constitutes proprietary Product information or secret manufacturing know-how.  Purchaser audits that are not based on breaches or alleged breaches of this Agreement and are not required by law or a governmental agency in excess of one (1) per calendar year will be mutually agreed upon by Purchaser and GEHC.  Upon the completion of any such audit, an exit meeting will be held with representatives from GEHC and Purchaser to discuss significant audit observations. Purchaser will provide a written report of all observations within thirty (30) days to GEHC. Within 30 days of the audit report receipt, Purchaser will provide written response to all findings that describes corrective action to be implemented as appropriate. A Non-Disclosure Agreement is required for each audit and Purchaser will assume all costs associated with any such audits. 

 

	
8.
	
Trademark

 

8.1Unless listed in Schedule 3, Purchaser shall have no right to use any Trademarks in connection with Combination Products whatsoever.

 

8.2Purchaser acknowledges and agrees that:

 

8.2.1GEHC and/or its Affiliates own of all Trademarks;

 

8.2.2It is not contemplated that Purchaser will acquire any rights in the Trademarks, but in all cases, any rights Purchaser may acquire in any Trademark shall be assigned to GEHC or its designee absolutely and Purchaser agrees to enter into any and all documents necessary to effectuate such assignment; and

 

8.2.3Except as expressly set forth herein, Purchaser does not have any rights or any title whatsoever in or to GEHC’s technology, trade name or in or to any of the Trademarks.

 

	
9.
	
Other Proprietary Rights; Infringement

 

9.1  Subject to Section 3.1, all right, title and interest worldwide in the Intellectual Property Rights in or associated with the Products shall at all times remain vested solely and exclusively in GEHC and its Affiliates. 

 

9.2  GEHC represents and warrants that the Products do not infringe the intellectual property rights of any third parties.  

 

10Compliance

 

10.1  GEHC represents and warrants that it shall comply with all applicable laws and regulations in connection with the manufacturing, use, sale, shipment, and otherwise, of the Products.

 

10.2Purchaser represents and warrants that it shall comply with all applicable laws and regulations in connection with the sale and use of Combination Products, including, without limitation all applicable laws and regulations issued by the country of origin, the U.S. government, the United Nations or other similar international organization regarding export and/or import of Products as part of Combination Products.

 

10.3Purchaser shall not pay, offer or promise to pay, or authorize the payment directly or indirectly through any person or firm, anything of value (in the form of compensation, gift, contribution or otherwise) to:

 

10.3.1any person or firm employed by or acting for or on behalf of any customer, whether private or governmental, for the purpose of inducing or 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

5 of 13

 

rewarding any favorable action by the customer in any commercial transaction or in any governmental matter; or 

 

10.3.2any governmental official, political party or official of such party, or any candidate for political office, for the purpose of inducing or rewarding favorable action or the exercise of influence by such official, party or candidate in any commercial transaction or in any governmental matter.

 

11Confidentiality

 

11.1During the term of this Agreement and a period of five (5) years thereafter, Purchaser and GEHC agree to keep confidential and not to disclose any Confidential Information of or about the other party to a third party and not to use such Confidential Information other than for the purpose of this Agreement. 

 

11.2The undertakings of non-disclosure and non-use in this Section shall not apply to:

 

11.2.1  Information that at the time of disclosure or subsequently is published or otherwise generally available to the public other than through any act or omission on the part of the recipient party; or

 

11.2.2  Information that was in the possession of the recipient party at the time of disclosure, as evidenced by the recipient party’s written records; or

 

11.2.3 Information acquired from a third party who has the lawful right to make such disclosure as evidenced by the recipient party’s written records; or 

 

11.2.4  Information that is independently developed by the recipient party without reference to or use of the materials comprising, or reverse engineering involving, the Confidential Information disclosed under this Agreement as evidenced by the recipient party’s written records; or

 

11.2.5  Information that is required to be disclosed by the recipient party pursuant to a legally enforceable order, direction or other regulation but any such disclosure shall be only so far as necessary to give effect thereto.

 

11.3Each party shall exercise all reasonable precautions to prevent the disclosure of Confidential Information of the other party by its employees or representatives, and in any event shall maintain with respect to such Confidential Information a standard of care which is no less than that standard which Purchaser maintains to prevent the disclosure of its own confidential information.

 

11.4Upon termination of this Agreement, each party agrees to return at once to other party, without copying, all originals and copies of all materials (other than this Agreement) containing any Confidential Information.

 

12Warranty; Disclaimer

 

12.1Each party warrants and represents to the other that:

 

12.1.1 The execution, delivery and performance of this Agreement by it does not conflict with or contravene its certificate of incorporation or by-laws, nor will the execution, delivery or performance of this Agreement by it conflict with or result in a breach of, or entitle any party thereto to terminate, any agreement or instrument to which it is a party, or by which any of its assets or properties is bound.

 

12.1.2This Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding agreement of such party, enforceable against it in accordance with its terms.

 

12.1.3It has the legal right and authority to enter into, grant the rights hereunder, and perform its obligations under this Agreement.

 

12.2Neither party shall do any act or fail to do any act, if such act or failure to act would materially harm the other party, including without limitation, misrepresent, misuse or misapply the Product.  Each warranty given by GEHC in this Section 12 is given solely to, and may only be relied upon by, Purchaser and, subject to GEHC’s indemnity obligations, shall not extend to any End User, subsequent purchaser, transferee or assignee of any Product. 

 

12.3Subject to GEHC’s indemnity obligations, Purchaser shall be fully and exclusively responsible for all warranties given by Purchaser to End Users, whether or not such warranties are greater than or in addition to the express 

warranties set forth in Section 12.4 of this Agreement. Purchaser agrees to indemnify, defend and hold harmless GEHC and its Affiliates and representatives from and against any and all claims by any person, whether or not such person is an End User, arising from, relating to, or in connection with any warranty given by Purchaser, whether express or implied.

 

12.4GEHC warrants that the Products provided hereunder will conform to the specifications included in GEHC’s product [****] in all material respects during at the time of shipment..  All warranty claims on the Products’ under this Section 12.4 must be made within ninety (90) days of Purchaser’s and/or the relevant Permitted Affiliate or Permitted Manufacturer  receipt of Products.  GEHC’s sole liability and Purchaser’s exclusive remedy for a breach of this warranty is limited to repair of, replacement of, or refund of the purchase price actually paid by Purchaser for such Products, at the sole option of GEHC.  Notwithstanding the expiration of the applicable product warranty set forth above, in the event that GEHC becomes aware that any applicable lot of Product sold to Purchaser hereunder does not conform to its Specifications, GEHC shall promptly notify Purchaser.

 

12.5EXCEPT AS EXPRESSLY PROVIDED HEREIN, GEHC MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY (INCLUDING WITHOUT LIMITATION, ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE).  PURCHASER SHALL NOT HAVE THE RIGHT TO MAKE OR EXTEND, AND SHALL TAKE REASONABLE MEASURES TO ENSURE THAT NEITHER IT, ITS EMPLOYEES NOR ANY PERMITTED AFFILIATE MAKE ANY SUCH WARRANTY OR REPRESENTATION ON BEHALF OF GEHC TO ANY END USER OR OTHER THIRD PARTY.

 

12.6Except for the indemnification obligations set forth herein, GEHC shall have no liability under the warranties contained in this Section 12 arising from: (i) the use of the Products in combination with any software, tools, hardware, equipment, supplies, accessories or any other materials or services not furnished by GEHC or recommended in writing by GEHC other than as a Combination Product;  (ii) fair wear and tear or; (iii) fraud, willful damage or gross negligence of Purchaser or any of its Permitted Affiliates, Permitted Manufacturers or representatives; (iv) shipping, storage or working conditions after GEHC’s delivery of the Products to the common carrier other than in accordance with GEHC instructions;  (v) failure to follow GEHC's use restrictions, recommendations or instructions; (vi) any alteration, modification, repair or enhancement of the Products by Purchaser or any third party, without GEHC's prior written consent;  (vii) any misuse of the Products or Purchaser’s use of the Products not in accordance with specifications; (viii) any allegation that Purchaser’s use of Products infringes the Intellectual Property Rights of any other Person; (ix) subject to Section 15,  any Products damaged or lost as a result of a force majeure event; or (x) any Products, if the price payable for such Product has not been paid in full in accordance with the terms of this Agreement.

 

13Indemnity

 

13.1  Purchaser Indemnity.  Purchaser agrees to indemnify, defend and hold harmless GEHC, its Affiliates, customers, successors and assigns, as well as each of their respective directors, officers, shareholders, employees and advisors (collectively, the "GEHC Indemnitees"), from and against any and all claims, demands, losses, liabilities, expenses, or damages (including investigative costs, court costs and attorneys’ fees) that any GEHC Indemnitee may suffer, pay, or incur as a result of, or in connection with:

 

13.1.1any breach by Purchaser, its Permitted Affiliates, Permitted Distributors, Permitted Manufacturers, employees or agents of any of Purchaser’s obligations or representations and warranties set forth in this Agreement;

 

13.1.2any fraud, gross negligence or intentional misconduct  by Purchaser, its Permitted Affiliates, Permitted Distributors, Permitted Manufacturers, employees or agents in connection with this Agreement

 

13.1.3 any claims (including, without limitation, claims of infringement or alleged infringement by the Combination Product which is not solely related the infringement or alleged infringement by the Product itself, death, personal injury, illness or property damage caused by the Combination Product not related to the performance of the Product) arising out of the exploitation of the rights granted under this Agreement or otherwise arising out of use, sale or distribution of the Products or Combination Products by Purchaser, its Permitted Affiliates, Permitted Distributors, Permitted Manufacturers, employees or agents hereunder; or

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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13.1.4  representations, warranties or statements made by Purchaser, its Permitted Affiliates, Permitted Distributors, Permitted Manufacturers employees or agents in regard to the Products, which are not specifically authorized by GEHC herein or otherwise in writing. 

 

13.2 Exceptions to Purchaser Indemnity.  Notwithstanding anything to the contrary contained herein, Purchaser shall not be obligated to indemnify, defend or hold harmless GEHC Indemnitees if such claim arises out of, or results from, in whole or part, (i) the fraud, gross negligence or intentional misconduct, or (ii) violation of applicable laws by any GEHC Indemnitees.

 

13.3GEHC Indemnity.  GEHC agrees to indemnify, defend and hold harmless Purchaser, its Affiliates, customers, successors and assigns, as well as each of their respective directors, officers, shareholders, employees and advisors (collectively, the "Purchaser Indemnitees"), from and against any and all claims, demands, losses, liabilities, expenses, or damages (including investigative costs, court costs and attorneys’ fees) that any Purchaser Indemnitee may suffer, pay, or incur as a result of, or in connection with:

 

13.3.1any breach by GEHC, its Affiliates, employees or agents of any of GEHC’s obligations or representations and warranties set forth in this Agreement;

 

13.3.2any fraud, gross negligence or intentional misconduct  by GEHC, its Permitted Affiliates, Permitted Distributors, employees or agents in connection with this Agreement; or

 

13.3.3any claims (including, without limitation, claims of infringement or alleged infringement related to the Product itself and not related to the Combination Product , death, personal injury, illness or property damage) arising out of the sale or distribution of the Products by GEHC under this Agreement.

 

13.4  The indemnified party shall promptly notify the indemnifying party of any and all such claims for which it seeks indemnification hereunder.

 

14Term and Termination

 

14.1Unless otherwise terminated as provided for in this Agreement, this Agreement shall become effective as of the Effective Date and remain in effect for a period of three (3) years and shall automatically renew for additional successive two (2) year periods thereafter (each, a “Renewal Term” and together with the Initial Term, the “Term”) up to eight (8) years unless terminated in accordance with the terms of this Agreement. 

 

14.2If either GEHC or Purchaser (a) fails to materially perform any of its obligations under this Agreement, or (b) materially breaches any representation or warranty made by it herein, then the non-defaulting party shall have the right to terminate this Agreement if such default or breach shall not have been cured within [****] days after the non-defaulting party has given written notice to the defaulting party specifying the nature of such default or breach.  Notwithstanding the foregoing, in the event that Purchaser fails to make payment for any amount due and payable hereunder when due, GEHC shall have the right to terminate this Agreement [****] days after written notice from GEHC of its intent to terminate for non-payment if such payment is not made within such [****] day period or if such occurance of late payment occurs [****] times within a rolling [****] months period.    

 

14.3 This Agreement may be terminated immediately by either party in the event of (i) the other party’s insolvency, receivership, or voluntary or involuntary bankruptcy, (ii) an assignment by the other party for the benefit of creditors; or (iii) any substantial part of the other party’s property being or becoming subject to any levy, seizure, assignment or sale for or by any creditor or governmental agency without being released or satisfied within thirty (30) days thereafter.

 

14.4. This Agreement may be terminated by GEHC upon written notice to Purchaser upon Change of Control of Purchaser if (i) the proposed acquirer, assignee or transferee is verified to be on U.S. government embargo lists, lists of known parties and other watch lists and would cause GEHC to be in violation of its compliance program; (ii) if the proposed acquirer, signee or transferee is a direct competitor of GEHC in producing or selling the Product on a standalone basis (and not solely as part of a test or kit) as also referenced in Section 5.1.1 and  GEHC has a commercially reasonable concern with the Change of Control resulting from concerns with compliance with local, state or federal laws and 

regulations, or indication of any state or federal investigation or any other financial or legal viability concern relating to the proposed acquirer, signee or transferee, provided that the fact that the acquirer, assignee or transferee may compete in certain markets outside the manufacture or sale of the Product on a standalone basis is not a reason for termination under this Agreement. 

 

14.5This Agreement may be terminated by either party without cause upon not less than [****] months’ prior written notice. In the event of such termination, Purchaser acknowledges that it has full financial responsibility for any undisputed costs of Products that are included in the binding portion of the forecast and that are held in GEHC’s inventory, work in progress (WIP) and any unique raw material used to manufacture Products and that payment shall be rendered by Purchaser within [****] days of the delivery by GEHC to Purchaser of a detailed invoice setting forth in detail the costs of each such item.

 

14.6  Last Time Purchase.  Upon delivery of notice of termination for any reason, except for cause under Sections 14.2, 14.3 or 14.4, GEHC shall fill all pending orders (if any) from Purchaser (and its Permitted Affiliates and Permitted Manufacturers) on the date either party gives notice of termination and GEHC shall accept a final order from Purchaser for Product with the specifications applicable to the last version of the Product acceptable to Purchaser, so long as the order is made within [****] days following receipt of notice of termination for a quantity of Product sufficient to meet Purchaser’s requirements for the [****] month period following the date of termination; provided, however, that such order shall not exceed [****] times the amount of the most recent [****] months of purchases delivered by GEHC to Purchaser hereunder (the ”Last Time Purchase”).  Such Last Time Purchase may include one or more than one lot of the Product.  

 

14.7  Upon the termination of this Agreement: 

 

14.7.1In the event that this Agreement is terminated by GEHC for cause under Sections 14.2, 14.3 or 14.4, Purchaser shall remain responsible to make any shortfall payment due and that any undisputed payment therefor shall be rendered by Purchaser within [****] days of the date of invoice to Purchaser detailing such shortfall.

 

14.7.2In the event of termination for any reason other than for cause by GEHC pursuant to Sections 14.2, 14.3 or 14.4,  Purchaser, its Permitted Affiliates and Permitted Distributors may continue to sell or offer for sale Combination Products which (i) are in Purchaser’s inventory on the termination or (ii) which are supplied on or after the termination date (the “Sell Off Period”).  For avoidance of doubt, Purchaser’s, its Permitted Affiliates’ and Permitted Distributors’ sale of Combination Products during the Sell Off Period shall be made in compliance with the terms and conditions of this Agreement.  .  In the event that this Agreement is terminated by GEHC pursuant to Sections 14.2, 14.3 or 14.4, Purchaser, its Permitted Affiliates and Permitted Distributors shall immediately destroy all remaining inventory of Products and such destruction shall be certified to GEHC in writing by a member of Purchaser’s senior management or other executive officer within five (5) business days following such destruction.

 

14.7.3Subject to Section 6.2, any purchase order placed by Purchaser and accepted by GEHC prior to the effective date of termination of this Agreement may only be cancelled by Purchaser with the prior written consent of GEHC. 

 

14.7.4Immediately upon termination for any reason, Purchaser shall, and shall cause all of its Permitted Affiliates, Permitted Distributors and Permitted Manufacturers to, (i) cease using the Trademarks (except as necessary during an applicable Sell Off Period) and (ii) return all Confidential Information to GEHC and GEHC shall return all Confidential Information to Purchaser.  

 

14.7.5Termination or expiration of this Agreement shall not relieve either party of its obligations hereunder that are intended to survive termination and each party shall retain all legal and equitable remedies after such termination or expiration.  The rights and obligations in the following clauses shall survive any termination of this Agreement to the degree necessary to permit their complete fulfillment or discharge: 6, 10, 11, 12, 13.6, 13.7, 15, 17.4 and 17.5.

 

14.8For the avoidance of doubt, the acceptance of any purchase order from, or the sale of any Products to, Purchaser after the expiration or termination of this Agreement shall not be construed as a renewal or extension, nor as a waiver of expiration or termination, of this Agreement.  In the absence of a written 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

7 of 13

 

agreement between the parties relating to the purchase of such Products, all such transactions shall be individually governed by GEHC’s standard terms and conditions governing such products in place from time to time which can be found at the following website https://www.gelifesciences.com/en/us/legal

 

15Force Majeure

 

The obligations of either party hereunder shall be excused or suspended to the extent performance is prevented or delayed by any future condition, which (i) is beyond the reasonable control, and without the fault or negligence, of the party affected thereby, (ii) was not foreseeable by such party at the time this Agreement was entered into, and (iii) could not have been prevented by such party taking reasonable steps. Such conditions shall include but not be limited to war, terrorism, mobilization, riots, fire, explosion, flood, insurrection, embargo, currency restriction, shortage of transport, general shortage of material and acts or omissions of governments in their sovereign capacity.

 

The party invoking Section 15.1 hereof shall, within seven (7) days after commencement of the condition there mentioned, give written notice thereof, and of the anticipated consequences thereof, to the other party. Within seven (7) days after termination or cessation of such condition, the affected party shall give further written notice to the other party detailing the actual results of such condition. 

 

In the event of any such condition, the party affected thereby shall take all reasonable measures to mitigate and minimize the effect of the condition, and to resume as promptly as possible the diligent performance of its obligations under this Agreement. Nothing in this section shall, however, obligate either party to settle strikes or other labor disputes except on terms and conditions, which it, in the exercise of its sole discretion, deems appropriate.

 

16Governing Law and Disputes

 

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of  the State of New York, without regard to conflict of law principles; except that, any matter touching or concerning intellectual property rights shall be governed by the laws of the jurisdiction in which such rights were granted. In no event shall this Agreement be governed by the UN Convention on Contracts for the International Sale of Goods

 

Any dispute, controversy, or claim relating to this Agreement ("Dispute") shall be resolved first through good faith negotiations between the parties. If the Dispute cannot be resolved through good faith negotiation, then the parties agree to submit the Dispute to mediation. The requirement of mediation and negotiation may be waived upon mutual written consent of Purchaser and GEHC.

 

If the Dispute is not otherwise resolved through negotiation or non-binding mediation within a reasonable time period (such time period not to exceed [****] days from the date the Dispute was first notified by either party to the other), either party may submit the Dispute exclusively to the courts of the State of New York.

 

THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO A TRIAL BY JURY.

 

17Notices

 

All notices and other communications hereunder shall be in writing.  All notices hereunder shall be delivered personally, or sent by national overnight delivery service or postage pre-paid registered or certified U.S. mail, and shall be deemed given:  when delivered, if by personal delivery or overnight delivery service; or if so sent by U.S. mail, [****] business days after deposit in the mail, and shall be addresse or to such other place as either party may designate by written notice to the other in accordance with the terms hereof.

 

18Licenses, Permits and Export Control

 

18.1Each party shall apply and obtain from any appropriate governmental authorities all relevant licenses, permits and approvals necessary for the performance of this Agreement and shall bear all related costs arising therefrom. Neither party shall be responsible for the adverse consequences caused by the other party's failure in obtaining (in a timely manner) the aforementioned licenses/permits, and the non-defaulting Party shall be entitled to claim its losses (if any) from the defaulting party.

 

18.2Purchaser and GEHC hereby agree that they shall not, except as 

expressly permitted by applicable laws, make any disposition by way of transshipment, re-export, diversion or otherwise, of U.S. origin goods and technical data, or the direct product thereof, supplied by the GEHC hereunder. Purchaser hereby certifies that Products, information or assistance furnished by GEHC or its Affiliates under this Agreement shall not be used in the design, development, production, stockpiling or use of chemical, biological, or other weapons either by the Purchaser or by any entity acting on the Purchaser's behalf.

 

18.3Purchaser shall not export the Products or any information or documents provided hereunder within or outside of the Territory without the requisite export license from the relevant body of the United Nations or other similar international organization, the United States Government, the European Union, the country of origin or the original country of export. The requirement to obtain a license may vary depending on the country of destination, the end user, the end use and other factors. Upon request from GEHC, Purchaser shall furnish GEHC with copies of all documents relating to such export. 

 

18.4The obligations of the parties to comply with all applicable export control laws and regulations shall survive any termination, or discharge of any other contract obligations.

 

19Miscellaneous

 

19.1Amendments and Modifications. No provision of this Agreement may be amended, modified or otherwise changed, other than by an instrument in writing duly executed on behalf of the parties of this Agreement.

 

19.2Successors and Assignment. This Agreement and the rights granted herein shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

19.2.1Neither party hereto shall assign or transfer any of its rights, privileges or obligations hereunder without the prior written consent of the other party hereto, except that, subject to Section14.4, m either party may assign this Agreement without consent (i) to one or more of its Affiliates or (ii) to any acquirer of or successor to that portion of its business to which this Agreement relates. 

 

19.3Entire Agreement; Counterparts. This Agreement, together with any and all Schedules attached hereto, constitute the full understanding and the entire agreement between the parties as to its subject matter and supersedes any and all prior agreements, understandings and representations (whether oral or written) between the Parties with respect to the subject matter of this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  

 

19.4Limitation of Liability.  

 

19.4.1IN NO EVENT WILL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL (INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOST DATA, LOST BUSINESS OPPORTUNITY, LOSS OF GOODWILL OR LOST USE) OR PUNITIVE DAMAGES REGARDLESS OF THE FORM OF ACTION, WHETHER CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

19.4.2The total liability of GEHC for any damages incurred under or in connection with this Agreement whether in contract, tort (including negligence), statute or otherwise will, to the extent permissible by law, not exceed an aggregate dollar amount equal to the sales of the applicable Products to Purchaser under this Agreement during the immediately preceding [****] month period.

 

19.5Insurance. Purchaser shall obtain and maintain appropriate coverage of general liability, product liability, and public liability insurance in the amount of no less than [****] Dollars (US$[****]) to protect GEHC and its respective trustees, officers, employees, attorneys and agents under the indemnification provided hereunder.  GEHC shall be provided appropriate certificates of insurance there under upon request to Purchaser

 

19.6Equitable Remedies.  The parties hereto agree that irreparable harm would occur in the event of a breach of any of the provisions of this Agreement and that monetary damages alone may be an inadequate remedy for any such breach because of the difficulty of ascertaining and quantifying the amount of 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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damage that may be suffered in any such event.  Accordingly, the parties hereby agree that each party shall be entitled to specific performance and injunctive or other equitable relief as a remedy for such breach or threatened breach and each party hereby waives any requirement for the security or posting of any bond in connection with such remedy.  Such remedy shall be in addition to, and not in lieu of, any other rights and remedies available at law or equity. 

 

19.7Relationship. GEHC and Purchaser each acknowledge that they shall be independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency. Except as expressly provided herein, neither party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, that shall be binding on the other party, without the prior written consent of such other party.   

 

19.8Severability. The invalidity or unenforceability of one or more provisions 

of this Agreement shall not affect the validity or enforceability of any of the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

 

19.9 Waiver. The failure of either party to insist upon the performance of any of the terms of this Agreement or to exercise any right hereunder shall not be construed as a waiver or relinquishment of the future performance of any such term or the future exercise of such term by reason of such future events or events not previously insisted upon. 

 

19.10Publicity.  Except to the extent required by applicable law, any press-release or other public announcement or statement regarding the existence of this Agreement, or any of its terms or conditions, shall be subject to the other party’s written prior approval.

 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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Schedule 1

PRICING

 

		
	
[****]
	
[****]

	
[****]
	
[****]

	
[****]
	
[****]

	
[****]
	
[****]

	
[****]
	
[****]

	
[****]
	
[****]

	
 
	
 

 

 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

10 of 13

 

Schedule 2

 

SPECIFICATIONS

 

 

 

[****]

 

			
	
[****]
	
[****]
	
[****]

	
 
	
 
	
 

	
[****]
	
[****]
	
[****]

	
 
	
 
	
 

	
[****]
	
[****]
	
[****]

	
 
	
 
	
 

	
[****]
	
[****]
	
[****]

	
 
	
 
	
 

	
[****]
	
[****]
	
[****]

	
 
	
 
	
 

	
[****]
	
[****]
	
[****]

	
 
	
 
	
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

11 of 13

 

 

 

Schedule 3

 

LICENSED TRADEMARKS

 

NONE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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Exhibit 1

 

CHANGE CONTROL PROCESS

 

As a supplier of products to the biopharmaceutical industry and products often used in a GMP environment, Supplier acknowledges that Change Control is a critical process in the quality management system and necessary to fulfill the obligations to supply products with a consistent quality to its customers.

 

The purpose of this Exhibit is to provide an overview of the change control process for the Product(s) identified on Page 1 Box 3 herein.

 

	
 
	
1.
	
Changes for which notification is given prior to implementation:

 

	
 
	
•
	
Change in label and/or primary packaging material

	
 
	
•
	
Change of company name

 

	
 
	
2.
	
Changes for which notification is given a minimum of 30 days prior to implementation:

 

	
 
	
•
	
Change to shelf life or storage conditions 

	
 
	
•
	
Change to [****] number

	
 
	
•
	
Change of analytical specification limit within current limits

	
 
	
•
	
Changes to Certificate of Analysis (not related to specifications)

 

	
 
	
3.
	
Changes for which notification is given a minimum of 3 months prior to implementation:

 

	
 
	
•
	
Change of critical raw material

	
 
	
•
	
Change regarding animal origin of raw material

	
 
	
•
	
Change to a different test method (related to existing release specification)

	
 
	
•
	
Elimination of test method

	
 
	
•
	
Change of analytical specification - outside of current limits

 

	
 
	
4.
	
Changes for which notification is given a minimum of 6 months prior to implementation:

 

	
 
	
•
	
Change of manufacturing site

	
 
	
•
	
Change of critical Subcontractor

	
 
	
o
	
Discontinuation of Products

 

	
 
	
5.
	
At Purchaser’s request, samples from 3 separate lots will be provided for the following changes listed below:

 

	
 
	
•
	
Change to storage conditions

	
 
	
•
	
Change of critical raw material

	
 
	
•
	
Change of analytical specification – outside of current limits

	
 
	
•
	
Change of manufacturing site

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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